Internet Marketing, Privacy Survey Finds Relevancy the Key February 3, 2005 By Larry Ponemon

Online merchants and marketers often struggle to achieve the appropriate balance between invasion of privacy and effective targeting of consumers. Recently, the Ponemon Institute surveyed consumers to find out what they think about how online merchants and marketers are communicating with them.

Specifically, we wanted to determine what information consumers are willing to share during and after making online purchases, and what incentives and services would encourage them to give more personal information.

The results of the study validated our belief that as consumers become more savvy about their online experience, marketers must change the way they treat customers in order to build long-term relationships on trust.

• Consumers are willing to share more personal information about themselves with marketers when they have a trusted relationship. Specifically, 22% of respondents are more willing to share banking information; 21% will share reading interests; 19%, data about special events or anniversaries; and 17%, areas of interest or hobbies.
• Consumers want to rule over their online experience. 84% said they'd like control over the types and frequency of Internet ads sent from a specific marketer.
• 64% of consumers say that if they had control over the types of online communication they received, they would be more likely to trust the marketers that sent it to them.
• 56% of consumers feel respected when marketers attempt to understand their interests.
• Consumers don't want to be tracked online. Only 20% (the lowest number) would let a marketer share information in order to track their buying behavior and project future buying decisions.

The survey
The 2005 Online Permissions Survey, sponsored by Dotomi Inc., is based on 1,799 responses from Internet users in all major regions of the U.S. and Canada. Because of the large number of survey questions required to achieve our research goal, we decided to randomly partition the sample into two segments called blocks. One group of respondents was given the following facts about a trusted merchant:

Block A (trusted merchant): For the past two years, you have purchased products from a well-known merchant's Web site for yourself, family and friends. Your experience with the merchant has been very positive because of the convenience of online shopping, the quality of merchandise and the dependability of delivery. You are about to make another purchase, and the merchant asks you to provide personal information about yourself. The second group was given the following facts:

Block B (new merchant): You find an online merchant that has interesting merchandise, but you do not have any knowledge about the merchant's product availability or dependability of order processing. After some thought, you decide to place an order, and the merchant asks for your personal information.

Percentage of data elements that respondents are willing to share with trusted (A) and new (B) online merchants
	Average Block A	Average Block B	Difference (A-B)
Home telephone	92%	91%	1%
Address	91%	82%	9%
Business telephone	88%	87%	2%
E-mail address	85%	79%	6%
Mother's maiden name	75%	72%	3%
Date of birth	79%	72%	7%
Hobbies or areas of interest	83%	67%	17%
Marital status	59%	57%	2%
Clothing size	55%	53%	2%
Information about family members	56%	40%	16%
Date of a special event or anniversary	58%	39%	19%
Credit card number	54%	38%	17%
Income information	53%	37%	16%
Debit card number	49%	35%	14%
Social Security Number	46%	30%	17%
Reading interests and preferences	51%	30%	21%
Nationality	34%	29%	5%
Bank information	50%	28%	22%
Grand Mean	64%	54%	11%

All differences are positive. This provides strong evidence that consumers are more willing to provide their personal information with online merchants with whom they have pre-existing or trusted relationships than if the relationships are new. Panel A below shows types of information that respondents are most likely to share with an online merchant, and Panel B shows information they're least likely to share.

Personal data most likely to be shared with online merchants

Home telephone		91%
Business telephone		87%
Address		87%
E-mail address		82%
Date of birth		76%
Hobbies & Interests		75%
Mother's maiden name		74%
Marital status		58%
Clothing size		54%

Personal data least likely to be shared with online merchants

Date of event or anniversary		48%
Family member info		48%
Credit card number		46%
Income information		45%
Debit card number		42%
Reading interests		41%
Bank information		39%
Social Security No.		38%
Nationality		31%

Telephone numbers, addresses and e-mail information are the most likely elements to be shared with online merchants. Nationality, Social Security numbers and bank information are the least likely to be shared.

How Bell Canada creates trust
Charles Giordano leads Bell Canada's Regulatory Marketing Privacy unit and is one of the few privacy executives who has worked in marketing. He understands the connection between privacy, trust and customers' openness to an organization's message.

Bell Canada is Canada's oldest and largest national telecommunications company, with operations that include phone, wireless, cable, Internet and outsourcing services. In a recent Canadian study of consumers, Bell Canada achieved the No. 2 rank among the nation's most trusted companies for privacy [1] and achieved top marks in a recent comparative benchmarking study on corporate privacy practices sponsored by the Information and Privacy Commissioner of Ontario [2].

"When customers are comfortable sharing their personal information, an organization is better able to customize offers to meet customer needs and increase customer loyalty," Giordano said. "As a result, when customers are loyal to your brand, they are more apt to listen to your message, read information from your organization more carefully and be more willing to accept calls marketing new products and services."

