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Four more Internet service providers will start charging banks, e-commerce sites and other large e-mail senders for guaranteed delivery. In deals expected to be announced Thursday, Goodmail Systems is expanding its CertifiedEmail program to Comcast, Cox Communications, Time Warner Cable's Road Runner and Verizon Communications. Yahoo and Time Warner's AOL became inaugural participants last year.
Individuals, businesses and organizations will be able to continue sending messages for free, but they risk finding those missives caught in increasingly aggressive spam filters.

With Goodmail, a company can pay a quarter of a penny per message to bypass those filters and reach in-boxes directly. Recipients see a blue seal verifying that the message is legitimate; senders get confirmations and can resend messages lost in transit. Nonprofit groups can participate, too, at about a tenth of the commercial rates. At least half of the fees go to the service provider, Goodmail chief executive Richard Gingras said.

For now, Goodmail will approve only companies and organizations in existence for at least a year, to thwart fly-by-night operations. Those that have prompted too many spam complaints will be disqualified. The service is designed to certify credit card statements, e-commerce receipts and other communications with existing customers. It does potentially give a boost to larger corporations and groups that can afford the charge, but Gingras says their messages are the ones most likely to be mischaracterized as junk.

Peter Castleton, Verizon's director of consumer broadband services, said his company would still let senders apply for "whitelisting" -- and thus bypass filters as well -- without charge. Goodmail's service, he said, is for those that want approval at multiple ISPs at once.

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In the last a few years, the Internet has turned commerce on its head. Suddenly, once sound retail practices, like the mass-merchandising of a handful of popular products (think Cabbage Patch Kids, Tickle Me Elmos, Nintendos or Air Jordans), no longer guarantee a big financial payoff in today's retail environment. The marketplace has become so segmented by niche consumers that best sellers only produce a fraction of the revenue they did previously, while niche or specialty goods can translate into big business for retailers who learn to tap that end of the market, commonly referred to as "the Long Tail."

In catering to the Long Tail consumer, e-tailers have several advantages over traditional retailers, such as infinite shelf space and the ability to change or add to inventory more easily. This allows e-tailers to offer an unlimited selection of high-margin items at a fraction of the cost required of a brick-and-mortar retailer . Moreover, it's now possible for online retailers to profit from the elusive Long Tail by applying social science to their e-commerce technology for the very first time.

Matching millions of online shoppers with tens of thousands of products is easier said than done. To do this effectively, e-tailers must think beyond the old merchandising rules, which are too costly to develop and maintain, and are not resilient to the changing preferences of shoppers. Scientists have discovered that a random group of informed visitors can predict far better than any individual merchandiser what products people want. This is known as the "wisdom of crowds."

The latest in online merchandizing is now based on what's called "crowd sourcing," or using the behavior of the invisible crowd of online shoppers to make products recommendations to one another on behalf of the retailer. Unlike specific product reviews, online retailers use the past context of shoppers who have been to the site to make product suggestions to the visitors that come after them.

In this model, retailers are leveraging the implicit, emergent behaviors of visitors who are anonymous and unknown to each other. By understanding these visitors and their intent, vendors can identify the thousands of micro-segments of shoppers who come to their Web sites and ultimately match each one with the best products available.

By observing which products truly give value to customers, e-tailers gain an in-depth understanding of community preferences and the thousands of micro-segments that emerge around products and categories without the risk of being misinformed by survey bias or misleading click-based data gathering systems. With this approach, the silent majority of site visitors are represented instead of being ignored. In addition, merchants can better understand how these communities self-organize into like-minded peer groups and better serve these micro market segments with more unique products, making the Long Tail even longer.

For example, an online store discovers that many of its shoppers purchasing kitchen appliances are also looking at flat-panel TVs. The retailer can conclude that these appliance shoppers would be likely to consider a small flat-panel TV when remodeling their kitchens. Online merchants are better equipped to tap into the Long Tail on their own Web sites because they can uncover the unique, previously hidden desires of their customer base.

