Media Headliner: The man who's taking on the web privacy cynics

Hugo Drayton says Phorm's approach to monitoring web users' habits won't be stifled by adverse publicity.

Hugo Drayton could be described by critics as "the man who knew too much". But, the former Telegraph Group managing director insists, he knows nothing at all. Or at least nothing about us we'd rather keep hidden.

These critics, or more accurately, critics of Phorm, the digital technology company he now heads in the UK, fear that its ability to use customer information in order to target them with relevant advertising will create an internet Big Brother, casting a prying eye on hapless folk going about their everyday web business.

Privacy campaigners fretting over the group's technology are woefully misinformed, Drayton says: "There's a counter-intuitive element which I think makes it quite hard for people to understand, even experts. The counter-intuition is that we do not store any personal data. We do not know where you have been."

Phorm's behavioural advertising targeting platform, the Open Internet Exchange, which launched last month, analyses users' web browsing. The browsing pattern triggers advertising "channels" in the system which match key words typed into the browser, or websites visited, with relevant ads.

But, according to Drayton, none of the browsing history is stored. Last week, the information commissioner ruled that Phorm must get an opt-in agreement from users before targeting them. Apropos privacy, Drayton says: "We can never identify an individual and there are myriad safeguards in the system to ensure you never can and never will."

Paradoxically, Drayton asserts that Phorm is in fact the way forward for consumer privacy, as its system protects consumers against phishing or fraudulent websites.

Launched as 121Media in 2002, Phorm's business model, put simply, involves hatching deals with major internet service providers and other online publishers (it has agreements in place BT, Virgin Media and Talk Talk). Phorm is listed on the Alternative Investment Market and splits the revenues made from serving targeted ads on the Open Internet Exchange platform with the ISPs.

Drayton arrived at Phorm as its UK chief executive in October 2006 (it was still known as 121Media back then). This followed a year-long stint as the European managing director at the AOL-owned, which came to an end when AOL integrated the business more fully into the centre.

He says he was attracted to Phorm by the vision of its founder, the chief executive Kent Ertugrul, and the combination of its access to the ISPs and its own investment in technology and tools. He says: "There were already some very smart people involved and my job was to build a team - which I suppose is what I feel I do best within a business and marketing environment: build effective teams with the right mix of talent and endeavour and experience."

Drayton moved into the world of new media after ten years at the Telegraph Group, where he rose to become managing director before losing his job in the wake of the takeover of the company by the Barclay brothers in 2004. Drayton had built significant online experience, though, during a spell as the managing director of Hollinger Telegraph New Media, the newspaper company's new-media arm.

But does he miss the newspaper days? "I think there's something unique and exciting about the buzz of a newspaper environment," he says. "Certainly I look back on that with great, great memories. However, alongside being a newspaper person, I had been a very committed digital person and I had been the advocate and evangelist within the Telegraph Group to move those things forward. So while I have a huge and remaining affection for newspapers, it was also clear to me that the next wave of media was going to happen more importantly in the digital space - and so it is proving to be."

And Drayton argues that some of the essential appeal of newspapers can be applied to the Phorm model: "It's not intrusive advertising. It's tailored and it's relevant. It's akin to a specialist magazine or a newspaper supplement which has its classified and display advertising for which the readers are sometimes almost as interested in as they are in the pure editorial."

Phorm's great strength for advertisers, Drayton argues, is that it has the potential to combine reach with effective targeting. "To date, you've always had to trade one for the other," he says. But is there a danger in all this, that Phorm will get swept away amid privacy concerns and awkward publicity about its offering? For instance, damaging reports circulated at the end of March that The Guardian had opted not to use the platform owing to privacy fears, wiping 5 per cent off Phorm's share price.

Drayton concludes that the onus is on Phorm to engage the industry but says there is no frustration at present around having to explain its position. "We'd like to have a much more open and much more dynamic debate about what this means for the future of the marketing industry," he says.

"We think there's an incredibly interesting conversation to be had. We need everyone to be comfortable with the premise of what we're doing, and that includes the privacy issue. We're absolutely clear what we're doing is a significant benefit to the consumer and the industry and that it's a significant step forward in terms of consumer privacy, but we do need to make sure that everybody's understood that. It'll take as long as it takes us to inform, educate and, hopefully, enlighten."

Age: 48
Lives: Camden, London
Family: Wife, Blanca (Spanish); three children, Molly, 11, Charlie, ten
and Lucas, seven
Most treasured possession: BMW motorbike
Last books you read: The Remarkable Lives of Bill Deedes, by Stephen
Robinson; Pies and Prejudice, by Stuart Maconie
Favourite piece of technology: The BlackBerry, of course
Motto: Make the most of now