"We believe our business benefits when we are able to collect quality information about customers and make sure we know their preferences with respect to how they want us to communicate with them," Giordano added. "Bell Canada's policy is to collect information about a customer on a 'need-to-know' basis. Collecting unnecessary information about an individual could risk being in noncompliance with privacy regulations. It is also inefficient to store and safeguard data that is not needed."

In order to gain respect, an online merchant must show that it understands each consumer's unique interests. Fifty-six percent of consumers feel that an online merchant respects them when it demonstrates understanding of their interests and is better able to market to them. In fact, consumers don't mind being contacted if there is something in it for them. Eighty-two percent of consumers said they want to be notified by an online merchant if they are provided with an incentive (i.e. discount or free offer), and 92% asked to be notified if a product or promotion would be of great value to them based on purchasing habits.

Larry Ponemon is chairman of the Ponemon Institute, a think tank dedicated to ethical information management practices and research. He is also an adjunct professor of ethics and privacy at Carnegie Mellon University's CIO Institute and is a CyLab faculty member. He can be reached at larry@ponemon.org.

1) Canada's Most Trusted Companies for Privacy Study, Ponemon Institute, (October 4, 2004)
2) Ontario Information & Privacy Commissioner and Ponemon Institute Cross-National Study of Canadian and U.S. Corporate Privacy Practices (April 19, 2004).

Internet Marketing, Privacy Survey Finds Relevancy the Key February 1, 2005 By Jack M. Germain

Most online transactions involve getting the consumer to provide as much information as possible on the request form. However, consumers are not willing to provide all the requested details. The study showed that 84 percent of the respondents want more control over the details they provide as a condition of completing an online transaction.

Internet marketers have to walk a narrow line in pitching messages to potential customers during online visits. While marketers try to gather useful customer information to provide follow-up targeted messages, consumers often provide false answers to personal questions or will leave the Web site without pursuing a transaction.

Consumers often falsify their responses in order to prevent online merchants from getting their personal contact information. However, the public's perception of online marketing and merchants continues to evolve.

Consumers are becoming more comfortable with buying online, but remain wary of sharing vital information such as credit card numbers with merchants they don't trust. Online marketers, in return, lose potential customers if they go too far in trying to establish a one-on-one relationship with Web site visitors.

Constantly Shifting Line

This Internet marketing dilemma revolves around invasion of privacy Latest News about privacy concerns by consumers and permissions marketers need from them to exchange information. What results is a struggle that online merchants and marketers face in following a constantly shifting line between invasion of privacy and effective targeting to consumers.

A new study of consumer responses urges online merchants to adapt their strategies in order to build and retain trust with consumers.

The Ponemon Institute, a research firm dedicated to privacy management practices in business and government, surveyed Internet shoppers about how online marketers can build and capitalize on trust through their communication with consumers. The Online Permissions Survey was sponsored by Dotomi, a direct marketing messaging firm.

The results are based on 1,799 responses from Internet users in all major regions of the United States. The survey found that trust is significantly correlated to improving the relevance of communication with consumers.

According to the study, 84 percent of consumers said they want control over the types and frequency of Internet ads sent from a specific merchant Merchants: StrikeIron Can Help Defend Your Business Against Online Fraud. The study also found that 64 percent of consumers would trust a marketer more if they had control over the types of online communications that were sent to them.

A major finding focuses attention on the benefits online marketers can get by building trust with potential online customers. The study found that 89 percent of consumers would let a trusted marketer share their personal interests with a third party without permission in order to increase the quality of services and products produced.

More Study Results

However, the Ponemon Institute study revealed that online shoppers draw the line at tracking activities involving adware or spyware to advertise online. Only 20 percent of the respondents, the lowest rate for any any question, would let marketers share information to track their buying behavior to influence future purchasing decisions.

To gain the consumer's respect, an online merchant must show that it understands each consumer's unique interests. According to 56 percent of the respondents, the online merchants respect consumers when useful information is the basis of follow-up messages.

Online merchants take note. Consumers don't mind being contacted as long as something is in it for them.

Some 82 percent of consumers said they want to be contacted by an online merchant only if there is incentive. They defined incentives as discounts or free offers. And 92 percent of the respondents want to be contacted only if a product or promotion offers a great value to them based on past purchasing habits.

Privacy Counts

Dr. Larry Ponemon, the founder and chairman of the Ponemon Institute, designed the study to focus on issues that cause consumer worries about their privacy.

"Privacy policies on the Internet are still very ambiguous for many consumers, and merchants must make a concerted effort to educate consumers to their practices, and be ready for an uphill battle to gain their trust," Ponemon said.

He said marketers need to understand the factors that cause consumers to either trust or not trust an online merchant. The bottom line for both marketers and merchants is how do you use permissions to get consumers to your business.

