Just for a counterpoint, about a year ago I did a landing page and accompanying marketing campaign for a friend of mine who runs a small landscaping business in Pittsburgh. With Squarespace and a couple days spent on a branding strategy, his site was head and shoulders above any competitor.
After a small investment on his part in advertising, we were generating many more leads than he could handle at a very good ROI--seemingly because the nice site was doing a good job differentiating him. So at least in his case, having a decent website did bring a real competitive advantage.
FWIW, my observation came from working on a scheduling product used by ~40k small businesses. I think what you've noticed is just how successful advertising can be. We've seen clients have similar success with Facebook and Yelp! ad campaigns, all without a homepage. One customer got over 30 new customers (expected LTV of over $1k per customer) in one month of Yelp! spend.
Exactly, web design agencies should pivot or include (and heavily promote) ad management.
I got to see the numbers of a mid-sized web design agency, and they were really an ad agency, but they didn't realize it (and didn't market accordingly).
After a small investment on his part in advertising, we were generating many more leads than he could handle at a very good ROI--seemingly because the nice site was doing a good job differentiating him. So at least in his case, having a decent website did bring a real competitive advantage.