Because it's not just representation. It's fetishized representation. The penis is there to inform you that the girl is trans, but also to make you feel like she's sexy because of it. Like an exciting thing to be stared at.
A good parallel would be the fetishization of black men and their penis' sizes. Some are not offended, but even if you are a black guy with a big penis, this kind of treatment dehumanizes you and continues to objectify not only the ones who are not offended. Remember: not every person wants to be considered a sexual object, especially when this also comes with inherent dehumanization and violence. Trans people are the same: transgender pornography is not good representation. Showing trans women as sexy girls with dicks is not good representation.
Thanks for this, helps me see this from a difference perspective. In this case, would the advert in question not be a problem if there are more trans people in the game who are not sexualised? (Given that we can then assume the model in the advertisement is willingly being sexualised)