To support the service (and keep free features free), we sometimes run advertisements, and the agreement for this has been in our terms of service since 2006.
The domain that you purchased only pays for the domain registration. It does not cover the rest of the service costs (space, bandwidth, hardware, personnel, etc) which are covered by the ads.
We try hard to only run them in limited places. If you would like to completely eliminate ads from appearing on your blog, we offer the No-Ads Upgrade: http://en.support.wordpress.com/no-ads/