Three of UK's largest Internet service providers (opens in new tab), BT, Virgin and Talktalk, have been signed by Phorm which markets a technology that allows online advertising to be targeted more precisely.
They will create a new online advertising exchange system aptly named Open Internet Exchange marketplace which will be used by publishers and advertisers.
Phorm analyses web pages visited by users to build an anonymous profile which is then fed back to publishers who can then deliver targeted adverts to the end user; the Telegraph (opens in new tab) mentions that prices can go up by 100x compared to traditional advertising and would be an excellent way to monetise traditionally weak internet properties like Social Networking and auction websites which attract a significant amount of users who use the sites extensively.
According to Reuters, the system only tracks the subjects covered by the user and does not log more details like their names or their addresses.
However, it is understood that, based on the fact that each profile is tailored for an individual user, the unique IP address will need to be known.
Internet advertising has matured considerably and Google UK managed to pull the biggest share of advertising revenues last year, ahead of more established players like ITV.
The technology is expected to be rolled out by 2009 and bring in as much as £360m by next year of additional revenue.
Phorm (opens in new tab) is also in talks with other ISPs in and outside UK to adopt its technology, which could potentially be extended to mobile phones as well.