Re: ArrZarr - Accurate Ads
“Half the money I spend on advertising is wasted; the trouble is I don't know which half.” John Wanamaker (1838-1922)
You are entirely correct that advertising has been around forever.
Put a magazine ad out, you choose the magazine for its demographic - you'll do better getting an ad for an upcoming racing game into Nintendo Power than into Playboy. However a lot of the readers wouldn't be interested in the genre, wasting a proportion of your marketing spend by putting an ad in front of somebody who doesn't care.
What PPC and Display do, and what Google wants this data for, is to try and figure out who is interested specifically in racing games. Not only that, but you can see how many clicked an ad and how many converted to get the most out of the advertising budget.
Disclaimer: a lot of the following paragraph is Google's goal and is currently far from perfected
This is why you can always trust Google in the way you would trust an enemy - they will soldier on to the goal of knowing everything about everybody. If they know you, they know what you mean when you search for something. Their SEO results are the driving force here, if those were bad then nobody would use their search engine. Because their SEO results are good, they get a lot of eyeballs on SERPs and can combine your search with what they know about you to present ads that are relevant. With the tracking on sites, the advertiser/retailer can see what is working and what isn't working to a degree that would be unthinkable 15-20 years ago.
As has been pointed out, I am indeed one of these marketing bottom-feeders. Take that as you will, but even when working on the accounts, I didn't care who you were. If people searching for a keyword were converting, then we paid more for that keyword. If a demographic were converting well, then we would bid more for that demographic. Trying to figure anything out about an individual was (a) impossible and (b) so far from worthwhile as to be laughable.
My final point on the subject is that a lot of the common complaints about ads are not Google's fault, they are the advertiser's. It's the advertiser who decides that remarketing fridges to people who have already bought a fridge might want to see more fridges in ads. There are also limitations in what you can see, Go to Curry's site looking for a Fridge but then convert from Argos, then Currys will probably remarket fridges to you because they haven't seen that you've converted already.
Awaiting downvotes
Arrzarr