Who wants to be "targeted" and have others pay to directly target them with a calculation that makes it more probable to profit from that targeting?
As must as I hate any kind of privacy-invading workflows, I must confess that (specifically) targeted advertising doesn't really bother me much at all. The fact is those ads are going to be present in that spot on a webpage regardless of whether it's targeted or not. So why not at least show me relevant ads based on search keywords in the tool being used?
To me, the only time I get creeped out and think they've crossed a line for me at least is when they start getting overly sensitive to the ads (such as Facebook) where you're not just being targeted based on a couple of data points and instead you're being targeted based on like a 100+ different data points on data they ideally shouldn't even really have in the first place.
I think it's all a balancing act. Everyone's comfort level is a little different. Just my opinion anyways. But I totally hear ya on the "I have nothing to hide" point, those statements always irritate me when I hear them from people, shows they're completely missing the point when they say that, IMO.