In order to target adds "at people in a narrow geographical area" I need to know when those people are in that "narrow geographical area". I.e., I need to know their location to an accuracy good enough to say they are in that "narrow geographical area" (or in this case, their phones location, which is a good proxy for their location).
Once I can know "the phones location" to a level of accuracy to make "narrow geographical area" targeted ads profitable, all I have to do is average several overnight readings of 'location' together to get a very good estimate of "where someone lives".
The point of OP is that I can't use targeted ads to answer the question "Person X: where are they?".
With the result that you have to believe that the "targeted ads" provider is both secure and ethical.
"Secure enough" and "ethical enough". Plenty of organisations know stuff about me that I'd prefer not to be public or sold to the highest bidder. They might leak it to the government or one day be the target of a megahack - but I file that under either "meh" or under "acceptable risk".
But luckily
EDIT - for example I'm not sure the original "Bounty hunters" use case would be facilitated by Google's targeted ads. There's a big gap between "I might be able to target ads at people in a narrow geographical area" and "I can find our where someone lives"