the thing about targeted ads most people think of, the information doesnt come from one source, it comes from a bunch of sources that get aggregated together. So while google may know nothing, someone else is going to know something, and combining the two means they can know alot.

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If a data source sees that someone is staying at address XXX for 8+ hours a day during the night, then they can assume they live there or are related in someway. They can get another data source and get a list of names of people who live at that specific address. So now you know not only where they live, but who they have a relation too. Another data source might show you traveling from that house to an office building where you spend another 8+ hours a day at.

How many people live at that address, works at this location, and is possibly related to this list of people. 99% of the time, its going to be a small list of 1-5 people and once you have it down that far, figuring out more information isnt difficult.

By combining data sources, you can get information greater than the sum of its parts with very minimal work.