Shares in Phorm plummet
Shares in behavioural targeting company Phorm have plummeted after BT pulled out of launching its controversial tracking technology.
Phorm’s shares were down 40% by lunchtime yesterday as news about BT’s decision to drop Webwise, a system that tracks the internet habits of customers to deliver targeted ads, started to spread.
BT said it needs to focus its resources on “other opportunities”, such as developing super-fast next-generation broadband and television services in the UK (see BT drops Phorm).
A BT spokesperson said: “We continue to believe the interest-based advertising category offers major benefits for consumers and publishers alike. However, given our public commitment to developing next-generation broadband and television services in the UK we have decided to weigh up the balance of resources devoted to other opportunities.
“Given these commitments, we don’t have immediate plans to deploy Webwise today. However, the interest-based advertising market is extremely dynamic and we intend to monitor Phorm’s progress before finalising our plans.”
However, BT’s decision is thought to have been affected by on-going privacy complaints about Phorm’s technology.
The company first came under fire after it trialled the technology with BT in 2006 and 2007 without the knowledge or consent of its users, and despite causing a stir, BT decided to carry-out a new invitation-based consumer trial of Webwise last year.
Results from the trial have been eagerly awaited since then, not least by the industry keeping tracks on Phorm but also by potential partners Virgin Media and TalkTalk.
Both companies, who together with BT control around three-quarters of the UK broadband market, are thought to be interested in the concept of behavioural targeting but have concerns about using Phorm’s technology.
Phorm didn’t seemed particularly phased by BT’s announcement, saying it was “not a surprise” to the company and it is not dependent on a UK model with just one ISP.
However, it is the latest in a series of setbacks for Phorm, who also saw its shares fall 27.5p last month following its results announcement, in which the company reported a pre-tax loss of $48 million for the year ending December 31 2008 (see Phorm’s pre-tax loss reaches $48m).