The current claimed size of the market is irrelevant to the argument. The argument is that there is more money being made from advertising than actual advertisers are paying and that this isn't sustainable.
That's more or less impossible by definition. What isn't sustainable is that advertisers tend to see over time lower returns for an equal investment in ads and that this trend has been fairly steady ever since online advertising became a commodity. Each new technology sees an initial (sometimes huge) uptick in clickthrough/engagement/conversion and then after a short while (and ever shorter it seems) the initial uptick transforms into a reversion to the previous mean and a subsequent steady trend downward. It has been exactly this phenomenon that has driven ad-technology and targeting forward and it's the equivalent of turning up the volume on an amplifier because the people intended to listen are going deaf from the sound levels.
Here's an attempt at some numerical estimates: http://www.bloomberg.com/bw/articles/2014-03-03/advertisings... Spoiler: ad spending in the US has grown roughly proportional with the growth of the economy, no bubble in sight.