If they are collecting so much data why do the ads still suck? I bought a pixel 7a and I still get ads for it all the time. You would think that google would know that I already bought a google phone from them.
Exactly this. I tend to ignore ads that show up, because they're generally not useful for me. I've also noticed this most in Google News. If I search for one topic one time on Google (usually just to find some random bit of info), Google thinks I'm very interested in that topic and starts showing me news articles related to it. Or if I search for a song in Youtube Music, I get articles about that song or band. It's ridiculous. I've started using DDG for search now, and may move to Spotify. I need to find a good news aggregator, too.
Most likely, they have some data telling them this is a good strategy. Otherwise they'd stop.