That's not the case. The following two statements can be simultaneously true:

• a sufficiently-good product would sell through word-of-mouth
• corporate executives are not satisfied with the small amount of purchases this would generate, because they want more profit.

Advertising is a way to generate morepurchases (and so more profit), but it might be increasing from a non-zero amount.

I don't think that the person you're replying to is entirely correct (some products or markets really do require advertising to make consumers aware), but they're closer to right than they are to wrong on a level playing field. But if the other side is using advertising, you basically have to do the same in order to remain competitive.