Tapping into the Long Tail isn't just about adding more items to the menu. Research shows that shoppers feel overwhelmed and are less likely to make a purchase when confronted with too many decisions. The key is to target a smaller set of products to the right people at the right time. One school of thought believes the problem can be solved with another round of personalization, profiling and behavioral targeting. The concept is to target products based on individual browsing history together with demographic information.

The latest social science research, however, has proven this thinking is flawed. As it turns out, individuals have thousands of profiles and past interests. A person can be a father, son, brother, golf lover, traveler, wine drinker, engineer and HR benefit seeker all at the same time. When taken out of context, our past behaviors poorly predict our future. On Amazon.com, cross-product recommendations have seen plenty of misfires outside of book suggestions that worked beautifully. The reason is simple: A book recommendation is within the context of the book. However, to always recommend diapers to an individual who's made a past purchase of a baby gift will most likely miss the mark.

Human psychology has revealed something even more profound that we're often not willing to admit -- humans are like pack animals and our needs tend not vary too widely. Given a context, 95 percent of shoppers purchase the same types of products repeatedly. Context is a synonym for the micro Long Tail segments discussed earlier. By detecting like-minded peers, we effectively discover an unlimited number of buyer segments. Based on the common needs of like-minded peers, e-tailers can recommend products more precisely. The purchase rate goes up dramatically as a result.

Well-documented research has shown that contextual targeting (a shopper's current context regardless of historical interests) gets 62 percent of the recommendations right while historical behavioral targeting gets it right only 18 percent of the time.

Because context is time sensitive, recommendations must also be timely, dynamic and taken from real-time feedback. For example, when Valentine's Day approaches, the crowd begins surfacing gifts that are common to shoppers for that holiday. On February 15th; however, no one is buying chocolate hearts any longer. If the store is still recommending sweets over springtime patio furniture, it will lose business. The recommendation system must be able to detect real-time changes in season, consumer tastes and market trends to avoid falling out of sync with customers.

Finally, recall that your visitors are telling you exactly how to grab their attention on your site. Consider tapping into their experiences to deliver dynamic landing pages for each visitor coming from Google or other traffic referral sites. Rather than creating custom landing pages for every possible natural or paid keyword -- an impossible feat, to say the least -- merchants armed with an intimate knowledge of their site's invisible crowd can use their collective wisdom to create dynamic recommendations on every page known to convert visitors who have come in through the same query. By doing so, merchants make their sites infinitely more "sticky" and increase sales.

For example, a customer may use the search terms "Fix a broken pipe" on Google and land on the Home Depot site. Her intent is not to look for broken pipes, of course. Showing her glue products together with PVC connectors and a do-it-yourself book will go a long way to serve her needs. By better understanding user context, merchants are able to connect customers to the specific products that like-minded peers found useful.

Today, online retailers must operate with a different set of rules than traditional retailers and embrace new techniques and technologies to increase revenues. By understanding Long Tail economics, improving product recommendations and harnessing the wisdom of crowds, e-tailers can stay competitive and increase visitor-to-buyer conversion rates by 50 percent and more.

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Online advertising continues to grow at a steady pace, with first quarter spending on Web-based advertising reaching a record level of US$4.9 billion. That represents a 26 percent increase when compared with the first quarter of last year, when $3.8 billion was spent, the Interactive Advertising Bureau (IAB) said in a report prepared by that trade group and consulting firm PricewaterhouseCoopers. The sequential growth rate was more modest, with ad spending in the first three months of 2007 climbing 2 percent when compared with the $4.8 billion in the fourth quarter of 2006. However, the last three months of the year are typically strong due to the inclusion of the holiday season and the first quarter is usually far more subdued, the IAB noted.

Ad spending is likely to continue on its upward trajectory, said IAB President and CEO Randall Rothenberg. "The ever-changing landscape of new platforms and technologies that enrich interactive advertising guarantees that this growth trend will continue," he said, adding that marketers are showing "increased comfort" with online advertising.

