BT, Carphone and Virgin Media agree ad exchange

LONDON (Reuters) - Three of Britain’s largest Internet Service Providers (ISPs) have signed up to use a new advertising platform that will give them a slice of the growing online targeted ad market.

A BT logo is seen on a building in a publicity photo. REUTERS/Vismedia

BT, Virgin Media and Carphone Warehouse’s TalkTalk have signed up to use a system created by Phorm that connects advertisers, Web sites and the ISPs to produce more targeted advertising based on a user’s anonymous browsing trends.

Phorm believes advertisers will be willing to pay more to place ads on Web sites signed up to the Open Internet Exchange (OIX) marketplace, because the adverts will be more relevant to the user based on their previous searching habits.

But the system will only remember the subjects a user has examined, and link that to a user profile, meaning the actual user and their Internet number remain anonymous.

Internet advertising has grown strongly in recent years and a report by media buying firm ZenithOptimedia in December predicted spending on the Internet would grow 69 percent over the next three years.

It expects the Internet to take an 11.5 percent share of all adspend by 2010, overtaking magazine advertising to become the third-largest medium behind television and newspapers.

Phorm and the ISPs will share the incremental revenue created by the new process.

Kent Ertugrul, chairman and chief executive of Phorm, told Reuters the group was also engaged in discussions with other ISPs and publishers in Britain and abroad.

“This benefits advertisers, publishers and consumers alike and introduces a completely new level of effectiveness in online advertising,” Phorm said in a statement.

Phorm says the system will provide more relevant adverts to users and it has already signed up such Web sites as and iVillage and advertising agencies such as Universal McCann.

The service will also include a feature called Webwise, which will be offered free to customers on Phorm, which will give greater protection against online fraud.

Reporting by Kate Holton, editing by Will Waterman and Sue Thomas