Google uses prior searches and spelling correction to match AdWords

I imagine that one of the problems that Google has is matching existing ad inventory against all the wonderful random crap that searchers type in - with many searches being really hard to monetize by "traditional" means. Thus the many experiments they run. I wonder what the ROI on this particular example is?

This is a random discovery which came about as I was looking up some old co-workers. First names have been changed to protect the innocent.

First I searched for my old co-worker "Ed" Biasi:


Note that there are no ads. Name searches are tough to monetize.

Then I searched for my old co-worker "Joe" Satchel:


Note the ad match - It's for a Biasia satchel - which is apparently some sort of $200 name-brand purse:

Not only is Google doing spelling correction on my Biasi search, they're remembering the immediate prior search term to match the ad. Apparently they only remember one prior search - when I did the same search twice (either Biasi or Satchel) the ad disappeared.

Fascinating.