BT Targets Advertising Breakthrough

BT Group plc (NYSE: BT; London: BTA) looks set to introduce technology that enables targeted online advertising, following a successful trial, dubbed "BT Webwise," with specialist vendor Phorm Inc.

During the trial, which finished on December 10, adverts that appeared on certain Websites were delivered according to how relevant they were to the broadband users participating in the trial. See the BT Webwise site for more details.

Now Phorm, which is "specialising in delivering behaviourally and contextually targeted advertising while preserving users' personal privacy and security," says the trial "achieved its primary objective of testing all the elements necessary for a larger deployment, including the serving of small volumes of targeted advertising."

The company statement, possibly prepared by a robot, continued: "Following the successful completion of analysis, both of the trial results and of any changes required for expansion, BT has informed the Company that it expects to move towards deployment."

That news, released Monday, bumped up Phorm's share price by 82.5 pence, more than 41 percent, to 282.5 pence on London's Alternative Investment Market (AIM). The stock rose another 10 pence, or 3.5 percent, Tuesday morning to 292.5 pence.

Of course that uptick does little to match the massive fall in value Phorm's investors have seen in the company's shares this year. In late February the stock was trading at 3,505 pence but began its descent in early March when it was revealed that BT had undertaken secret trials, using Phorm's technology, without telling the broadband users involved. (See this Guardian feature for details and background.)

That in turn raised questions about the privacy and security aspects of Phorm's technology. (See The Phorm Storm: More Clouds Ahead or a Change to Sunny Weather?)

But despite assurances from Phorm that its technology could be used without impinging on end user privacy, and confirmation that the specialist's technology was also being put through its paces by cable operator Virgin Media Inc. (Nasdaq: VMED) and alternative broadband player Carphone Warehouse Group plc (London: CPW), Phorm's valuation continued to dip, dropping more than 90 percent between February and December. [Ed. note: Oh, and there's a huge recession going on. But anyway... ]

Phorm is playing in an active and potentially lucrative market as telecom and cable operators seek ways to boost revenues from their Web-based, streaming TV, and video-on-demand services, and some consumers (though not all) become used to the idea of multimedia personalization. (See Cable Advances on Advanced Ads, IBM Reports on Ad Trends, Targeted Advertising, Basil Alwan, and The Ad Question.)

But the specialist vendor faces significant competition, as the likes of Alcatel-Lucent (NYSE: ALU), BigBand Networks Inc. (Nasdaq: BBND), Ericsson AB (Nasdaq: ERIC), Microsoft Corp. (Nasdaq: MSFT), Packet Vision Ltd. , RGB Networks Inc. , Sotal Ltd. , and others, are all active in this space. (See BigBand Teams With Verimatrix, BigBand, Widevine Integrate, AlcaLu Updates IPTV Platform, IBC: Microsoft Adds Ads to IPTV, Sotal Targets IPTV Advertising, RGB Shows Off, and Packet Vision Ltd..)

— Ray Le Maistre, International News Editor, Light Reading