It was obvious that it would fail...
...for any number of reasons. But mostly because the people they were marketing it to --- industry insiders --- weren't the people whose consent they needed --- punters.
The reference to Google in the article highlights this: the people KE needed to convince were punters, but the only people who care about Google's dominance of the advertising market are industry insiders. I crossed swords with Peter Bazalgatte on the same topic at the Convention on Modern Liberty thing (he is, it has to be said, a really nice guy) and his main concern was about the paucity of money for content creation: again, that sells Phorm to media companies, not end users.
At no point did KE come up with a direct benefit for punters. Oh sure, there were some incredibly vague indirect ones --- this will make money for ISPs who will cut your bills, or this will make money for content providers who will make good programmes. But ISPs are hardly sympathetic poster-children, and content is not in short supply.
Speaking personally, if an ISP wants to make more money, it should charge me more and I'll see if I want to pay, and if content providers want to sell me premium content for more money, they should ask for my money. The idea that I will give my attention and, by implication, my money (advertising only makes money if the viewers buy the products) in preference to just paying my money is silly.
Still, it got me to leave BT as a customer after having been customer #2 in my exchange one of the architects of the Project Ascot trials of ADSL in Ealing in 1996, so they can't say that Phorm didn't have an impact.