Marketing has always been about "targeting" or as the latest craze would call it "context". The basic precept is: The closer you can get to a buyer before their buying decision the more effective your message. Thus, packaging for supermarket items is really important. When the buyer is reaching out to buy a box of Macky Wac is the best time to convince him/her to try your brand.
Broadcast models of advertising are indeed inefficient, but even TV and radio can be "targeted". Demographics of viewers/listeners are carefully tabulated and ads delivered that meet their interests. BMW's on Seinfeld for instance.
In Detroit they tell the story of the automotive supplier that was trying to reach a specific buyer at General Motors. Someone from the ad agency followed the executive to work and looked into his car to see where his radio dial was tuned (this was in the old day when radios had dials of coures). They then placed ads for their client company on that radio station during the executive's commute! Now that is targeted marketing.
But hold it. That is a major invasion of privacy is it not? This is where targeted marketing raises issues. Today there are laws against what the ad agency in Deroit did. They are called anti-stalking laws. Isn't contextual advertising the Internet equivalent of stalking?
-From a Starbuck's in Cambridge, MA.