A Google AdWords Help thread reports that an AdWords advertiser has been notified that using the word "gay" in his search ads are seen as offensive. This advertiser was offended that Google would consider the word "gay" as offensive. Here is what he said:
I found it very offensive when my ad was flagged for review for having the term "gay" in it. It surprises me that this a part of Google's policy as it is very offensive and homophobic.
Just to clarify: Google's policy is offensive, the term "gay" should NOT be.
With the recent Amazon FAIL over a similar topic, does google also want to be lumped into this mess?
It is well known that Google is very supportive of gay rights, so I was a little skeptical. I tried to create a search ad in Google AdWords myself, and used the word "gay" in the title and description and it worked without an issue. In the case above, it seems like after the ad was already live, Google made a decision to review the ad later. Maybe someone felt his ad was offensive and Google pulled it until it can be manually reviewed? I am not sure, we don't have the official word from Google yet.
Forum discussion at Google AdWords Help.