Google’s new privacy policy (starting March 1) is generating a lot of negative response from both users and legislators for targeting ads to users based on their interests and relationships online. That’s because the information harvested from user data across Google products can greatly impact not only Google Ads but also Search Results − which have become a major force in advertising.

Google’s new privacy policy says that once a user signs into a Google account, the company will use that user’s data across its services, resulting in a more personal online experience for users. In fact, Google recently started requiring new Gmail users to create Google+ accounts, so its data resources will continue to grow.

Here’s what Google had to say about the new privacy policy change: “The main change is for users with Google Accounts. Our new Privacy Policy makes clear that, if you’re signed in, we may combine information you’ve provided from one service with information from other services. In short, we’ll treat you as a single user across all our products, which will mean a simpler, more intuitive Google experience.”

In other words, if you’re signed into Google, it will suggest search queries and personalize your search results based on the interests you previously expressed in Google +, Gmail and YouTube, etc. Google claims this will allow it to better understand your queries and serve you the best results. If you don’t like it, you can sign out of Google.

Impact on Google Ads: Google’s new privacy policy and its expansion of Google+ with Google Search Plus Your World have implications for paid search because these changes allow Google to target ads directly to consumers rather than to queries.

Up until these recent changes, ads were targeted to queries. If a consumer searched for a Gucci designer handbag, the intent was explicit and marketers could target their ads based on queries. When queries aren’t clear enough, Google has to work harder to serve relevant results.

Now, with all the data collected on Google, YouTube, Gmail and Google+, the company has the means to enhance relevance by putting interests and relationships together in your Google profile.

User Behavior: Google has been leveraging its network of AdSense partner sites to create behaviorally based user profiles, as stated below.

“When a user visits an AdSense partner website, we analyze the content of the page and site to show contextually relevant ads. We use these page topics as well as data from third-party companies to associate interests with a user’s cookie, taking into account how often users visit sites of those categories, among other factors.

Google may use the websites a user visits, as well as third-party data, to infer the user’s gender, age category, and other demographics. For example, if the sites that you visit have a majority of female visitors (based on aggregated survey data on site visitation), we may associate your cookie with the female demographic category.”

User Emails: For a while, Google has been personalizing ads based on the emails people read in Gmail, as it states below:

“For example, if you’ve recently read a lot of messages about cameras, maybe you’d like to see an offer from your local camera shop. On the other hand, if you’ve reported these messages as spam, or marked them ‘not important’ you might not want to see that offer. Soon, some of you will start seeing fewer ads overall, and focused on subjects we hope will be important to you, at the right time.”

User Relationships: We all know word-of-mouth is the most powerful advertising medium. When people you know and trust recommend a product, you are more likely to believe that more than any marketer’s ad. By using the data based on relationships in Google+ and Gmail, Google can prioritize ads based on what users recommend with+1. Google Search Plus Your World will encourage adoption of +1, which is a part of AdWords.

The benefits of using all this data to make ads more relevant are tremendous. It can result in satisfied users and more clicks for advertisers. And yes, more money for Google.

As Google aggregates more data about who their users are, what they do, what they like and who they like, it is creating a treasure-trove of valuable data that contributes to its dominance of the web. And that’s why legislators are scrutinizing Google’s every move.

Tip for Marketers: The takeaway from the above: create a Google+ Page and connect to your Google AdWords campaigns. That allows all your +1s (from your Page, website, ads and search results) to be summed in a single total. This new AdWords feature is called Social Extensions.

With Social Extensions, consumers will see all the recommendations your business has received, whether they come from viewing an ad, a search result or your Google+ Page. This means your +1’s will reach not only the over 40 million Google+ users, but all the users who go to Google every day.