In a recent interview, Kim Malone (Director in the AdSense group at Google) said, "Behavioral targeting is not something that Google [AdSense] will do."
Kim could not be more clear in this outright, flat denial, but I simply do not believe it. There is too much to gain. Ads targeted to individual behavior are more relevant, useful, and interesting to users and convert better for advertisers.
If Kim is telling the truth here -- if Google really will not get into behavioral targeting -- I would say this represents a beautiful opportunity for Yahoo, Amazon, and Microsoft to trounce AdSense. Use a little more data, pay a little closer attention to what people want and need, and your ads will be more relevant and less annoying that Google's contextual ads.
While they have been painfully slow to execute, Google's competitors are moving on behavioral targeting.
Microsoft adCenter lets advertisers target ads "to the customers most interested in your products or services." Microsoft adLab, the research arm of adCenter, says their goal is to "change online advertising dramatically in areas such as paid search, behavioral targeting and contextual advertising", claims they have "years of profiling, user behavior, and data mining", and asserts that they "know a heck of a lot more about their audience than Google knows about its own."
Yahoo has been working with Revenue Science "to show text listings on Web pages based on user behavior." Yahoo also recently launched their Panama ad system which, according to Danny Sullivan, will include "audience targeting based on factors that could include demographic information or online behavior" in "future versions."
Amazon Omakase targets ads "based on what the Associate has been successful with in the past; what that user has been interested in; and what the site is about." In my opinion, other than Findory, this is the most dramatic example of fine-grained behavioral targeting out there right now. The Amazon Omakase ads I see on other websites are eerily relevant, targeted to my purchase and clickstream history at Amazon.
It is unbelievable to me that Google is not pursuing behavioral targeting. But, if Google is not pursuing behavioral targeting, it is clear that its competitors cheerfully will.