Personal Private Investigator

I got curious about locating physical demography of an IP. With all these ‘young girls in your area’ popups, I would like to know how they do it?
Then I stumbled upon If you browse to their lookup list, it will empower you to be a private investigator for a few dollars. Cool, huh!
I looked up on a few of my acquaintances to verify whether their story on their history match up. Interestingly most of them tell truth. ūüėČ
My theory is that these advertising programs are either using WHOIS lookup based on your IP or your profile (e.g., Google ad-sense). There are quite a few products available that provides there services out of box.
A couple of associated question that I have are 
1) How do these advertisers know the searcher is a heterosexual male who is interested in female in their area? They should work on their algorithm better. 
2) Where do they get pictures of these (young) women?
3) Does anyone sue them for illegally obtaining their pictures (assuming they cull these pictures of the net) or for copyright violation?
4) How good is this advertisement when I use a proxy or anonymizer?
5) What if the searcher is a teen or pre-teen? While teen might not mind looking at these pictures (???), doesn’t it infringe their rights?
Google ad-sense is an irritant that does not put me in moral dilemma. So, I think it is a good revenue model.
Let me know your thoughts?