Phorm Incentives Could Entice Users to Allow Targeting

Behavioral ad targeting company Phorm continued to address concerns surrounding the privacy implications of its technology at a “town hall” event it hosted in London Tuesday. The company stressed its potential as an important future revenue stream for ailing media firms, and indicated the firm is considering offering incentives to users to opt-in to its ISP-based behavioral tracking.

“We’re particularly excited about where we can go with persuading users to adopt the service,” said CEO Kent Ertugrul during the event.

A panel of Phorm execs along with former Chancellor Lord Lamont, and Kip Meek, chairman of the Broadband Stakeholder’s Group, fielded questions from a substantial audience, made up of privacy advocates, journalists, technologists and ad agency execs.

Since it announced agreements with three of the U.K.’s largest ISPs in March of 2008, the firm has held a series of events and open discussions intended to address questions and consumer concerns surrounding their technology.

Ertugrul confirmed that the firm is looking at ways to convince users to opt-in to receiving its targeted ads. Incentives could include financial incentives or charity donations, he said.

When asked how much ISPs could expect to be paid for their relationships with Phorm, Sarah Simon, the firm’s recently appointed financial and strategic development officer, echoed analyst assumptions that suggest Internet service providers could receive a 50 to 70 percent cut of profits after media owners have been paid.

Ertugrul seemed to suggest that Phorm was being labeled a scapegoat for wider privacy issues in the online space. “Major search engines store everything: IP addresses, click stream data. Most people browsing the Web have no idea that any of their information is being stored, but we give them clear and explicit choice. We answer these questions day-in, day-out, more than anyone else in the online ad industry,” he said.

Both Ertugrul and Mike Moore, Phorm’s global commercial director, argued that the technology could help fund the struggling traditional media sector. “The press is under pressure. The news we’re hearing is frightening. Local and national newspapers are disappearing. Where is the money going to come from to fund this media?” Moore asked. He argued that the increased revenue Phorm’s platform would attract from advertisers, thanks to its targeting capabilities, could help fill funding gaps for media firms.

Last month, the firm announced a full trial of its targeting technology with Korean ISP Korea Telecom, which may result in full deployment, according to Ertugrul. The panel was unable to give any information regarding a U.K. launch, although Ertugrul previously stated that he expects partner British Telecom to go ahead with a roll out of the technology by the end of the year.