"It's not that fucking hard." This! Exactly what this man said! It's all about the context!
There doesn't need to be a conflict between privacy and advertising, it's just that Google chooses to leverage user information to attract advertisers. I guess from Google's perspective the target audience can be sized far beyond 'context only' advertising (as per pick up truck example above). If Ford want 500,000 people to see it's adverts for a pick up truck, then it's much easier to accomplish if those ads are injected into any website rather that only those related to cars and pickup trucks, so I can see the advantage for Google, it's just a shame it's at odds with the behaviour I'd like to experience as a user.
Context is critical, and no matter how much data Google collects it will NEVER know the context of why I've searched for something. Maybe I searched for that F150 because I want to buy one, maybe I searched because I think they're fucking stupid. Maybe it's because I just saw someone load a dismembered body into the back of one, and I wanted to double check I was reporting the correct model of vehicle to the police...