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Phorm takes a bullet for the advertising industry

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Internet Security Threat Report 2014

The unlikely image of Phorm boss Kent Ertugrul as some kind of John the Baptist of behavioural targeting was conjured yesterday as advertising industry leaders pondered the future of online advertising.

"I think from a media owner perspective it was good that Phorm drew the sting for everybody else," Microsoft Advertising sales director Chris Maples told the audience at the International Advertising Association's Digital Download in London.

Phorm, the general consensus seemed to be, had "taken a bullet for the rest of the industry," but the quest for more relevant - and hence more lucrative - advertising on the Internet continues. This may turn out to be an overly optimistic analysis, however, because although Phorm has provided a textbook example of what not to do, it's still pretty easy for everybody else to catch stray bullets. In the next few weeks the US House of Representatives will be considering legislation on the subject, and a team from Brussels is due in Washington this month to coordinate regulatory measures.

Meanwhile in a speech earlier this week, EU Commissioner Viviane Reding cited behavioural advertising as one of three major privacy concerns, the others being social networking - where she threatened to act if Facebook et al did not, at minimum, make the profiles of minors private by default - and RFID (aka the Internet of Things).

David Wood, legal counsel for Brussels lobbyist ICOMP and one of several attendees who had also been present for Reding's speech, reported that there was currently a "huge interest" in behavioural targeting in Brussels, and that Reding had been "devastating in her critique of Phorm." The Commission, he said, is not yet entirely up to speed as regards online advertising, having only started to look at it in the the last two or three years. But Wood says he has seen tangible changes in the atmosphere over the last 18 months, and that Europe now has the building blocks to begin dealing with the issues.

In Reding's speech, Phorm certainly continued to wear the bullseye. "European privacy rules are crystal clear," she said, "a person's information can only be used with their prior consent... The Commission is closely monitoring the use of behavioural advertising to ensure respect for our privacy rights. I will not shy away away from taking action where an EU country falls short of this duty. A first example is the infringement action the Commission has taken with regard to the United Kingdom in the Phorm case."

Insofar as Phorm and the UK government continue to draw fire over specific infringements, Phorm could certainly be seen as 'taking one for the industry', but an obvious consequence of the episode is that it's not just Phorm that now has trouble getting arrested. The fallout leaves a widespread view of behavioural advertising as sinister and invasive.

So in the one corner you have Microsoft's Chris Maples making the pitch for the convenience of relevant advertising via the eminently sensible point that if you advertise in Vogue, or in a football magazine, you expect to reach a specific kind of reader and the specific kind of reader expects to see a specific kind of ad. That's the pitch the industry has to sell Brussels and the US legislature, and it's one that is, up to a point, reasonable (but the reasonableness breaks down as and when you start getting tagged as 'football mag reader' wherever you go).

In the other corner, meanwhile, you have the recent survey by the Universities of California and Pennsylvania which found that most Americans don't want tailored advertising and object to being tracked. It's going to be a tough sell to both the legislators and the users. ®

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