Online advertising has significant economic importance and a large proportion of online business models are underpinned by advertising revenue. Effective online advertising facilitates market entry for organisations in a wide variety of sectors. However, in undertaking such activity, a balance needs to be struck between commercial interests and a consumer’s right of privacy.
Phorm's proprietary technology uses anonymised internet service provider (ISP) data to target online users with tailored advertising. It works by sitting between the internet provider and the network to monitor what websites users visit and then matches keywords from the content of the page to an anonymous profile. The technology differs from other behavioural advertising systems which use data only from partner websites visited by users but which do not work in conjunction with ISPs.
The service has proved controversial for some campaigners who believe it breaks UK data interception laws. However, Phorm claims that its technology protects consumer privacy and states that it does not retain any personal information or details of browsing activity. Furthermore, it requires user consent and there is an opt-out available.
Nonetheless, the Open Rights Group has been urging major internet companies to opt out of Phorm. Various websites have rejected the technology including Amazon and more recently, Wikipedia.
More controversy followed where recent press reports documented alleged collusion between the Home Office and Phorm. The technology is under further scrutiny after a Freedom of Information request revealed that the Home Office apparently offered “informal guidance” to the company on the legality of its service. Collusion has been denied by both parties and Phorm has acknowledged that “it is for the courts to decide what is or is not legal, not the Home Office.”
Arguably, targeted advertising is critical for the future of the web, particularly for advertising dependent businesses who need to demonstrate the power and commercial value of more efficient, relevant adverts. In an attempt to do so, the Internet Advertising Bureau and a number of key players in online behavioural advertising have launched a set of Good Practice Principles which will come into effect on 4 September 2009. There are three core themes in the guidance: notice, user choice and education. The guidance has been signed by ten entities so far, including Phorm.
These Good Practice Principles are described as complementing UK data protection law and have the support of the Information Commissioner's Office. But will the Good Practice Principles be enough? There is likely to be concern that comprehensive protection against the problems associated with online behavioural advertising, still relies on pro-active and technically minded consumers who are aware of the steps to take, to decline such advertising. Tempting customers with incentives if they accept behavioural advertising are another challenge for privacy campaigners, recent suggestions, for example, customers may be given incentives to sign up, which could include reduced broadband connections or a donation to charity, may well prove tempting enough for some consumers to accept online marketing anyway.
To discuss how Berg Legal can assist you with these issues, please contact Luisa D’Alessandro at luisad@berg.co.uk. Alternatively you can call Luisa on 0161 833 9211