We formulate a semi-classical circuit model to clarify the role of quantum entanglement in the recently discovered encoding phase transitions in quantum circuits with measurements. As a starting point we define a random circuit model with nearest neighbor classical gates interrupted by erasure errors. In analogy with the quantum setting, this system undergoes a purification transition at a critical error rate above which the classical information entropy in the output state vanishes. We show that this phase transition is in the directed percolation universality class, consistent with the fact that having zero entropy is an absorbing state of the dynamics; this classical circuit cannot generate entropy. Adding an arbitrarily small density of quantum gates in the presence of errors eliminates the transition by destroying the absorbing state: the quantum gates generate internal entanglement, which can be effectively converted to classical entropy by the errors. We describe the universal properties of this instability in an effective model of the semi-classical circuit. Our model highlights the crucial differences between information dynamics in classical and quantum circuits.