Google's AdWords blog gives some of the details:
Ever wish you could show your ads more often to a specific group like women aged 25-34? Want to see how your ads perform with certain demographic groups and then adjust your bids accordingly?
If that sounds like your small business, here's a quick-start guide to AdWords demographic targeting:
1. What is AdWords demographic targeting?
The feature lets you target ads to specific gender and age groups on *some* sites in the Google content network. Testing begins in a few weeks in the U.S. and U.K. You can sign up for the demographic targeting beta test here.
2. How does it work?
The feature only works with some sites in the Google content network, for instance, social networking sites that have gender and age information about their users. Google says participating publishers anonymize this data and send it to Google in aggregate form, allowing for the ad targeting.
3. How do I use demographic bidding?
You can modify bids to target a particular segment, such as increasing bids for a particular segment. You can also set up your bids to exclude certain demographic groups.
4. How can I make it work for me?
Google is also rolling out demographic reports that can show you how campaigns are working based on certain metrics. That can help you fine-tune your demographically-targeted campaigns.
Mashable: Target Google AdWords Based on Demographics
Search Engine Watch: Google AdWords Beta Testing Demographic Bidding