As Phorm screws up – again – Feeva is in the rear view mirror

It’s clear now that Phorm is slowly but surely deadpooling – and I don’t use that phrase lightly. It’s lost the battle to convince customers that its ‘deep packet inspection’ technology isn’t an invasion of privacy (whether it is or not is now almost irrelevant, that’s how it’s seen). It’s been exposed as having had dealings with the British government it previously denied. It’s launched a ham-fisted, aggressive blog (StopPhoulPlay, oh come on…) to argue its case, which bizarrely attacks potential customers. It’s – to use to that handy phrase – all over bar the shouting. Phorm is now irrevocably associated with controversy. So who and what comes after Phorm?

Because it’s as simple as this: The idea of tracking user behaviour is simply not going to go away, not matter how much “privacy campaigners” like Privacy International might rail against it. Ever since the first cookie embedded itself into a browser, Internet and media companies have been trying to figure out ways to increase revenues via greater ad targeting – and user tracking is a huge part of that.

So, in Phorm’s rear-view mirror is another company, Feeva. Word on the street is that some time ago – well before all the above happened – people from Phorm and people from Feeva met, trying to convince each other that each one was right on how to go about user tracking. Phorm, lead by Kent Ertugrul, was convinced it had the solution and duly launched. But Phorm’s plans to track BT users via a cookie has lead to scrutiny from European regulators and a wave of attacks from consumer activists. Likewise Silicon Valley-based NebuAd was sued in November in the US and is now liquidating its assets. Another, Adzilla, is also attracting law suits galore.

But Feeva has kept its powder dry. Did it decide to lie in wait until Phorm had taken all the heat? We’ll probably never know. What is clear is that Feeva proposes a radically different approach, which may well win out in the end. And it goes like this:

The San Francisco company targets Internet users with geographic and demographic precision. It does this by harvesting geographic and other information directly from ISPs – but, crucially, in a way that doesn’t identify individual users and in such as way as to put distancing between it and other players like Phorm.

Feeva merely obtains the user’s location down to zip/postcode as they request pages by placing tags on Web page requests (called HTTP header requests) as they pass through an Internet router. There is no software on the consumer’s device, no cookies or IP addresses obtained and no tracking of the user’s web surfing. Feeva doesn’t use IP addresses – as Phorm does – to obtain the postal code, but via its software sitting on the ISP’s router.

With information on the community that an Internet user lives in, and no information about the user or their web behavior, Feeva taps into the well-established method for ad targeting used by TV, Radio, Magazines, Classified Ads, direct mail marketers for years: postcodes.

Once Feeva has the user’s zip code (remember, not their exact location) it can match it with other information it knows about the users in that area code (average incomes, demographics, census data etc) and advertisers can use the identifying tag to send appropriate advertising – an ad for a BMW to a central London address, an add for a MacDonalds to a suburban one for instance.

How’s it going to do this? Well, remember that software on a router? It’s going to embed itself via a partnership with Internet router giant Cisco. (Back in February it quietly announced this: PDF). By partnering with Cisco the solution scales almost immediately in a huge way.

Make no mistake, they have done their home-work: Feeva has been working on this technology for *nine years*. CTO Jaz Bangacomes from the WiFi and cable industries. CEO Nitn Shah has worked at Cambridge/Bell Labs and the FCC. People like Richard Purcell, ex-Microsoft Chief Privacy Officer are advisors. Feeva is so far backed by angel money and then an undisclosed VC round in 2007.

Phorm isn’t doing that. It’s using cookies. Yes, Phorm says it does not identify individuals either, since it assigns a random number to the cookie’s browser, and then forgets the surfing history once the browser is tagged. The trouble is it’s still tracking that user on that browser, on that computer, not the much more general profiling information of people in that postcode. Thus Phorm keeps having to fight fires about it “spying” on users, while Feeva simply says it’s just like any other long-existing marketing company, targeting on postcode. It’s slightly crazy that no-one has thought of this before, in relation to ISPs I mean.

Ad agencies pay Feeva to access the tags it produces (60-100 with categories) and Feeva distributes a share of the revenues backs to the ISPs it works with. QED. Plus, this is a completely new revenue stream for the ISP, remember, which doesn’t get them into the kind of hot water with their users that an association with Phorm does.

Feeva’s main route to market may be slower – it has to work with ad networks like DoubleClick to access and educate advertising agencies – but its unlikely to draw the kind of firestorm Phorm has. And of course, it can do that same kind of thing on the mobile web, especially with better handsets like the iPhone, which has a decent browser which is location aware.

So, while Phorm is pummeled daily by the press and activists, I would expect Feeva to be announcing deals with Ad agencies and ISPs fairly soon and attracting a great deal less controversy with it.