Pass Variable to function in add_action()

Sorry, it doesn’t work that way.

All WP really does is save your function name and then call it when do_action(‘wp_hook_sidebar’) is called. Your displayAd function is going to have to get what it needs on its own – from a global variable, a function call, a SQL query, etc…

Try

global $passedtext;
$passedtext = 'foo';

and elsewhere …

add_action('wp_hook_sidebar','displayAd');

function displayAd() {
    global $passedtext;

    echo $passedtext;
}

However, if $passedtext is available in the code that calls do_action() then you CAN pass it (but your example is odd or misleading, why bother if you can just echo it anyway.) However, if your displayAd function is doing a bit more, you can do this:

do_action('my_hook',$myparameter, $secondparameter);

and then

add_action('my_hook', 'my_function');
function my_function( $param1, $param2 ) {
...
}

Of course if you’re dealing with an existing WordPress hook, you can only use parameters if it will be passing them, since the add_action has already been inserted into the code. Check here for details:
http://adambrown.info/p/wp_hooks
or just open up the core php file that you’re hooking into.

(And for other options to get stuff to your function, grab a handy PHP book.)