BT, Carphone And Virgin Media Agree Ad Exchange
A London-listed company offering targeted online advertising has signed up three of Britain’s biggest internet providers (ISPs)…
London — Three of the UK’s biggest Internet Service Providers (ISPs) have signed up to grab a share of the booming online advertising market through a new deal that allows them to help serve targeted adverts to their customers.
BT, Virgin Media and Carphone Warehouse’s TalkTalk have signed exclusive deals with advertising technology company Phorm to use its Open Internet Exchange (OIX) service that connects advertisers, Web sites and the ISPs to produce more targeted advertising based on a user’s anonymous browsing trends.
“Phorm, which listed on Aim in 2004, has launched the Open Internet Exchange (OIX), which analyses page visits to build an anonymous user profile.”
OIX monitors every website that a customer visits and sends this data back to a central advertising hub. It then advertises products and services tailored to that profile through publishing websites.
It gives internet service providers a new revenue stream from their subscriber base and, by offering targeted advertising, ISPs and publishers can charge up to 100 times as much as traditional advertising that is based on content.
Phorm believes advertisers will be willing to pay more to place ads on Web sites signed up to the Open Internet Exchange (OIX) marketplace, because the adverts will be more relevant to the user based on their previous searching habits.
But the system will only remember the subjects a user has examined, and link that to a user profile, meaning the actual user and their Internet number remain anonymous.
Phorm is already working with ad agencies and partner websites, including the Financial Times, the Guardian, MySpace and Universal McCann, to define their OIX target audience by setting up a channel based around relevant keywords or specialist sites.
“Relevant ads are then served up to users, replacing more generic display advertising.”
Kent Ertugrul, chairman and chief executive of Phorm, said: “Less than 10pc of internet pages are monetized from an advertising perspective. Showing ads based on who is looking at a page rather than the content will expand advertising to the long tail of pages beneath the home page.”
Internet advertising has grown strongly in recent years and a report by media buying firm ZenithOptimedia in December predicted spending on the Internet would grow 69 percent over the next three years.
It expects the Internet to take an 11.5 percent share of all adspend by 2010, overtaking magazine advertising to become the third-largest medium behind television and newspapers.
“The fact is that in fashion, car or computing magazines people seek out the advertising because it is relevant, and the value of targeted advertising is well established. People seek it out and enjoy it.”
“Phorm and the ISPs will share the incremental revenue created by the new process.”
Ertugrul, said privacy and security had been a priority for the service, which has been in development for six years.
“An OIX feature called ‘WebWise’ will be offered for free to customers as part of the service.”
WebWise flashes a warning on screen when users try to access a site that has been blacklisted for so-called “phishing scams” – where fraudsters posing as banks try to trick web users into giving away their password details.
“Market research by these ISPs has found that consumers find two things really irritating online; the first is irrelevant advertising and the second is fraud,” Ertugrul added.
Analysts at Investec said: “For BT and TalkTalk, this announcement offers the exciting prospect of monetizing their subscriber bases. Currently, BT fails to capture any significant amount of online advertising revenue, while Carphone only monetizes some content revenues through its AOL acquisition.”
Phorm said it was unable to give revenue projections for the new service. But analysts estimated that ISPs could earn as much as an additional £360m by next year.
“This benefits advertisers, publishers and consumers alike and introduces a completely new level of effectiveness in online advertising,” Phorm said in a statement.
Ertugrul said Phorm is talking to all the UK’s ISPs and has also initiated talks in the other countries, including in the US, about OIX.