Behavioural targeting gets caught in snipers’ crosswires

Will the Phorm-inspired Euro Commission case ruin behavioural targeting for everyone else?

Stuart%20SmithEvery now and again, the marketing business commits a major blunder in one of its key areas of competence: public relations. We are in the midst of one right now with the signal mishandling of behavioural advertising, more often known as behavioural targeting or BT for short.

At its simplest, BT is an online tracking service which, mostly via cookies, enables advertisers to build up a comprehensive picture of web-users’ behaviour and then mould premium-rated advertising around it. At a time when brand-owners are becoming disillusioned with conventional internet advertising, this technology promises to be a real breakthrough – coming close to the one-to-one relationship with consumers that marketers have craved from time immemorial.

“No doubt about it,” Richard Eyre, chairman of the Internet Advertising Bureau, said recently, “BT is the way of the future for advertising.”

And what’s wrong with that, you might ask? No one, after all, needs constant bombardment by ads they don’t want to see. Isn’t that precisely the criticism constantly levelled at so-called “junk mail” by a mail-shot weary public?Unfortunately BT, so admirable in principle, has fallen short of what might be expected of it in practice. And no more so than in the conduct of Phorm, a small AIM-listed company which has precipitated a mighty row with big implications for the future of BT technology. Single-handedly, it has got the European Commission to launch legal proceedings against the UK government over alleged breaches of data protection; so potentially spoiling the party for anyone else interested in exploiting BT under Ofcom’s current regime of benign regulatory neglect.

Let me say at once that I have some sympathy with Kent Ertugrul, Phorm’s chief executive, who has seen his company demonised as the Damian McBride of information technology. Phorm is, to listen to some accounts, the unacceptable face of snooper culture; the harbinger of a dystopia where what people privately get up to on the internet is open to routine monitoring and abuse, initially by unscrupulous marketers and subsequently by – who knows? – state bureaucrats and secret policemen.

In fact, Phorm is an unlikely villain. It is a minnow in the ocean of BT, whose patented technology, Webwise, has never got further than the test-bed. True, the other BT (British Telecom, the UK’s largest ISP) has helped it out, and Virgin Media and Carphone Warehouse’s TalkTalk are (or were) also interested. But to succeed, it needs wide-scale acceptance by major dotcom brands such as Google, Facebook, Bebo, Yahoo! and Amazon. Without their co-operation Webwise cannot glean the vital profile data which, after internet service providers have taken a cut, would be shaped and passed on to advertisers at a healthy profit.

This co-operation was always in doubt, because the likes of Google and Amazon have themselves developed site-specific BT, which could at some point have come into conflict with the industry-wide technology of Phorm. Like fair-weather friends, the dotcoms went along with the negotiations because there was an outside chance that Webwise might become the industry-standard (and who would wish to be left out of that?). So, in one way, the privacy hullabaloo culminating in intervention by Brussels is a welcome excuse, allowing them to retreat behind a self-interested smokescreen of public concern. But the relief will be short-lived.

The irony about Phorm technology is that it is less of a threat to privacy than many of its critics suppose, and certainly less of a threat in principle than the BT technology being used by some of the dotcoms. It does not store a user’s IP address or log the clickstream (history of pages visited), which is more than can be said for Amazon, Yahoo! or Google.

Its executives have also been reasonably enlightened about the need to enlist public support. They have been looking at a package of incentives whereby participating ISPs could bonus broadband users for their co-operation with better deals and charitable donations.

Their mistake, with capital consequences for everyone else involved in BT, was the underhand – and illegal – way in which they carried out their first trial programme (through British Telecom) without telling anyone they were being “wire-tapped”. This was the thin end of a wedge that has thickened into Brussels involvement.

It is a classic industry blunder, reminiscent of Tesco’s radio-frequency identity (RFID) tagging experiment five years ago. RFID is a technology which offers obvious inventory benefits to brands, retailers and consumers alike. But – just as with BT – it raises privacy issues, which were unsubtly highlighted when Tesco used tags to trigger a camera that photographed customers in the act of buying razors. Result: the cause of RFID has never really recovered (MW September 18, 2003).

Where the present European Union court proceedings will end is anyone’s guess, but it is reasonable to assume that BT’s tacit allies, such as communications minister Lord Carter and Ofcom chief executive Ed Richards, will have less room to manoeuvre in the light of a European Union court ruling.

It’s worth recalling Richards’ words at the recent ISBA conference. He said he supported BT as long as it was “transparent” and created genuine value for consumers. As an example of this “value”, he suggested that revenues raised from BT might help to fund a new generation of high-speed networks. Not a bad idea really, given the lack of alternative funds for infrastuctural investment at the moment.

But that was pre-Brussels. Richards is likely to be more cautious now; and so is everyone else with an interest in promoting BT. I note, for example, Carter’s mea culpa for failing to show due deference to privacy issues (, April 17).


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