• GigaOm, Friday, March 28, 2008 12:01 PM

GigaOm's Stacey Higginbotham contends that the problem with Phorm, the advertising startup that has caused such a stir in the UK, isn't privacy violation, but rather the lack of value provided by its advertising system.

Phorm assigns a cookie to a Web browser and then serves ads based on that user's browsing history. It doesn't collect personally identifiable information, nor does it save the URLs of specific sites visited by users. Instead, its software collects baskets of keywords to build an advertising profile, which it uses to serve ads. To build that user's advertising profile, the system applies numbers correlating to certain categories and records the time of each visit. Ads for adult sites, medical conditions and other sensitive categories are not included in the system. In that regard, "Phorm's privacy infringements are less than the data aggregated by major search engines and easier to opt-out of," Higginbotham says.

"I don't really buy CEO Kent Ertugrul's argument that Phorm delivers better ads," she adds. Who's to say that a person is interested in viewing car ads, for example, while shopping online for shoes? Wrong ad, wrong frame of mind. However, for someone casually browsing PerezHilton.com, a shoe ad might actually catch their attention.

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