I think targeted advertising is OK providing that the end user is made explicitly aware of what the targeting preferences are.

Taking the Orbitz example, it could be argued that targeting one section of the user base with items at a different price level to another section of the user base in a covert manner is potentially illegal under unfair contract terms legislation. The same could be argued if the targeting was done under generic site T&Cs.

However, if the end user could see on their screen what targeting was available and being used, and had the choice of turning it off or on, then the targeting becomes obvious and fair.