A Google
advertising bot displays advertisement based on your search history and
email content. (Similar to search bots which identify words and links in webpages). This
works in the same way as a MS Word document and any other
program that can find text. For a Word document, when you hit Ctrl+V a
script runs which matches a string of characters in the document to the
characters
you type in the search box. This is how how a Google advertising bot
finds text in your email and Google searches. Although the Google bot
may seem to be understanding what you are saying, it can't read or
understand what you are writing any more than a MS Word document can,
it's just a word search tool in this regard.
Once the advertising keywords
are found in your search text or email, the corresponding advertisement
is then linked to your account.
Why did Google do this?
This
generates advertisements which are more relevant to users - benefiting
the user (who sees more things they like) and advertiser
(who get more clicks). ISPs, websites, and advertising
networks all have ways of tracking your online behavior. Cookies are the
most direct way of tracking user behavior, although there are many
more. What Google also did was allow its users to control the type of
information that is shared with advertisers, which you can do right
here:
http://google.com/settings/ads
This tool also allows you
to block adds you do not want to see. Keep in mind, none of this is new or coming from Google, Google is simply using existing tools which everyone else uses. Google simply gave this personalization, control, and
transparency over to users due to their philosophy - don't be evil.
Does Google show you adds based on your location?
Yes, Google, like all other ISPs, websites, and advertising
networks, track your location via your IP address. If you own a cell phone, your provider also tracks your location information (as well as any other applications you allow access, such as Facebook).