Unless you're using adblock, you should be seeing a whole bunch of crappy ads for fat-loss solutions, IQ tests, "Which way is this mannequin turning?", etc...
(Disclaimer: I co-founded a company now helping companies target ads. People opting out won't harm me economically, but I'm really trying to understand people's objections).
I want unsolicited ads to not be targeted for several reasons:
1) I don't want people to necessarily infer my interests/character based on ads they see when I'm just browsing the web. "Dude, why do you have porn ads all the time when you browse the web?"
2) I don't need to be sold to on a constant basis. Unless I'm in the market for something, I generally would prefer to not be sold to. Selling me something I'm sure to not care about, e.g., IQ tests, are almost the same as no ads. Showing me well-targeted ads are more likely to prove to be a distraction.
3) Privacy. I'd really prefer no one to have information that associates my account with specific information. It's hard to avoid today, but to the extent that I can reduce it, I will.
With that said, solicited ads are fine. If I do a search, x% of the time I'm looking for a product to purchase. I don't mind it then. Many of the websites I read, e.g., Engadget, are almost ad sites in that the content is generally about product for me to buy or use. And Android ads on Engadget are fine. They're not specifically targeted to me, but the demographic of people reading Engadget.
Every now and then I see a perfectly targeted ad. like the other day I saw one for a chamber music concert a bus ride away. I saw an awesome concert and the venue got an extra sale. If that had been a random IQ test ad, I would have missed an awesome experience.
TL;DR targeting is better for everyone.
Re (3), that sucks. If they're collecting and associating data with your account, but just not displaying the ads, I think that's a problem. Opting out should opt you out of associating data with your account.
Quality - My experience with targeted ads usually involves them lagging behind my purchase or interest. So if I set out to buy a new saw, by the time I start getting ads related to new saws, I have already purchased it. Everybody loses (Advertisers waste money targeting a purchase I already made, and I keep seeing ads for a product I don't need anymore).
Both of these scenarios occurred recently, and I don't really know a good solution to the problem.
I arguably get a small advantage from ads targeted at what I'm currently doing, but the relative impact of what I'm currently doing is decreased (by definition) when the relative impact of who I am is increased.
I don't need to see recruiting ads when I'm looking for computer hardware, and I don't need to see computer hardware ads when I'm looking for a library implementing a particular network protocol.
It's a 3-way deal. I'd like to see fewer ads, without any obnoxious flash/animation. Also, ads that pay publishers more money for their traffic - and help advertisers find markets. The current market is completely broken; obnoxious ads for consumers, no support for good publishers and bad ROI for advertisers.
But what do you mean by "targets based on a specific identity?" Clearly the intent is to target the same person who went to a site but did not convert. That sounds like targeting based on a specific identity to me.
Also, I can name at least two companies that target people (OK, cookie stores) based on specific interests or traits they (OK, their users) are surmised to have: Google and Facebook. These two are very high-profile about it, so I would be surprised if others did not do the same.
Interesting. So here's a poll I just created on that: "are you running AdBlock?"