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Privad client uses identified product titles and product-related keywords to request ads from the backend infrastructure in an anonymous, privacy-preserving manner (see http://adresearch.mpi-sws.org/overview.html for details). Backend servers use these ad requests to search for matching products on amazon.com, shopping.com and google.com/shopping and build textual ads from the resulting products. The client then stores these mock-up Privad ads on the user computer and displays them in Google adboxes instead of Adsense ads.
Another experimental feature in Privad addon is differentially private data aggregation (http://en.wikipedia.org/wiki/Differential_privacy). What it means in practical terms is that Privad client locally collects ads-related statistical data and allows for numerical queries over these data with some amount of noise added to the query results. This mechanism makes it possible to obtain deep insight into ads performance, which goes beyond simple click-through and conversion-rates, without forfeiting user privacy.