Almost definitionally most of the ads would be shown to visitors thought to be bots, which might not impress advertisers, even if G was careful to only count those that passed the CAPTCHAs (though the LLM bots can too, it seems).

There is also the reputation risk that advertisers and their brands might become associated with the stress points of having to do a CAPTCHA or being denied access etc.

Just two off the top of my head.

There used to be this ad captcha used back in the day where you had to watch an ad and then type out some word that was in it. I imagine that it's far more useful for them to make you label data, and requires less labor on their part for the paltry revenues they'd collect

Historically, captcha was crowd sourced training for OCR that happened to present to the trainer as an test that they were not a bot. That became training for AI image classification and collecting this data was way more important, valuable, and under the users radar than to present them with ads. I can't say for V3, but I'm guessing that collecting data for prediction is still more valuable than presenting the user with V2 images with ads.

Value is in fingerprinting and tracking people and the websites they visit.

Legit visitors got to the site where the ReCAPTCHA is by an ad in theory, so G would be focused on that part of the funnel. The beginning of the journey is search and/or ads.

ReCAPTCHA is frequently on sign-up forms and other things where every percent of users that don't complete it costs. It's bad enough to be making people fight with it, but if it showed ads some fraction of people would click on the ad or otherwise be distracted by it [1]

Note that in a lot of cases it looks at your cookies and other trackers and decide you must be human by looking at the mud on your boots from walking all around the web. It might also play a valuable role in punishing people who use browsers other than Chrome, though it seems the browsers that I have the most CAPTCHA harassment with are on Android tablets.

[1] unless you completely believe the "all clicks are click fraud" theory that nobody has honestly clicked ads since 1999. It's up there with my other conspiracy theories such as "the dead internet theory" and the one that there's no interest in mainstream culture at all outside of the media: that is, I meet people who watch things like Solo Leveling and play Genshin Impact but never people who watch Severance and play Call of Duty