• by Steve Smith , Staff Writer @popeyesm, January 11, 2008

You can't get much closer to the full depth and breadth of users' behavior than tracking their clickstream and activity from the time they get online. This is what ISP-level behavioral tracking can offer service providers as a way to monetize their otherwise "dumb pipe" and to ad networks as another way to target campaigns more accurately. After years of watching the approach succeed in Asian and European markets, U.S. service providers are only beginning to consider implementing it here. Front Porch, works extensively in Asia and helps monetize the largest free ISP in Europe, FreeHotspot.com. Derek Maxson, Front Porch's CTO, explains the technology and model.

Behavioral Insider: How are the methods of data collection and the types of data gathered different from the BT networks we are most familiar with?

Maxson: We look at the Web sites that people go to and the searches they perform. We can attribute them to anonymous profiles and take action on those with one or more ad networks.

BI: What inventory are you using for the ads? Where are people encountering the ads coming off this tracking?

Maxson: We partner with multiple ad networks. We work with them to optimize the ads they serve.

BI: What is your reach in the U.S.?

Maxson: This is really new in the U.S. In 2001, when the dotcom bubble burst, Front Porch found a willing and open market in Asia and did a lot of business there in those years. We have about five service providers in the U.S., as well as some wireless networks and services we provide for municipal wireless and hotels and airports. It is just getting a significant reach in the U.S. I don't think that anyone in that space has developed enough inventory in North America to rival the reach of ad networks today. The largest cable company ISPs and telco ISPs in the U.S. will want to see how this works itself out over the next six months to a year. They are concerned with legal issues, privacy issues that they need to come to grips with. They need to become comfortable with it. That will occur as they see other ISPs of less size see this produce significant revenue.

BI: Arguably,8 you are coming into a market with a fairly evolved BT eco-system of networks with significant reach. Where does your business and technology fit into or compete with this environment?

Maxson: One of the decisions we made strategically is to work with advertising networks and BT networks, not in competition with them. We've had discussions with some of the parties and we are working with them because they see the robust value in the data that we have and the profiles that we are producing and see them as complementary. So Front Porch is not an ad network as such, but we can play a key role with service providers and with advertising networks to create opportunities for higher value advertising to be shown.

BI: What are the areas specifically where you technology adds to or improves on the data BT networks already gather?

Maxson: It is primarily the complete context of their Web surfing. In a traditional sense BT networks have a limited view because they are only able to look at the behaviors generated from their partner Web sites and partner ad networks. Whereas being out at what we call the edge of the network gives us the ability to see the full story of context for each individual subscriber's behavior.

BI: How many segments do you track?

Maxson: We don't really track by segments. We use more of a contextual analysi,s and I would say it is more akin to keyword advertising than it is to traditional channel-based banner advertising.

BI: How does that work within an ad network?

Maxson: It's more that we match the keywords and behaviors that we see into channels that they have. Ad networks are increasingly wanting to move beyond the traditional channel model that they have done for so many years successfully by being able to micro-target into elements of a channel so they can support their advertisers' desire to direct ads to the most likely buyers of their products.

BI: Your model introduces another revenue sharer, the ISP. How much of the pie do service providers expect from providing this data?

Maxson: The ISP expects to receive a financial benefit that is significant from the lift that is created by their data. Generally speaking it is a revenue share of the lift that is generated vs. what advertisement previously would have been shown there. If it had been a run of network type of ad that has minimal targeting and it is able to be lifted to something much better, then the revenue share is on the lift.

BI: On the issue of privacy, is there user notification and opportunities for opting out?

Maxson: The ISP can send a notification over the Internet to their subscribers indicating the services available. They can opt out of that. We hope that by the second quarter of this year we will have the ability for our end users to view the profile so they can edit it and decide if this is helpful, can add to it and they can opt out as well. Opt-out already exists.

BI: You mentioned anonymity -- but one worry with this approach would be the ISP's ability to tie online behaviors to a deep well of offline information.

Maxson: The BT solution we have put together works primarily with the advertising networks rather than with the ISP's solutions. So advertising networks have built into their capability anonymous identifiers usually stored in cookies. Our solution is built around the same type of methodology so there is not a master database. Front Porch doesn't store data for any period of time. There is way too much data to store even for small ISPs. So as the information is produced on the network, it is evaluated, and indicators of behaviors that match advertiser interest are briefly stored and communicated with advertising partners and then discarded. So there is no ability to reconstruct lots of elements of people's history.

BI: So you are not building dense personal profiles that could be targeted against over time?

Maxson: Correct. Most advertising data that is relevant is relevant in the now or in the soon. And it's not really needing to know what people do over weeks and months. It is based on buying decisions that are happening very soon -- and that is the type of behavior that appears to us advertisers are really interested in.

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