• by Laurie Sullivan , Staff Writer @lauriesullivan, July 8, 2009

By now you have likely heard that U.K. Internet service provider British Telecom Group has pulled out of its agreement to deploy Phorm's behavioral targeting platform Webwise. The decision follows a similar path to the witch hunt spearheaded by the Recording Industry Association of America (RIAA) to protect the music industry from college students infringing on copyrights. Ironically, both scenarios lead to the computer's IP address. Let me explain.

Advertising executives in the United States I spoke with, who asked for anonymity, confirmed that The British Telecom Group's decision would not detour any decision toward adoption of behavioral targeting.

Behavioral targeting advocates claim the IP address can't identify the person behind the computer. Advertisers just want to know that the person behind the IP address has looked at two Lexus ads and read an article in Consumer Reports about the 430's features. They don't care about the consumer's social security number, bank account number, and they really don't care to know the consumer's name. (Well, maybe they would want to know the name to send targeted advertisements through snail mail.)

Rather than the personally identifiable information, what advertisers really want to know is the consumer's intent and interest in making the purchase, how long until they are ready to plunk down the cash, and what it will take to get them to commit.

Two years ago a computer security expert testified during a RIAA copyright hearing that many computers can connect to the Internet with the identical IP address as long as they remain behind control points such as routers and firewalls, which made it difficult to confirm any one person of copyright infringement.

Recently, U.S. District Court Judge Richard Jones agreed with the security expert. In a Seattle federal court decision on the issue that has fueled debate about online privacy for years, Jones ruled that "in order for 'personally identifiable information' to be personally identifiable, it must identify a person. An IP address identifies a computer."

The Seattle ruling came a little too late for NebuAd. It was only last year that a behavioral targeting project caused the demise of the U.S.-based company. It was driven out of business after Congressman Ed Markey made ISPs reveal they were testing the targeting service.

Until now, privacy concerns in the United Kingdom have not had the same effect. British Telecom's tests with Phorm prompted privacy complaints and an investigation by the European Union. Some believe the massive drop in stock price, about 43%, played a role in the decision, too.

Raleigh Harbour, vice president of business development at Rubicon Project, Los Angeles, says the behavioral targeting project could have been perceived as creating a line that companies like British Telecom don't want to cross. "It's a big enough question mark where no one wants to come close to crossing or going over the line," he says.

But British Telecom's decision doesn't appear to signal a pull-back in behavioral targeting. Clearly, there is a growing market backed by a full set of industry principles that no one wants to violate. Stepping over the line and collecting personal identifiable data would only mean negative consequences for the advertising industry in the long term.

Those IP addresses constituted as non-personally identifiable information help to tell advertisers the exact ads to serve up, making online marketing exciting. No one company wants to jeopardize that future. The fact British Telecom dropped Webwise shouldn't slow adoption, Harbour says. It just might change the way companies think about the future.