Falling out of Phorm

BadgerPoor old “Badger” Lamont. The former chancellor of the exchequer must be ruing the day he lent his name to controversial behavioural targeting company Phorm as a non-executive director.

Earlier this week, Phorm brushed off its rupture with British Telecom (only the UK’s leading internet service provider, after all) as nothing more than a hiccup in a global expansion strategy that also involves, er, Korea. Now the number 2 ISP, TalkTalk, has also dissociated itself from Phorm’s proprietary Webwise service. Which leaves Virgin Media as its only prospective customer in the UK. Except that Virgin has neither tested Webwise, nor entered into any exclusive arrangement with Phorm. Which doesn’t, on the face of it, leave the company with many sizeable alternatives in the UK.

BT – targeted advertising that is – holds great promise for the advertising community. The possibility of giving the lie, once and for all, to Leverhulme’s adage about wasted ad budgets is one evident attraction. But there is also subtler potential in the way that the generic version, practised by Phorm, works. Because ISPs harvest the behavioural data, they would be able to charge advertisers for the privilege. It was hoped that part of this extra revenue stream might in some way – perhaps through government levy – be channelled into the reconstruction of our ageing broadband infrastructure. That at least was the aspiration voiced earlier this year by head of Ofcom Ed Richards.

Unfortunately for advertisers, Phorm’s notoriety as an alleged agent of “snoop culture” has preceded the widespread adoption of generic BT, placing a hand on its windpipe at birth.

The generic version – enshrined in Webwise – is, of course, not the only type of BT in use. Big portals, such as Google, Yahoo! and Amazon, all have their proprietary version of what is sometimes euphemistically referred to as “interest-based advertising”, derived from tracking the behaviour of their customers via cookies. To what extent these may be regarded as an invasion of privacy, as opposed to satisfying the customer’s needs, is a matter of debate.

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