The massive market for online advertising is one that
affects every internet user. Many ISPs, search engines and websites
depend on advertising revenue for funding, and in the absence of
those funding sources would either have to pass on additional
operating costs to users or cease trading altogether,
writesToby Stevens.
The battle for control of internet advertising had, until
recently, been confined to a small number of rapidly consolidating
players, in particular
Microsoft and
Google. These well-established companies have built up their
offerings over many years and believed they controlled the market,
with little threat from new entrants.
But a new breed of online advertising company has appeared
recently. The likes of NebuAd and
Phorm are using
behavioural profiling mechanisms at ISPs coupled with
advertising space on participating websites to deliver targeted
advertising to each user. They claim users will see advertisements
that are more likely to be relevant to their browsing history, and
the ISPs and websites will receive increased revenue. Sounds good?
Not everyone thinks so.
Critics of Phorm allege that the service breaches the Regulation
of Investigatory Powers Act and is against the spirit of the Data
Protection Act. They are worried that, despite assurances to the
contrary, the technologies will be able to gather
personally identifiable information. They point out that
unencrypted webmail services or discussion forums, where users
might have a reasonable expectation of privacy, will be subject to
automated profiling. Critics are angry that some of the
participating ISPs intend to adopt an "opt out" approach to
implementation. And they are even more displeased that one of the
ISPs has trialled the technology without informing end-users that
their browsing habits were subject to scrutiny.
Phorm's approach has shaken the existing providers, who
recognise a threat to their market share and are not going to do
anything to ease Phorm's entry into the market. And it's a big
market - one estimate is £20bn a year - for which Phorm is fighting
with a "nothing to lose" attitude that is much in the spirit of the
original dotcoms.
If Phorm is going to succeed in its ambitions, it will obviously
have to successfully argue the legality of its plans to prove they
are legitimate. It will have to gather and maintain the support of
its partners, who will, between them, need to win over the hearts
and minds of their user base. The service launch must be flawless,
fast and effective, and once in place, Phorm must dig in and
establish its new approach as the status quo.
Parallels with the so-called war on terror are obvious and, like
that war, only history can judge whether this is the dawn of a new
age of freedom for the internet or a fatally flawed attack by
capitalism on our shared online values.