Phorm factor

Reading Time: 4 minutes

David Sawday invited me to get answers to my questions about Phorm on Friday night and meet Kent Ertegrul the CEO. Their office is on Regent Street, with the entrance just off Regent Street.

It has your usual start-up feel with a Mac laptops and screens occupying desks and otherwise spartan of office furniture. Where it did differ was in the light airy feel because of the buildings high ceilings.

The room where the rest of the marketing were included another former Yahoo and a famous crisis management consultant busily prepping to shoot a web video and tracking down and posting comments on blogs regarding the privacy concerns raised with Phorm’s in-network appliances.

You can read about Phorm’s discussions with some of their main critics. I deliberately avoided questions on privacy because people like Charles Arthur and the guys at El Reg had already covered that ground well.  Instead, as you can see from the notes that I made from my discussion with David and Kent centred around some of the thoughts and questions that I made in an earlier blogpost:

Social media corp. comms 101 – if you are likely to have a crisis and have contingency planned for it (like having Ernst & Young reports on tap), then you should be really blogging well before you are knee-deep in the media merde, not starting when the coverage hits the fan ;-)

There was a wry smile and they acknowledged that I was right.

 A professional services organisation like Ernst & Young is no guarantee of respectability: McKinsey did management consultancy at Enron and Arthur Andersen was an immensely respectable organisation who fell in flames when Enron imploded. Other accountancy firms like Grant Thornton had been associated with scandals such as Parmalat. Phorm would have been better off letting hackers and crypto fanatics loose on the system.

Apparently Phorm had engaged with hackers and crypto fanatics to test their offering, it just hadn’t made it into the communications mix up till now, though it would have been an ideal way to engage with some of their badvocates.  Kent didn’t have the details, apparently Marc Burgess was the best person to talk in more depth about this.

Webwise – what browsers will be supported and how good is this service compared to the anti-phishing solutions offered for free to consumers by the likes of MSN and Yahoo!?

The primary advantage of Webwise seems to be in ease-of-use of their anti-phishing tool. Since it resides in the network, it is browser and OS agnostic and Granny doesn’t have to worry about downloading a toolbar. Kind of like fluoride in the water to improve everyone’s dental hygiene with no effort

How relevant to the consumer will the adverts be, how will Phorm have a better understanding of customer intent than say Google or Yahoo! to provide fewer, but more relevant adverts?

Phorm goes for behaviourial fit (or user intent in search speak) rather than relevance to the surrounding content on the page. On the flipside it means that there isn’t a ‘race to the bottom’ in content terms as content providers work to make their pages Google friendly. Tabloid newspapers can keep their punning headlines and writers create content dripping with sarcasm and irony for their human readers.

Rather than a master algorithim deciding on how the behavioural adverts are vended, Phorm allows advertisers to define rules through its ‘Channel Marketplace’ interface. The clever bit is that individuals can create rules that advertisers can licence and pay for on a per-click basis – a kind of crowdsourcing model. This means that the higher-per-click areas (like mortgages) can attract sophisticated rules to maximise the benefit to the advertisers.

It wasn’t clear to me whether the process of building these rules will allow for the kind of complex behavioural economics approaches that people like Amazon and Netflix are currently looking into. Because of the current privacy furore Phorm hasn’t been able to go out there and publicise the Channel Marketplace. Expect interesting things.

IF Phorm’s technology works as promised will this create a surplus of ad inventory driving the price of online advertising artificially lower?

In other comments during the meeting Kent mentioned that less ads would need to be served, however he felt his model would grow the overall market for display advertising because of its increased effectiveness. Consumers would be more inclined to click on the ads because they would move from being adverts to highly pertinent funded information. An economic virtuous cycle, in the same way that Google grew the market for search keywords in the early noughties.

Consumer search terms on Google or another search engine – who really owns that data? What are the legal and ethical issues about one advertising platform eavesdropping on the customer interaction with an advertising rival like that? Could this considered to be industrial espionage?

The model I had in mind for this question was the rights that the likes of Tesco would assert over their store layouts and the way goods are presented to customers. I felt that this was particularly pertinent because Phorm looking at this page would be ‘standing on the shoulders of giants’ and get a relevance lift-up to vend ‘behaviourly right’ advertisements. Kent’s viewpoint was the consumer owned the data, they owned their interaction with the the search site. Consequently Phorm is free to access the data so long as the user wants to opt-in to receiving their advertisements.

Some additional links:

The Register – an interview with Phorm focusing on privacy

The Guardian – Charles Arthur writes about Phorm here and here

BBC Online – Darren Waters talks about the privacy aspect of Phorm’s offering