A hot topic across the online tech and advertising world is the launch of a company called Pudding Media, which delivers real time contextual advertising to phone calls in a VOIP environment.

The New York Times has covered the launch and includes this summary:

Pudding Media, a start-up based in San Jose, Calif., is introducing an Internet phone service today that will be supported by advertising related to what people are talking about in their calls. The Web-based phone service is similar to Skype's online service -- consumers plug a headset and a microphone into their computers, dial any phone number and chat away. But unlike Internet phone services that charge by the length of the calls, Pudding Media offers calling without any toll charges.

The trade-off is that Pudding Media is eavesdropping on phone calls in order to display ads on the screen that are related to the conversation. Voice recognition software monitors the calls, selects ads based on what it hears and pushes the ads to the subscriber's computer screen while he or she is still talking.

While I'm not sure if the contextual advertising model is a sustainable business plan for a startup in a field dominated by Skype and possibly Google in the future (with great open source players such as Asterisk and Ekiga in the mix), the most puzzling aspect of this launch has been the overwhelmingly negative response from the blog world as evidenced on Techmeme.

I'm a heavy email and IM user, and definitely more so than phone or VOIP. So, I find people who use services such as GMail to be giving over much more long term information about themselves compared to a service such as ThePudding.

This is puzzling to me because the digerati represented at Techmeme love GMail and GTalk and Google Reader and Google Web History and Google Maps and YouTube and Google Docs and Google Calendar, etc. I've used all of those services, but I started to move away from platforms such as Google Reader and GMail once I realized just what I was giving over. Take all of that information and combine it with partnerships such as LibraryThing (which is what I use for my own book collection) and you can develop a rather three dimensional composite of Sam Harrelson with relative ease.

It puzzles me that there would be such an outrage over a contextual voice product that effectively behaves the same way, and in some ways less intrusively, as all of Google's much loved (and much contextualized) products.

TechCrunch delves more into ThePudding's service offering:

Phone conservations are monitored only by computers, not actual human beings. The company also does not record any of the conversations or log any of the topics discussed. Therefore, advertisements are tailored to each particular phone call and not to trends in users' calling behavior.

While I'm not a fan of ThePudding after doing my own research and investigation and I'll definitely be sticking with Skype and Ekiga, it is comforting to see that conversations won't be logged or tracked over time for ad delivery. However, I cannot help but make a connection to Google who does log information and behavior over time and deliver ads based to individuals based on an incredible amount of data that can build up over time.

So, how far is too far in contextual advertising? Is there an upper limit on what the mass audience will find helpful and a point beyond which a company is labeled as "evil" if they cross? Thinker, blogger, open source advocate, writer and fellow Ubuntu evangelist Cory Doctorow (one of my fav bloggers and writers) recently published a short story entitled "Scroogled" on the premise of exploring a near future when Google crosses that arbitrary line from offering helpfulness and relevancy into something else. It's required reading for everyone in the online industry:

Greg felt a spasm in his guts. "You're looking at my searches and e-mail?" He hadn't touched a keyboard in a month, but he knew what he put into that search bar was likely more revealing than what he told his shrink.

"Sir, calm down, please. No, I'm not looking at your searches," the man said in a mocking whine. "That would be unconstitutional. We see only the ads that show up when you read your mail and do your searching. I have a brochure explaining it. I'll give it to you when we're through here."

"But the ads don't mean anything," Greg sputtered. "I get ads for Ann Coulter ring tones whenever I get e-mail from my friend in Coulter, Iowa!"

The man nodded. "I understand, sir. And that's just why I'm here talking to you. Why do you suppose model rocket ads show up so frequently?"

While in the realm of short story fiction, the issues Cory explores are important to consider for your own web experience.

In the meantime, let's not play the role of Captain Renault and act as if we're "shocked to find that there's gambling going on here." Contextual advertising is an incredibly powerful and profitable platform, but in order to properly leverage the delivery of those ads, you must have built up a certain level of trust or branding (as in the case of Google). Otherwise, you face the "creepy" stamp from the bloggers and press.