This becomes a form of harassment, and leads to more ad blindness and higher bounce rates.
interest based ads obviously work. the stats say so, otherwise google wouldn't implement them.
however, more "efficient" ads can lead to more ad fatigue. it's the same principle as with popup/popdown/layer ads. 99% percent of visitors may find them really annoying, but the 1% who react on them make the operation worthwhile.
yes, it works - just like spam works. but the question is, what are the long term effects? if the majority of people will strongly oppose a certain advertising type, ad blindness and ad hatred will escalate further. that means more ad blockers or overall more frustrating user experience over time. an effect that isn't priced into google's oh so awesome algorithms - which are only about maximizing the short term cash flow.. it would indeed make sense to reflect these issues - because annoying advertising is not sustainable.
p.s. the flaw in the current system is this: google really can't correctly guess, what i am interested in right now. unless i tell them directly what i want. which i do when i enter my query into the input field on their search engine. that's what the adwords on their serps are serving. whereas ads on the content network are always inferior anyway (less targeted, more annoying) if you look at it this way..