Imagine logging on to the Internet one day, only to be greeted by a handful of advertisements that cater precisely to the type of clothes you wear, music you listen to, country you live in, hobbies you enjoy, maybe even to the age and sex of your children.

A string of new partnerships between Phorm, a London-based digital technology company and advertisement broker, and three British Internet Service Providers (ISPs) – BT, Carphone Warehouse and Virgin Media – means that this type of scenario is closer than we think.

The three ISPs have given Phorm full access to their customer’s browsing history, which means the company can now track the web browsing habits of 2/3 of the Internet users in the UK, collecting priceless information on their tastes and consumer interests. Phorm then matches this information with selected advertising ‘channels’, such as travel, food, or luxury automobiles, for example, to serve advertising that has a higher chance of being relevant to users.

Phorm: “We don’t know who you are nor where you have been”

Although this new technology has spurred controversy, Phorm denies that it is merely a new type of spyware. “Our technology offers a new level of accuracy while improving user privacy. Unlike other advertising services which ‘store and retrieve’ data (i.e. Google Ads), the Phorm system has been designed so that no personally identifiable information or browsing histories are stored” says Kent Ertgrul, Phorm’s CEO. Or, as the smiling lady in the group’s video press release puts it, the company “never knows who you are nor where you have been”.

But for Gifford Morley Fletcher, a London-based web-marketing consultant, the partnerships still violate Internet user’s privacy. “Phorm’s partner ISPs never asked their customers for permission to provide information on their browsing habits, anonymous or not” he says. “You may suddenly find you are being served specific forms of advertising without having asked for it. Also, because the technology is opt-out instead of opt-in, you may never be aware that you are being served targeted advertising, nor who to contact if you’d rather not be”.

“As long as web marketing improves user’s online experience, it’s accepted”

Other technologies that track user’s online browsing have been around for a while, but some go by all but unnoticed while others raise waves of indignation. “It is generally accepted that data collecting can contribute to improving users experience, by helping them find the information or the product they are searching for as quickly as possible. Most of it is entirely harmless – as long as it remains anonymous” says Fletcher.

One widely accepted web-marketing tool is the internet cookie, a very small text file that web servers can put on a computer’s hard disk. Cookies allow websites to store information on a user’s machine – generally a user ID – and later retrieve it. Thanks to cookies, sites can recognise users who visit them more than once, and adapt their content accordingly. On the online order site Amazon.com for instance, they allow users to post reviews of the products they purchased – one of the key factors of the site’s increasingly huge popularity.

“I find the way Amazon uses internet cookies fascinating. There’s something a little surreal about returning to the site months after a previous visit and seeing your preferences all set for you” sais Aurelien Scalbert, a Parisian journalist and regular Amazon customer. Like most web users, Scalbert accepts the most cookies, deleting them “only if he starts being annoyed by spam mail or pop-ups from the site”.

“Facebook’s Beacon went too far”

Some web-marketing tools, on the other hand, have triggered widespread anger and distrust among users. In December 2007, the website Facebook was forced to withdraw and modify its new advertising tool, Beacon, which offered clients to “create a natural word-of-mouth buzz” for their businesses on the Facebook network. The idea was simple: when a Facebook user purchased something on one of Beacon Ads client websites, a “story” was automatically posted on his profile and news-feed, potentially revealing the purchase to his entire network of friends.

“It was pretty obvious that users would massively reject this type of tool, and that’s exactly what happened.” says Fletcher. “It may not be too serious when your friends, family and colleagues read that you have bought three books on Amazon, but say you had bought three books on cancer…The system was revealing potentially very intimate information without ever asking users for their permission. It went too far.”

Although many advertising specialists believe that behavioural advertising is where the future lies, Fletcher thinks that the industry shouldn’t focus only on targeted ads. “The beauty of successful advertising is that it catches you when you least expect it - and this surprise factor adds to the effect and the memorability of the ad, which is also generated by the creative approach used. Highly targeted advertising could theoretically be far less creative. It’s often not advertising at all but direct marketing.”

The risk for advertisers is that users tire quickly of targeted, standardized ads – or worse, that they distrust them. “Advertising tools that irritate people gradually disappear. Look at pop-ups, for example: when they first appeared, they had an amazing clickthrough, because they were new. Then they annoyed people, and now you hardly see them any more” says Fletcher. “But the tremendous changes in the media these past years, with the rise of the Internet and those new satellite boxes that allow viewers to put ads on hold when they watch television, have incited businesses to renew their advertising models and test new tools”. Let’s just hope that user’s privacy won’t pay the price.