Broadband ISPs Shy Away From Ad Targeting, Frustrating Targeters

While the controversy over behavioral targeting had been building since last year, Charter Communications’ (NSDQ: CHTR) high-profile troubles with ad targeter NebuAd in June has chilled similar efforts by other ISP broadband providers to serve ads directly to subscribers through their systems. Complaints by privacy advocates led Charter to abandon the ad targeting test it was running with NebuAd after Congress asked the companies to testify at hearings looking into the tactics associated with behavioral ads.

NebuAds’ rise and fall: USAT takes stock of the troubles NebuAd and other behavioral targeters have run into with the Congressional backlash. It’s tough to assess the state of their businesses precisely, since the NebuAds does not disclose who its clients are. One of the few NebuAd clients it did identify was broadband provider CenturyTel. A rep for the company tells USAT that although it considered its ad targeting testing a success, it canceled any further work with NebuAds’ ad serving system once the Congressional hearings began. Other companies that have recently ended their NebuAd system tests include Bresnan Communications LLC, The Washington Post Co.’s (NYSE: WPO) Cable One Inc., Knology Inc., Embarq Corp. and WideOpenWest.

Scrutiny crosses the Atlantic: Ad targeting’s challenges haven’t ended at the U.S. border. British ad server Phorm began piling up complaints since February, when it said it had struck ad targeting partnerships that gave it access to 70 percent of Britain’s broadband market: BT Group (NYSE: BT) PLC, Virgin Media (NSDQ: VMED) and Carphone Warehouse Group PLC’s TalkTalk. But not anymore. Phorms shares peaked within two weeks of its announcement. Since then, its shares have fallen about 75 percent.

Efforts stalled, for now: There’s nothing like the words “Congressional investigation” to send businesses in the other direction. The big problem with ad targeting is that, as a Cable One rep tells USAT, there are no “clear rules and boundaries.” At the moment, the best that the ad targeting companies can hope for is that the heat will cool down once the election season is over. When that happens, perhaps Congress and the industry can find some agreement on privacy safeguards and rules on opting-in (or opting-out). In the meantime, the cable companies and telcos that had been banking on taking a portion of the ad revenue heading directly to the networks of affiliated sites working with Google (NSDQ: GOOG), Yahoo (NSDQ: YHOO), Microsoft (NSDQ: MSFT) and AOL’s (NYSE: TWX) Platform-A will just have to wait.