Word came recently of the apparent death of Phorm, a UK-based consortium of ISPs seeking to deliver over their networks behavioral targeted — or BT — advertising.  In a mild bit of irony, reports of the death of BT came in the form of an announcement by BT — British Telecom.  Last week, the giant telco backed out of its intention to launch the technology.

Phorm is following not so much function but NebuAd, another company seeking to offer BT to networks.  NebuAd closed its doors it May.  The move came after Congress began an inquiry into the technology, spurred on by consumer advocates who successfully argued that the technology was being rolled out without consumer consent and in violation of their privacy.

The Center for Democracy and Technology told Congress: “In recent years, however, massive growth in data processing power has spurred the development of new ‘deep packet inspection’ (DPI) technologies thatpotentially allow Internet service providers (ISPs) and other intermediaries to analyze all of the Internet traffic of millions of users simultaneously. The use of DPI technology, though still in somewhat limited deployment, raises profound questions about the future of privacy, openness, and innovation online.”

That specter, not any measureable reality, became the tsunami that overwhelmed NebuAd and Phorm.

What could they have done?  And, in light of the investment media and other companies are making, spending as much as $22 million per year,  to address privacy concerns (read: liability), how can you prevent what ought to be a competitive edge — that commitment to privacy — from turning into a market problem?

One answer may be in the fact that BT and other intrusive technologies are seen only as being to the advantage of the advertiser.  Strategically, companies instead need to create and communicate value for consumers.  Tactically, this might be a rebate, a lower cost of service, more control or advertising that is so relevant, it becomes content.

Ad Age’s Bob Garfield said in his 2007 market-changing Chaos Scenario 2.0, “people don’t like ads, but they crave content.”  While BT is one way to deliver more relevant advertising, without engaging consumers in the Phormula (bad pun, I know) such technologies, and the companies who deploy them, may get no further than Capitol Hill or Brussels or wherever legislators act on behalf of their constituents.

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