"Free cds as promotional advs" - The cost to the advertizer is charged to promotion, and is thus a business expense, which can be deducted from taxes on the business (in the U. S. and Canada). Moreover, as Wordy says, the 'free' cds are usually those that have recouped their cost and have filled most of the demand.
This doesn't mean that the production costs were low. The pressing cost is the smallest of the costs going into the cd.

Tapes, of course, are a thing of the past; I have a number of them which I transfer to cds as I get time. (Blank tapes sold here in Canada have a tax on them, a quality recording tape costs much more than a blank cd).