Some selected excerpts:
Eric Schmidt ... [says] that advertising should be interesting, relevant and useful to users. "Improving ad quality improves Google's revenue ... If we target the right ad to the right person at the right time and they click it, we win."Advertising is content; it is information about products and services. Advertising should be useful and interesting, not annoying and irrelevant.
This proposition, he continued, is applicable to other media. "If we can figure out a way to improve the quality of ads on television with ads that have real value for end-users, we should do it," he said. While he is watching television, for example, "Why do I see women's clothing ads?" he said. "Why don't I see just men's clothing ads?"
[Google] says it has not connected the vast dossier of interests and behavior to specific users .... For now, the only personal information Google says it considers is the user's location.
Personalized advertising, targeted to individual interests, will be a big step forward. If we can get to the point where advertisements are helpful and relevant, telling readers about products and services they actually want to know about, people will stop ignoring ads.
Update: John Battelle has a similar article in the SJ Mercury News on personalization and personalized advertising:
You've seen the ads along the right side and top of Google -- they are usually extremely relevant to the term you typed into the search box. Why are they so good? Because Google watches what you type and tries to match ads to your stated intent.Right now, advertising is annoying. It is irrelevant and useless. If I don't have a cat, I'm not interested in an ad for cat food. It doesn't matter how obnoxious you make the ad using popups, flash, or whatever annoyances you can conjure up. I'm not interested.
But what if Google and others knew what you had searched for before, or other sites you had been to, or other purchases you made? Now that's custom advertising.
Imagine that the relevance of the ads, or other services offered to you, is based not just on your keywords in your searches, but also the content of your e-mail, or the knowledge of where you've been recently on the Internet, what you have done, and what you found worth your time?
Google and Yahoo are already working on these services, with the goal of being able to customize more and more to the individual, or at least to demographic or behavioral clusters of similar individuals.
If you're going to have to show me advertising, at least show me something I might like. You know who I am. Don't waste my time. Show me something useful.