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I think the author really nails it. He isn't object to the ads existing, he is objecting to them being irrelevant.

Ads that are relevant almost aren't Ads, they are almost content.

I agree, but you can't fault them for releasing this as a stop gap solution. The data will surely show that click through rates are lower than web search; when it does, they can be motivated to improving that. Release early, release often?
How are they irrelevant? He searched for Brett Farve and got ads about Brett Farve. He was just bummed that they were text ads, not images.
Isn't relevance defined by context?

If he was doing an image search he wanted images, not text.

What about Ads for products or Stock photography or Celeb sites with more photos?

How do advertisers feel, now that their clickthrough rates will likely decrease as a result of being on the seemingly-irrelevant images page?
The beauty of AdWords is you can track conversions and exclude domains/sites that don't convert well. Most AdWords advertisers will welcome an increase like this in inventory.
what really sucks is when a blogger has "rich jerk" large image ads; much worse then adwords in image search
All right, this has to be the first time I've seen someone vocally complain that they visited a web page and didn't see enough large, visually distracting, bandwidth-sucking graphical advertisements.

I think these ads on Image Search are great—they stay out of the way, they don't slow down my web browsing, and they're generally relevant to the search query. As for whether or not this will generate an extra $200 million in revenue, I trust Google's calculated and informed estimation on that account far more than I trust this random blogger's gut feeling to the contrary.