The continued double-digit year-over-year growth rates are "particularly impressive" because the online ad industry has grown so large, said Peter Petrusky, a director with PricewaterhouseCoopers. Looking forward, he said, continued growth in broadband Internet usage "could translate into more users spending more time online, and offers a platform for rich media and video ads that dial-up connections can't render."

The report, which is based largely on spending by the top 15 online advertisers as well as other data sources, does not offer a category breakdown of where the nearly $5 billion was spent. Already, though, it's clear that search advertising spending and in particular spending on Google ads remain the engine driving online advertising higher.

Paid search is "currently the key driver of U.S. online advertising as a whole," and in turn Google dominates that sector because it attracts more users and monetizes each user's clicks better than its rivals, eMarketer Senior Analyst David Hallerman said. eMarketer recently estimated that more than 40 percent of total Internet ad spending is tied to search marketing.

Others sectors are expanding, however, and not surprisingly Google has a hand in them. For instance, display ads are expected to expand 20 percent to nearly $4 billion this year, and Google recently increased its exposure to that market through its pending $3.1 billion purchase of the interactive ad agency DoubleClick.

Multimedia advertising, especially video ads, are also expected to grow exponentially in coming years, as is spending on advertising that leverages social networking sites and other Web 2.0-style online communities.

Still, at least for now, search-based advertising will continue to be the area where most of the money will be aimed, Sterling Market Intelligence Principal Analyst Greg Sterling said. For instance, in 2006, search marketing's share of the total ad spending was down 1 percent from the year before, with the share of the spending going to display advertising rising.

"Keyword search and contextual ads are what marketers are comfortable with -- they can measure it and know that it works," Sterling noted. "The growth is already starting to pick up across the other categories." After soaring and then crashing along with the dot-coms, online ad spending has experienced almost uninterrupted increases since late 2002, IAB data show. Growth has accelerated in the past three years, even as the market has gotten larger.

The first quarter spending level of $4.9 billion outpaces the total online ad spending from 1999, at $4.6 billion. As recently as 1997, total Web advertising spending was less than $1 billion for the full year.

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If you're like lots of Americans, you're increasingly wary of identity theft. But should you pay LifeLock or a similar company a few bucks to more than US$100 a year to protect your identity? A host of new companies has sprung up recently offering products including credit monitoring, fraud alerts and identity theft insurance. Some will even unleash robotic software to scour the Internet and ferret out whether crooks are selling your credit card number in chat rooms. Are they worth it? Or are they hyping consumer fears to turn a quick profit?

"It's a very profitable business, because for the most part the services that are being provided cost them virtually nothing -- and generally they are things you can do for yourself at little or no cost," said Paul Stephens of the nonprofit Privacy Rights Clearinghouse. Identity theft prevention services agree that motivated consumers can do many things to protect themselves. They say consumers pay for the convenience and expertise of having someone else do it for them -- like having your accountant prepare your taxes.

"We all live with the fact cars are stolen every day; that's why we have car alarms and insurance," said Todd Davis, CEO and founder of Tempe, Ariz.-based LifeLock, one of the fastest-growing identity theft prevention services. A surge in stolen data, he contends, has "created a valid need for these services."

More than 50 million people have been told in the last three years that their personal information has been improperly disclosed. The Identity Theft Resource Center lists 136 data breaches so far just this year, compromising more than 56 million records. A survey released last week suggests 84 percent of Americans believe identity theft can happen at any time, up from 81 percent a year ago. The survey by the Identity Theft Resource Center and Fellowes, a shredder manufacturer, reported 59 percent of people felt vulnerable -- up from 50 percent a year ago.

"Consumers have very good reason to be afraid," said Jay Foley, executive director of the Identity Theft Resource Center. "We've seen recently that no one is exempt."
Foley warns consumers that no prevention program is foolproof, so consumers need to be aware of what they are getting for their money compared with what they can do for themselves. No one directly regulates the industry. The Federal Trade Commission monitors its marketing practices.

