Phorm will fail – so do not worry about it

{{rtcode}}Phorm is a controversial online advertising system that has already annoyed the founder of the web, Sir Tim Berners-Lee. Today, the top web sites in the world have been urged to stop using Phorm since it is thought to invade privacy.

Advertising and privacyHere’s how it works: it monitors what web sites are being looked at on any particular computer. It then delivers advertising to match the kinds of topics that are being viewed. This is known as “behavioural advertising” and the marketing world is cock-a-hoop about it because they think it is the answer to their prayers.

For years, no-one has really known if advertising works. It’s all rather a “hunch” that it does. A company spends millions on TV adverts and sees its sales rise. The advertising industry connects the two sets of figures and says “hey look, the more you spend on your ads, the more sales you make”. But as any student of statistics will tell you, putting two sets of data together and claiming a direct relationship is most unwise. Advertisers, of course, know this but they worry that if they reduce their advertising, their competitors will steal market share. Hence, companies continue to advertise based on a statitistical quirk, a hunch and fear. Advertisers still use the 19th Century line “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

Advertising gurus would like us to think it is a science, but it is more art. Hence the reason why Phorm appeals so much to  the industry. It is based on “science” – tracking exact interests and feeding precise advertising to the online user. Add to that, you can analyse the impact of the behavioural advertising much more easily because you will be able to get data which shows that precisely targeted adverts lead to more sales, for instance.

Oh what a dream for the advertisers. Precise data – at last – and the ability to deliver an advert only to those people who will be really interested. Is it any wonder the advertising industry is full of glee about behavioural adverts, like those from Phorm?

Well, their happiness will be short-lived because they appear to have forgotten one thing, so focused are they on the technology. They’ve forgotten people – and what they actually do.



Imagine you are in a restaurant and you are chatting over a meal. Imagine that the person on the table next to you is listening to your every word and making notes of all the topics you talk about. Would you like that? Let’s assume you are annoyed, but try to ignore the eavesdropper. Your conversation then turns to the fact you are looking for a new, environmentally friendly car. The individual on the next table now jumps up, steps over to you and pushes a slip of paper in front of you with a picture of an environmentally friendly car in front of you with “special offer” typed on it.

You might ignore this interruption – but what if it continued throughout the meal, with slips of paper on every topic you spoke about? How annoyed would you be? Very. Well, that’s what behavioural advertising like Phorm does. Unlike the interruption of traditional web advertising, which you can easily ignore, it’s much more difficult to ignore behavioural advertising because it is there, right under your nose, waving away at you using words you are using and reading.  Consequently you know you are being watched. And most people hate that. Just as they hate the person on the restaurant table next to them listening in to their conversation.

In other words, people will rebel against behavioural advertising. Most traditional advertising is ignored – few people actually click on online adverts. Google, for instance, is able to make money from its AdWords programme, simply because of the vast numbers of people who frequent its web site. Most people never click on a sponsored link.

The argument from the advertising industry is that if the adverts are more narrowly focused on our precise interests, we will like them more and act on them more. But the reverse is true because we will become acutely aware that we are being watched and monitored. Even if Phorm cannot identify individuals by name and doesn’t store the data it uses to process the advertising, the fact is we will feel we are being watched.That will annoy us intensely and we will avoid using web sites that make us feel that way.

We have accepted traditional advertising because we know it’s not personal. But as more and more people feel they are being watched they will rebel against behavioural advertising – no matter how reassuring the companies may be on privacy.

The current campaign focusing on privacy is all well and good – and may achieve some success with some of the world’s biggest web sites. However, Phorm and the other behavioural advertising companies have failed to understand human behaviour at all. It will work against them because most people will avoid web sites that use behavioural advertising in a big way.

At the moment, it is all experimental with few targeted adverts. As the industry attempts to crank this up they may well find another statistical relationship – increased behavioural advertising linked to decreased sales.

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