On paper Phorm is a tremendous idea, and they have the potential to be the smartest form of targeting available to us marketers. As I have stated
previously, Phorm is also not evil in what it is trying to do! In fact, they store less data than a standard 3rd party ad server.
In essence what Phorm do is to sit inside your ISP and wait for certain events to happen that qualify that ISP customer as someone who a certain advert should be shown to. Before the likes of Phorm came about, no single Ad Network or Media Exchange had total sight of your online activities, Google can not see the searches you are performing on Yahoo! for instance, and Advertising.com can't follow all your banner impressions on the DoubleClick network. And whilst many networks now claim to have 90% audience reach, it will always be missing gaps.
But with Phorm I can build very specific targeting criteria based on all the data.
For instance, if I was promoting a hotel in San Francisco I might want to specify that searches for "hotel", "san francisco" and "bay area" took place, that the person has visited the local sports team site and that they have read dining out information for the area too. With such targeting knowledge I can then "buy" that person and place an ad that offers discounts during baseball weekends.
So what went wrong with Phorm that means before it has even served its first campaign it is being torn apart?
In short, it was positioning and marketing.
The value proposition for the ISP is great; for the first time they can take their slice of the advertising dollars flowing online by charging Phorm a fee to place their servers in their hosting environments.
And for Phorm it's simple too; they get to sell advertising campaigns to marketers at a premium because of their inherent knowledge of the consumer.
But what about the consumer? Now this technology has been brought to their attention, they want in on the action, they feel they deserve a slice of the pie because it's their data that Phorm is making money from.
Personally I come back to the argument that the consumer's reward is the content they consumer online, mostly free and therefore funded by the advertising associated with it. If advertiser's are going to make it more relevant by targeting with technology such as Phorm then great.
But different consumers have different attitudes to the reward model and therefore Phorm found itself in the situation of having to give back. How they chose to do this was sadly disappointing and I believe contributed to the problems they now face - the 'gift' was free software to protect the consumer online. An old and tired proposition, and one associated with spam and annoying banners saying your PC is infected!
Will Phorm get off the ground and be successful? I hope so, but it is going to take an ongoing charm offensive to the 'people' and a way to silence those of the privacy activists who are sending out factually incorrect information.
Phorm is launching in the UK first and they want to tie-in with BT, Virgin and Talk Talk and if they can accomplish this they have more than 80% of the UK ISP traffic flow. There were reports that Virgin had pulled out of this deal, but these turned out to be false and possibly another example of how Phorm is being smeared?
I do wonder whether Phorm's answer now is to create a free model with an ISP partner such as BT and fund that though it's advertising revenues. Doesn't everyone win then?
Previous posts on Phorm:
July 5th 2008
July 30th 2008
September 18th 2008
December 1st 2008
January 9th 2009
I wonder if the word stunt will become permanently associated with the name Virgin?