"The key here is there should be no misrepresentation that this is the only way you can get this service," said Joel Winston, FTC associate director of privacy and identity protection. "In theory, it could provide a benefit in some cases. Is it worth it? That's up to the consumer."

A main offering of the ID protection companies is credit monitoring, which entails watching your credit report for unauthorized access, such as someone taking out a new credit card account or buying a stereo in your name.

The three major credit bureaus were the first to offer this service for a fee. Steve Ely, president of Equifax's personal solutions, said credit monitoring is a tool that "provides peace of mind." If there is unauthorized access of your report, "that's the big red flag that you have to immediately take action and notify the creditor that opened up the account in your name," he said.

Equifax offers three monitoring programs. The least costly is a monthly report. For $12.95 a month, you can get daily reports from all three credit bureaus, including Experian and TransUnion.

Consumer groups point out the government now allows consumers one free credit report from each of the three credit bureaus. By spacing out their requests, consumers can access their credit reports for free once every four months.

In addition, consumers who suspect their information has been compromised can place a fraud alert on their credit report without having to pay a company to do it for them. The alert raises a red flag any time a creditor enters into a transaction with someone using the person's identity. It can be renewed every 90 days.

In about 25 states, consumers can also place a "freeze" on their credit report, which means no one, including creditors, can access it without permission. Some states, including Kansas, limit credit report freezes to consumers who can prove with a police report they have been the victim of identity theft.Missouri does not have a law allowing consumers to freeze their credit report. Still, Ely said, many consumers don't want the hassle of monitoring their own reports. "Most people don't want to do all that, so we do it for them."

LifeLock promotes its monitoring package with individual $1 million insurance polices. If criminals "clean out your bank account, we would give you your money back," said CEO and founder Todd Davis, who markets the value of LifeLock's protection by posting his own Social Security number on his company's Web site.

Consumer groups, however, say most identity theft losses amount to less than $600. Most of the hassle with identity theft is cleaning up your credit and restoring your good name.

Still, the FTC's Winston said insurance can be a benefit if, for example, substantial losses result from someone opening a new account in your name. However, he compares insurance to extended warranties on appliances. They can be useful but are often oversold. LifeLock and other companies also will assist consumers whose credit has been compromised, providing the necessary forms to alert creditors.
Also, Davis said, if an impostor does something wrong in a consumer's name, "we'll bail you out of jail and get you a lawyer." Davis boasts that LifeLock is growing at the rate of two accounts every minute.

New entries in the identity theft prevention business tout their high-tech ability to scour public records and the Internet to ferret out data breaches before they occur. The services say they can create a personal profile that can be matched against data that show up somewhere else. If your credit card is being used in a way that doesn't match your profile, you are alerted.

IDWatch, a service owned by Bellevue, Wash.-based Intelius, advertises software that thwarts "black market" thieves who try to sell your credit card in an Internet chat room. "What we've done at Intelius is not only monitor credit report information but also monitor public record information," said Ed Petersen, head of sales and marketing.

Intelius has a leg up in its technical ability to forage the Internet. It already is the largest provider of public information on the Internet. Most of its money comes from conducting background checks for big businesses. IDWatch can find out whether someone obtained a phone number in your name, used your Social Security number or if someone was arrested in your name, Petersen said.

"You could check these things on your own, checking public records and your credit record. But trying to make sense of it -- you can't really do yourself," Petersen said. IDWatch offers packages beginning at $9.95 a month for three months, $7.95 a month for a year and $4.95 a month for three years. LifeLock recently announced its own public records search program in partnership with MyPublicInfo.

Consumer groups point out, however, that most identity theft remains low-tech -- more dependent on dumpster diving than Internet breaches. Consumers can protect themselves by being careful with personal information, shredding documents and watching what they carry in their wallets.

The FTC's Winston raises a paradoxical concern: These companies also collect personal consumer data to do their jobs. That means consumers now have to carefully check out the companies they are trusting to keep a watchful eye on their credit. So far, it appears, they will have to do that themselves.

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