More Phorm ISP Partners Jump Ship, Beginning of the End?

Following BT’s decision not to implement behavioral ad targeting technology from Phorm, rival ISP TalkTalk has also chosen to sever its ties with the firm, in what is likely to signal the end of its activities in the U.K. market.

Phorm itself issued an operational update to investors this morning stating that Carphone Warehouse-owned TalkTalk has “unfortunately terminated its agreement with Phorm,” and admitted the ISP did not even reach the stage of conducting trials of its platform.

Two of the three ISPs that announced agreements with the company in March ’08 have now shelved the technology, with the third, Virgin Media, stating it has no plans to use it “any time soon.”

In response to BT’s announcement on Monday, Phorm said it now intends to concentrate its efforts on overseas operations, where perhaps privacy concerns surrounding the technology are less prevalent. Today’s statement reiterates that stance, emphasizing the company’s “excellent progress” and “advanced negotiations” in 15 markets outside of the U.K., including trials currently underway with major Korean ISP, KT.

The company has also repeatedly expressed interest in entering the U.S. market, despite failed attempts from rival ISP-level targeter NebuAd, which was eventually forced to shutter its operations in May. Phorm CEO Kent Ertugrul says his company’s experience in the U.K. “prepares [it] well to address concerns that have been raised in the U.S. and to engage accordingly.”

In reference to ongoing privacy concerns surrounding behavior-based ad targeting in Europe, the company said today it is “extremely encouraged by the fact that BT has stated that privacy was not a factor [in the company’s decision to drop the technology].”

Although BT has said it will continue to monitor potential opportunities with Phorm, it is unclear how long the firm can continue to operate without any paying customers. Despite claiming advertisers and agencies remain interested in its technology, no inventory has been sold through the platform to date. Unless one of its prospective international ISP customers fully deploys the technology soon, one wonders why investors would continue to pour funds into the company without any foreseeable return.