National advertisers are more expensive, and don't help local races as much or at all. Spend less money, hit more people in states with more people in them.
That fundamentally changes if I can counter your Times Square billboard with a direct mail campaign in Minnesota.
And you can have Nebraska. The whole state, I wouldn't run a single ad there for a national campaign, in either scenario. Why would I? The ad money I might have to spend in Nebraska to get a thousand eyeballs might get me closer to ten thousand eyeballs in California or New York. Not to mention the ten thousand eyeballs I get in New York are also eyeballs I want to see my general platform and the fact that my party exists, because as you may well know, most people vote a straight ticket.
I see a lot of compelling reasons to believe that local media would remain a primary means of communication between candidates and prospective voters, even if we switched to a popular vote.
What market force are you imagining makes ad space cheaper in wealthier states?