Google will assign those users to categories based on the content of the pages they visit. For example, a user may be pegged as a potential car buyer, sports enthusiast or expectant mother.Barry Schwartz over at Search Engine Land, in an excellent and detailed review of the new product, writes:
Google will then use that information to show people ads that are relevant to their interests, regardless of what sites they are visiting. An expectant mother may see an ad about baby products not only on a parenting site but also, for example, on a sports or fashion site that uses AdSense or on YouTube, which is owned by Google.
Google said the approach could help advertisers reach their audiences more easily and publishers to earn more from their sites. Users will also see ads that are more relevant to their interests, the company said.
Google said that it planned to segment users along 20 categories and nearly 600 subcategories.
I asked Google how detailed can these ads get? I asked, can an advertiser pass along a specific ad to a specific user? For example, can I show an ad for the Sony HDR-XR200V if this user added the Sony HDR-XR200V to their shopping cart on my site but did not check out?The post on the Official Google Blog about this new product, "Making ads more interesting", is rather bland, but it does give a good description of the goal of personalized advertising:
[Brad] Bender [Google’s Product Manager] said yes, but ultimately it is up to the advertiser how specific they want to get with those ads.
By making ads more relevant ... we can create more value for everyone. Users get more useful ads, and these more relevant ads generate higher returns for advertisers and publishers.Please see also my Oct 2008 post, "Google describes perfect advertising", which quotes an article by Googler Susan Wojcicki and gives more context to what Google is trying to do with personalized advertising.
Please see also my May 2004 post, "Bringing sense to web advertising", and my July 2007 post, "What to advertise when there is no commercial intent?"
Update: Philipp Lenssen posts the full list of category interests used by Google.