I was considering going for option 3, but decided that advertising should be seen by everybody, and if its to graphic then it should be threatened to take down it should get enough criticism by people. But really for an advertisement exposed for the public it shouldn't be too graphic.
So you agree? There should be certain community standards that don't need a case by case input from "the market."
I mean if someone wants to put up a picture of a vagina with semen dripping out of it on a billboard next to a primary school to advertise an adult video store you don't honestly think it should sit up there for a few weeks while you wait for a critical mass of emails to pour in to the government?
This is why libertarianism is a joke. When you try and implement it strictly in real life it blows up in your face. Of course there have to be preemptive government restrictions on advertisements that are displayed publicly. Every adult video store that was looking for publicity would just put up billboards in front of schools, churches, etc. and wait for the news trucks to roll up.