Why does Google keep showing me the same ads over and over?

I don't really know how Google ads work but I can't help noticing that the same ads crop up again and again. Either these few advertisers can afford to flood every computer in the world constantly with their particular promotion or else Google is using its rather intimate knowledge of me and my personal preferences to tailor the ads it shows me. Given the number of ads I see repeated from small companies who surely don't have multi-million dollar budgets I guess the latter.

If this is the case I can understand why mmorpg players have been plagued with those salacious Evony ads but I am somewhat miffed that Google has now decided to bombard me with the following:

I get this offer to "Cut down 3lbs of your belly every week" at least ten times a day. What facet of my lifestyle could possibly have convinced Google that I need to lose some weight?

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