Advertising is not one of the core topics of IO--at least, not of IO narrowly defined. This chapter may therefore be omitted from a course directed primarily at economics majors. However, as mentioned in the preface, IO has gradually been expanding to the point of overlapping significantly with fields like marketing and strategy, which justifies the inclusion of advertising as a separate topic.
One of the central issues in the IO analysis of advertising is the relation between advertising competition and price competition. Not much economics research has been done on this topic. As a consequence, most of the points presented in section 13.3 are rather tentative: more questions are raised than answered. (This is one of the sections of the text where the issue-driven, rather than literature-driven, nature of the text is most evident.)