Long time to posts!
Looks like the current economic crisis couldn't make Google cease their innovation, here's the email I received yesterday from Google.
We're writing to let you know about the upcoming launch of interest-based advertising, which will require you to review and make any necessary changes to your site's privacy policies. You'll also see some new options on your Account Settings page.
Interest-based advertising will allow advertisers to show ads based on a user's previous interactions with them, such as visits to advertiser website and also to reach users based on their interests (e.g. "sports enthusiast"). To develop interest categories, we will recognize the types of web pages users visit throughout the Google content network. As an example, if they visit a number of sports pages, we will add them to the "sports enthusiast" interest category. To learn more about your associated account settings, please visit the AdSense Help Center at http://www.google.com/adsense/support/bin/topic.py?topic=20310.
For more information about interest-based advertising, you can also visit the Inside AdSense Blog at http://adsense.blogspot.com/2009/03/driving-monetization-with-ads-that.html.
For the publisher, I don't think this would make much difference to their income. Web surfers visit a site because it currently contains the content they want. Take the sport enthusiast mentioned above for example, if she is only interested in sports news, she will see sports news channel ads everywhere (not really, I think the news ad percentage will only increase a little), even when she is trying to shop for sport instruments and vice versa. This behavior based kind of ads is possibly most benefit to Google because now they will be able to display ads that fit the user's behavior on their search pages based on user activity data you gathered. This may also be beneficial to some so called SEO groups where they use money from an unknown source to buy each other's product rapidly, thus receive huge income (and yes, that's money laundering). Now they can see more relevant ads for their purpose…
Privacy concerns may arise for the normal user, which is exactly why the European Union worried about the Doubleclick acquisition: now Google have just updated their policy to track everyone using their service. Well, there's nothing you can do about it except to trust them though; so far Google is trustworthy :). It's true that they censored search content for their Chinese interface but hey, at least they never disclosed user data to our bloodthirsty comrades like Yahoo!