Page last updated at 15:06 GMT, Friday, 2 May 2008 16:06 UK

Phorm boss talks targeted ads

By Spencer Kelly
Presenter, BBC Click

Phorm graphic
BT and Carphone Warehouse are expected to use Phorm's system
Imagine a system that tracks where people go on the web, and builds up a profile so it can serve up adverts based on what that person has seen. A system to do just that could be switched on in the UK this summer.

Spooked? Some people have been.

Phorm is the company behind the idea and it has had some pretty bad press of late. Some have questioned whether Phorm's "Webwise" ad-serving system is even legal in the UK.

But if it works in the UK it could go global. So is there anything to worry about?

Phorm says its system will not track "sensitive" sites like medical or adult content
Phorm says its aim is to deliver ads relevant to a web user. And it emphasises that the system never associates the pages someone sees with who they are.

So how does it do that?

The tracking software sits on hardware installed at your ISP, which allocates a web users PC a random number. The system then intercepts each web page request made by that person and looks on that page to see if any of the text match up with its ad categories.

So a "camera" category might be looking for relevant keywords when people surf. If it finds them, that category is associated with the random number a person was allocated.

Records of the actual pages visited are destroyed.

Phorm says its system will not track "sensitive" sites that show medical or adult content, and because no personal information or IP address is recorded anonymity is preserved.

So with several ad categories associated to a PC it is easy to match advertisers to surfers.

The profile for Click shows visits to car, camera, and holiday sites.

If a blog or newspaper site were visited that had also signed up with Phorm, ads based on the more product-orientated sites visited previously would be shown. These smaller sites get a cut of the ad revenue if they have signed up to the Phorm system.

Phorm have made clear that it wants its system to be rolled out on an "opt-out" basis, meaning customers would have to choose not to have the system running while they surfed the web.

BT and Carphone Warehouse have signed up to use Phorm.

BT is planning a trial soon which is expected to operate on an "opt-in" basis, in which customers will be asked if they want to be enrolled.

Carphone Warehouse has said stated it wishes to run the system also on an "opt-in" basis. Virgin Media is currently assessing the technology.

Web extended interview: Phorm's CEO, Kent Ertugrul and IT specialist and critic of Phorm, Alexander Hanff discuss the controversial targeted ads system

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