Advertising could fund future broadband

Advertising could fund future broadband

Summary: The leaders of two of Australia's largest ISP's see a viable business model in offering free or discounted broadband connectivity, sponsored by advertisements targeted according to a user's web surfing habits.


The leaders of two of Australia's largest ISP's see a viable business model in offering free or discounted broadband connectivity, sponsored by advertisements targeted according to a user's web surfing habits.

Privacy advocates have been rallying against the attempts of online advertising vehicles such as UK start-up Phorm to track web surfer's habits at ISP-level to deliver them targeted advertising.

But neither Justin Milne, group managing director of Telstra Media or Simon Hackett, managing director of Adelaide-based ISP Internode, have a problem with the concept. Both see a future where advertising might pay for broadband in much the same way as Google delivers targeted advertising to the users of its free Gmail webmail service.

"I don't have a problem with the notion of targeted advertising at an ISP level as long — as it's a choice our customers have got rather than a mandate," Hackett told in a recent video interview. "I think that's one of the ways you'll possibly see us head in the future. So picture a world where you can choose to be shown targeted ads and pay less money, maybe even pay nothing, or just pay for the experience directly and not have the ads."

Picture a world where you can choose to be shown targeted ads and pay less money, maybe even pay nothing

Internode's Simon Hackett

Hackett and Milne both see the advertising models used by traditional media giants (such as free-to-air television stations) as fundamentally flawed in today's internet-connected world. Internet technologies, they argue, offer far more viable models for advertising — to the point where ads actually become desirable to users.

"The problem with conventional advertising is in fact sheer waste," explains Hackett. "The fact that you throw a generic ad out about a sports car to people who don't give a flying anything about a sports car — [with the internet] you could spend ten times the money getting ten times the result."

"Picture a world where you might have an IP equivalent of a TV station and the ads actually tune themselves over time to what you said you wanted to see. You get the content free as long as you're prepared to watch the ads."

Milne says ISPs and web developers have already been using behavioural targeting, albeit on an anonymous level, via the use of cookies. It's not a stretch, he suggests, that similar technology may be used to "make advertising more useful to customers and therefore more useful to advertisers."

Milne would like to see web-surfing data used with information from other service providers to take the premise even further. Telstra Media, he says, is in a unique position to bring some of those sources of data together. Telstra might in the future, for example, be able to take advantage of a mix of both data about mobile phone use and data about web-surfing habits to serve targeted ads.

Mobile phones, Milne said, have unique identifiers about who is using the device and can also easily be tracked according to location.

"One example is, anonymously perhaps or with your permission, we notice that you've surfed a bunch of different car sites, so you must be in the market for a car," says Milne. "And we've done a deal with BMW, who are advertising with us, and now we notice that you happen to be standing right outside a BMW dealership."

It's probably stepping a bit too far into invading a customer's privacy

iiNet's Michael Malone

"So we send you a message or punt you an ad, or send you an SMS and say: turn around, walk into the [car] dealer behind you and you can get a discount off the price of the car. Now if you as a user are really in the business of buying a car, suddenly car ads become not ads, but information."

Not everybody is keen on the idea, however. Michael Malone, CEO of Australia's third-largest ISP iiNet, has some privacy concerns.

"I haven't heard about the example you give of Phorm, which is utilising advertising directed at customers based upon what they are browsing," he said. "But my first reaction to it is that it's probably taking things a little bit too far."

"The ISP, I believe, is providing the plumbing for the customer into their household, and largely we should be passive in terms of the data the client is downloading and getting access to. We require the minimum required logs, for instance, of what our customers are doing, and we don't interfere with the data in any way without police interception requests."

"So my first reaction to what you're saying is [that] its probably stepping a bit too far into invading a customer's privacy."

Topics: Broadband, E-Commerce, Telcos, NBN, EU

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  • ads become desirable to the user?

    That's about as likely as people enjoying mosquito bites...

    People might tolerate ads because they can't afford not to, but NO-ONE likes them.
  • This is just another load of garbage

    Ads - targetted ads - focussed on my surfing habits - gee I really like the idea of MORE BLOODY ADVERTISING INVADING MY LIFE - NOT!!!!!!!!!!!!!

    I actively pursue a policy of NOT buying anything from advertising that I do not seek out.
  • Pleassssssssssssse

    To all ISPs: Please don't offer plans like this to me. Advertising SUCKS the big beefers! It's bad enough that our major news website invade our browsers with popups, popunders, Java applets and other ways that cheat software developers' endeavours to block all this garbage.

    We don't want it so please ignore any 'market reasearch' you've done and scrap the plans altogether.
  • Getting slower.........

    So our internet traffic would be going through Conroys censorship filters and slowing down, now ISPs want to run it through analysers to determine our surfing habits. Another slow down. Not to mention the privacy issues. How do they know I am surfing or its my kids surfing when they send their beer ads through? I dont want to see endless ads for video games that were supposed tp be for the kids. Who pays for the bandwidth all this extra rubbish would gobble up? Someone has to pay for it, and its always the person at the end of the line.
    Sounds like a very bad idea to me.
  • Take us back to 1995

    I remember old ISP's back in the dial-up days who offered 'free' plans, so long as you kept the sponsorship banner open at the top of your screen. I think plans like that aren't around anymore, because they FAILED.
  • I agree...

    Imagine in your example of you getting ads for games etc from games sites that your kids were browsing OR your kids getting ads for new porn from the sites YOU were browsing when they were in bed sleeping.

    Think of the kids ...
  • A matter of costs

    Can you imagine the number of successfully click-thu's converted to actual purchases that would need to fund a user at say $50/month ??

    No advertiser of sane mind could afford a campaign like that. If say 1000 users were being subsidised by $50 / month thats a cool $50,000 to have to convert to purchases just to break even such that the ISP is then not burdened by that user.

    Or simply every user needs to buy $50 worth of product to justify the 'free' connection.
  • Oh really?

    Well I remeber when Foxtel started it was about less advertising, fast forward to 2008, you can hardly tell the difference now between it and FTA
  • Internet ADs get real

    This was tried with Globalfreeway, free2air,
    GoConnect, FreeOnline just to name a few. While yes many signed up for the FREE Internet Access that advertising $ didn't suport it.It's already annoying now when you go to various sites and before you get to see that sites content a roll over of an ad obscures the site you want to go to.
  • Does anyone actually NOT block ads when they surf??

    I personally don't see ads because I block ALL of them. They are a waste of bandwidth and I have NEVER been tempted to buy anything I ever saw on the internet via a pop-up ad.

    I use the internet to find INFORMATION about a product. Popping up ads that advertise what I am already researching is a waste of time and resources.