Hang on a tick...
Yes, it's all very well sharing tips on how to prevent your web searches being able to be tracked by the search engine provider and their advertisers...
...but all those web servers and databases don't run on fresh air. Companies can either follow the Microsoft approach (selling bloatware to you at inflated prices) or the Google approach (provide advertising space).
While ads could theoretically be context-free, the click through rate would be very low (possibly even insignificant), making companies wonder why they were going to the bother of paying to advertise. However, if the search engine looks at what you're searching for, and finds adverts with keywords attached that match what you've searched for, the click through rate will be much higher, companies will be satisfied they're getting more visits / purchases as a result of their advertising, and will consider paying for more advertising with the search engine.
Google has an advantage over other search engines (other than its sheer market size!) in that as it also owns its own advertising network, all the juicy data you give it remains completely in house. They don't sell your data to third parties because they have no need to. It would, however, be interesting to know how much of your search history is passed to the advertiser - just the search which resulted in you clicking on their ad, or everything (probably unrelated) you searched for beforehand? Also bear in mind that although they can track your machine, unless you're stupid enough to be browsing on a mobile phone with location information turned on, particularly if you're using a dynamic IP address, your Geo IP information could be anywhere within a couple of hundred miles of yourself. As others have said, given most browsers have ad blocking extensions, any information the companies do collect on you will go to waste (other than saying someone that matches your profile isn't interested in them) because they'll have a zero click through rate from you!