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A thread at Search Engine Watch Forums asks AdWords: No Tobacco but Pornography OK... why? Some guess it has to do with tax reasons, some believe it has to do with the war against smoking, but the best answer in the thread is by Ian.
It's because tobacco gives you cancer and porn only gives you hairy palms.
Did you ever wonder what else is prohibited? In the thread is a link to the Google AdWords Content Policy. The list includes; Aids to Pass Drug Tests, Alcohol, Anti and Violence, Bulk Marketing, Cable Descramblers and Black Boxes, Counterfeit Designer Goods, Dialers, Drugs and Drug Paraphernalia, Fake Documents, Fireworks/Pyrotechnic Devices, Gambling, Hacking and Cracking Sites, Miracle Cures, Mod Chips, Prescription Drugs and Related Content, Prostitution, Sexual Content (Adult), Solicitation of Funds, Tobacco and Cigarettes, Traffic Devices, and Weapons. Note, the "Sexual Content (Adult)" is "not permitted for the promotion of child pornography or other non-consensual material."
