Reading a lot of the comments in this thread, you guys are taking this announcement and running with it in some weird directions. Google's just playing catch-up with ad targeting features that Facebook has had for years. Nobody is targeting individual users. There are HUGE amounts of depersonalization work and legal review that go into making something like this a reality. If you think Google's engineers spent more time developing this than Google's legal team spent approving it, you're probably wrong.
Say a company wants to target ads to people that are in their email subscription list. Or a brick-and-mortar retailer wants to marry up their in-store customers with online data to target in-store shoppers with online advertising. These are features that have been supported for a while through Facebook and through third-party services like Liveramp. Google is building the infrastructure to support these natively. It's not a new technology. It's a very old one - what used to be called database marketing back in the days of direct mail and catalogs.
Granted, I make my living in marketing, so I may be biased, but I think a lot of folks are looking at this the wrong way. More targeted advertising is less annoying, not more. (A) You aren't getting spammed with things that are irrelevant to you. The ads you are shown are more likely to be related to something you actually care about or could potentially want to buy. (B) Advertisers don't have to spend as much money on targeted ads as they used to have to spend spamming the world with untargeted advertising (see also TV, radio, sponsorship & endorsement deals, etc), so their margins go up and they can afford better product development, lower prices, etc.
The risks here are that you will somehow be outed as someone that shops frequently at a particular store, not that you're going to be "spearfished" or that the NSA will send drones to your house to kill you with missiles.