The main health risks of sugar were known by then: obesity, diabetes, tooth decay. Low-sugar diets had been successfully used in diabetes treatment in the late 19th century, and the early 20th century saw epidemiology reveal links between sugar intake and diabetes, and the discovery of insulin and with it a much-improved understanding of how the body deals with sugar (Johnson et al., 2017). Also in the early 20th century, the combined role of bacteria and sugars in tooth decay began to be understood (Suddick & Harris, 1990).

The links with obesity were well-known before then, and in 1966 well-known to the public - note that this ad was written with the awareness in mind.

would this ad have been made to deliberately mislead/misinform

In a sense, most advertising aims to deliberately mislead: "you need our product", "you need to vote for us", "if you drink our cola, you will have fun and be popular", "if you drink our beer, you will be more attractive to women", "if you buy 2 of our product for the price of 1, you will save money", "if you buy our insurance, you will have peace of mind", etc.

What this ad is aiming for is the deception that "you need refined sugar in your diet". The ad avoids saying that, and sticks to the facts (although "Besides, you need sugar, too" goes close). Yes, it is correct to say that people need energy (diet-wise), and it is technically correct that sugar is an important source of energy for our cells. It is correct in that artificial sweeteners won't provide that. What the ad omits is that our bodies will happily convert many types of carbohydrates to glucose to satisfy that demand for energy, and will convert proteins and fats, too - our cells will not be starved of sugar even if our diet includes no refined sugars, or even no sucrose. But this is pretty normal for advertising.

The ad even considers the negative effects of sugar, and directly addresses an important point about them: "Unless you make a career out of drinking soft drinks". The amount of sugar consumed matters. This is sensible but understated advice to not over-indulge in sugar.

The ad, quite reasonably, notes that "Energy is the first requirement of life." The following advice, "Play safe with your young one---make sure they get sugar every day" is dubious advice. Yes, parent should make sure their children have a good diet, including sufficient energy. No, it isn't necessary for beet/cane sugar to be included in the diet to get that energy.

Thus, the ad has both good advice and bad advice. The good advice is understated, and the bad advice rather more strident. If parents follow both pieces of advice, and make sure to include sugar in their children's diets, but do so with restraint and moderation, the inclusion of sugar will be basically harmless. It is likely that Sugar Information, Inc. hoped that the good advice would be ignored, but to their credit, they gave the advice.

References and reading:

Banting F. "The history of insulin". Edinburgh Med J 1929;36:2.

Richard J Johnson, Laura G Sánchez-Lozada, Peter Andrews, Miguel A Lanaspa, "Perspective: A Historical and Scientific Perspective of Sugar and Its Relation with Obesity and Diabetes", Advances in Nutrition, Volume 8, Issue 3, May 2017, Pages 412–422, https://doi.org/10.3945/an.116.014654

Suddick, R. P., & Harris, N. O. (1990). "Historical Perspectives of Oral Biology: A Series". Critical Reviews in Oral Biology & Medicine, 1(2), 135–151. https://doi.org/10.1177/10454411900010020301