There’s been quite a bit of excitement on The Register and Thinkbroadband about the recent announcment by a company called Phorm that they’ve signed up BT, Virginmedia and Carphonewarehouse/TalkTalk for contextual advertising.

What is contextual advertising? It’s like Google Adwords on steroids! Instead of targetting ads based on the content of the page that’s being displayed, the ad is targetting at you directly, based on where you’ve been and what you’ve been searching for recently on the web.

The money that’s in contectual advertising is huge. Instead of 2c or 3c per click, advertisers are willing to pay $1 or $2 per click. It’s amazing. To get something like Phorm to work though you need two things to be in place. Firstly you need a relationship with one of the major ad brokers on the Internet – someone like DoubleClick – so that your ads will appear on existing websites as you don’t want to go out and persuade people to switch to Phorm for advertising. So Phorm are working hand in hand with existing advertisers who can query Phorm’s site to find out how much Phorm are willing to bid to place a single ad. So now if you’ve been looking for a new car, you’re likely to get car ads on a site that has zero car content.

Secondly you need to monitor traffic to identify people’s habits so you need to stick probes in the ISP’s networks. The only way that you’re going to make that happen is to promise to share revenue with the ISPs. This is a brand new, hugely lucrative, revenue streams for the ISPs who feel abused by the likes of MySpace, Google, Facebook, YouTube and even the BBC using the ISP’s networks as free content delivery networks, making loads of cash at the expense of the ISP’s bandwidth charges.

And now, the question of privacy.. It’s possible to work out where someone’s been if you’re Double Click or Google – they have so many people signed up with their advertising programmes that they could reverse engineering your partial browsing history if they so choose (and maybe they already are!!). The Phorm solution may take this one step further because, if they coded the solution in the right way, they could resurrect your entire browsing history. You’re going to have to trust them to anonomise the data.

Have a look at this link (after remembering that these guys are trying to shoot Phorm down!):


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