Because the watch is even more engaging than the phone, it probably feels even more a part of your me.
Personal advertisement on specific hotspot of your interest have the easiest and best opportunity.
I see a revival of some well known social media apps that has this information, engagement and advertisement ability.
I can see Foursquare engage with the user of the watch be asking if the person wants to check-in with this retailer, with one touch on the watch. This momentum of interaction gives the retailer the ability to push a great last minute deal within the foursquare app. This without the irritation and without a high response rate.
Interaction with an Apple or Smart Watch user by ads with or without the irritation, will be very narrow.
Advertisers probably like to fill the total screen of the watch with the ad. But this will block the users intentions and have a high irritation rate. Compare This with a browser ad that blocks the total screen before you can go to your primary goal.
Size, timing, content and position will all been weight by them. As in the example of foursquare, a full screen advertisement can be shown because timing and engagement of the app gives the user a short introduction to this advertisement. Also the content is (should) made him or her. The engagement of the retailer feels real en helpful. Maybe even more important, the user was expecting to get a personal deal, because of the interaction with the check-in beforehand.
Maybe Foursquare is a easy example you say. What about general ads, now shown on blogs, websites and search engines like Google??
The thing is, the two way interaction of the Apple and Smart Watches will be very limited. Mostly it will be an one way information stream, because the input and display possibilities on these devices are limited for large information consumption.