Google Adwords has introduced demographic bidding, this feature enables advertisers to choose a subset of population for showing their ads to. If you market young women's accessories so you might wish to show your ads more often to women aged 25-34. With this new feature this sort of targeted advertising becomes a reality and would enable advertisers to have a greater degree of control by helping them choose the target audience and manage their ad's performance better.

Google would test this feature over the next few weeks with a selected group of advertisers in the U.S. and U.K. Moreover, demographic bidding and reports are available to advertisers who run contextually targeted or placement-targeted campaigns (with CPC or CPM bidding) on certain sites in the Google content network.

Here's how it works:

This service is made available when the participating publishers send the data of their users to Google in aggregate form, enabling Google to adjust which ads are shown to members of specific demographic groups. The publishers have access to data, such as the gender and age of their users because their users sign in with that information when they create a profile or fill out registration or subscription forms.

To allay any privacy concerns this user reported demographic data is anonymized and only then sent in an aggregated format for processing, so that no users are identified personally. Further, AdWords gets this data only from publishers that have permission from users to share their data based on the site's terms and conditions. Finally, users under 18 won't be targeted demographically.

There are two modes by which advertisers can use demographic bidding. First, they can modify (increase or decrease) your bids for a particular audience segment, e.g. increasing the bid for 25-34 year-old males by 230%. Second, you can prevent your ads from showing to certain demographic groups.

To help advertisers select which demographic region converts best for them, the advertisers can generate Demographic Reports from the Report Center to guide them through the demographic specific bids. The reports show various metrics viz. campaign performance, impressions, clicks, CTR, and conversion data.