Online ad targeting progresses in U.K., lags in U.S.

LONDON – U.K. Internet surfers will likely soon see the deployment of a controversial behavioral ad targeting system, while the concept appears to be faltering due to privacy concerns in the U.S.

Online ad company Phorm said last week that British Telecom’s preparation to deploy its Webwise tracking system has taken longer than expected due to work to ensure the system can handle a large number of users. Webwise examines the Web sites a person visits and keywords used in searches in order to deliver ads related to those topics. The system has raised concern over how that personal data is handled.

Two other U.K. Internet service providers, Virgin Media and Carphone Warehouse, are also planning trials of Phorm.

U.K government agencies have said that Phorm doesn’t violate data protection regulations as long as ISPs have a user’s consent before monitoring Web traffic. The European Commission has also queried the U.K. government for information on Phorm but has yet to take other action.

“We work with the regulatory authorities here very closely, and they have been very supportive of Phorm technology,” Phorm spokesman David Sawday said.

Phorm’s progress in the U.K. contrasts with the bumpy road encountered by a similar company, NebuAd, which has worked to market its behavioral ad delivery system in the U.S.

The CEO of NebuAd, Robert Dykes, resigned last week and joined Verifone Holdings, an electronic payments hardware and software developer, as senior vice-president. He remains listed as the founder and chairman of the company on its Web site. Dykes testified before a U.S. Senate committee in July, maintaining that NebuAd does not retain information that could later be used to identify individuals and their online activities.

NebuAd had deals with U.S. ISPs to deploy its system, but some of those ISP partners have pulled out. On Wednesday, NebuAd said it has suspended deploying the system pending a Congressional inquiry, according to the Washington Post. NebuAd’s London office could not immediately answer questions.

Phorm has been in discussions with U.S. ISPs but won’t reveal which ones. “The main focus at the moment is the U.K. and getting to the trial and deployment stage with the three ISP partners here,” said Justin Griffiths, who works for a public relations agency employed by Phorm.

The concern with targeting advertising systems is that the data collected could be publicly exposed and possibly linked back to a specific person, jeopardizing their privacy.

Phorm puts a cookie, or a small text file, on a user’s PC in order to see if they’ve opted into the system. Then, the system collects a person’s browsing history, search terms and keywords from Web pages. That data is use to assign categories of topics that a person may be interested in, such as digital cameras. That data is then discarded, Phorm has said.

The IP (Internet Protocol) address — which identifies a PC connected to the Internet and can be linked to a person’s account with an ISP — is not recorded.

Similarly, NebuAd collects browsing information in order to build profiles for advertising categories and other data is deleted, Dykes told the Senate Committee on July 9.

Advertisers who have signed up with Phorm can then buy ads related to those interests, knowing that only people who have expressed some interest or searched for certain terms will see those ads. It offers a much more precise way for advertisers to hit their target audience, while ISPs get a share of the ad revenue for using the system.

But frequent data breaches involving major companies have brought a sense of unease among privacy activists over the systems. Those groups in both the U.S. and U.K. have pushed for government intervention.

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