The share price of controversial behavioural advertising firm Phorm fell by more than 20 per cent in early trading yesterday, after the Office of Fair Trading (OFT) announced an investigation into online advertising.

Aim-listed Phorm has been criticised by privacy campaigners over its plans to roll out Webwise, a technology that targets advertising according to a user's web-surfing behaviour.

BT conducted a trial of the technology, but has since ruled out using it, as has TalkTalk.

The OFT is launching an inquiry, entitled Advertising and Pricing Market Study, looking at the use of personal data in web site advertising.

"In particular, we may look at behavioural advertising where information on a consumer's online activity is used to target the internet advertising they see. We may also examine the practice of tailoring prices to individual consumers on the basis of their personal data," said the OFT, announcing the report.

Phorm's share price closed at 130p on Wednesday and fell 30p to 100p yesterday morning, closing at 108p.