"We asked the question, 'Is there a relationship between the issues of privacy and permissions?' We found the answer is that consumers see the two aspects as being one and the same," Ponemon told the E-Commerce Times.

"The correlation between the relevance and frequency of online ads with the trust of that merchant was much stronger than we anticipated. The results suggest that consumers seek quality over quantity in the ads they receive, and merchants would be wise to target campaigns to each consumer as individually as possible."

Control Is Big Factor

"If they think they will be bombarded with adds, they won't complete a transaction online," Ponemon said.

Most online transactions involve getting the consumer to provide as much information as possible on the request form. However, consumers are not willing to provide all the requested details. The study showed that 84 percent of the respondents want more control over the details they provide as a condition of completing an online transaction.

"Online retailers need to start out slowly," Ponemon said. "Most online places go too fast."

That results in consumers putting false information on the forms to protect their privacy.

What Not To Ask

The survey results suggest that online merchants should collect only the information that is useful to complete the sale, Ponemon said.

It asked respondents to rank the kind of data they are least likely to answer for an untrusted online merchant. Their answers included special life events like anniversaries and birthdays, reading interests, social security Get a Free E-Commerce Start-up Kit from Verisign numbers, special interests and banking information.

Other data online consumers are not likely to share with untrusted online merchants include income levels, information about family members and clothing sizes.

Significant Sampling

Ponemon said he believes his study on permissions is statistically valid. He hoped for a 15 percent response. He got 17 percent.

The survey was mailed to 10,444 people. A total of 1,799 people responded.

"That was a good response. It was better than average," Ponemon told the E-Commerce Times.

Respondents who returned completed surveys received US$5.

Follow-Up Study Planned

Ponemon said he is encouraged by the response to the survey from Web design companies. He expects to see new online strategies as a result of the information.

He will now turn his attentions to the spillover effect.

"I want to do a second study. Let's find out if the trust level is there, does that convert to higher sales," he asked.

He said the premise of the proposed follow-up study is that if organizations are patient to get customers to understand what happens with their data, it will pay enormous dividends to the online merchant.

"Trust takes a long time to build. It can be lost overnight. Permissions is the key issue," Ponemon said.

"Once you lose it, it is hard to get back."

Ponemon Institute release first ever online consumer permission study January 30, 2005 By Dimitri Metaxas

A recent research report conducted by Ponemon Institute and sponsored by Dotomi, marks the first-ever study about consumer response to opt-in communications on the web. The research was conducted on a national scale by surveying 1,799 consumers aged over 18 across the US.

The objective of the study is to learn what information consumers are willing to share with an online merchant (website/company) they purchase products or services from.

The study also aimed to investigate what incentives and services could be employed by the merchants to encourage consumers to provide more detailed information. Learnings like these enable marketers to better formulate their consumer data-capture studies and hence better target messages to the most appropriate or relevant audiences.

The report substantiates theories held by marketers that as the consumer continues to become savvier about his/her online experience, marketers must monitor and perhaps even change the way they treat consumers online in order to build a long-term relationship based on trust.

Some highlight findings of the report include:

• Consumers are willing to share more personal information about themselves with marketers when they have a trusted relationship. Areas such as sharing banking information, reading interests, special events such anniversaries/birthdays and areas of interest such as hobbies were found to be the most personal to consumers and the most affected by the perceived relationship the user has with the online merchant in question.
• Consumers want to be in control of their online experience. 84% of consumers want control over the types and frequency of Internet Ads sent from a Marketer.
• Lifetime customer relationships are best built when there is trust between the consumer and the marketer.
• If you treat a consumer with dignity, respect and humor, they respond much more in the relationship. 56% of consumers feel respected when marketers attempt to understand their individual interests.
• Consumers don't want to be tracked online. Only 20% would let a marketer share information in order to track their buying behaviour and project future buying decisions.

This report provides a whole host of implications to marketers when interacting with their consumer base through the online medium. One consistent finding in the report (unsurprisingly) is clearly that building trust in your brand through your communications and practice becomes paramount to the success of your overall consumer relationship.

However there are other interesting findings ie. The Internet provides marketers with a backbone of technology for us to better learn and understand our consumer needs and dislikes but the misuse of that same technology can actually have negative effects on our brand image and credibility.

Hence the communication and tracking online of our consumers must be monitored and vigilantly executed. An interesting insight for many brands in our region who perhaps have over stepped this fragile line.

Furthermore, the widely touted future of online in 'behaviour' based marketing may still have obstacles to overcome as this report shows that consumers are very sensitive about their buying and browsing behaviour being tracked. Despite the fact that the same consumers indicated a preference for relevant and personalized communication and advertising. Clearly this shows a challenge for us to educate the consumers as the benefits and clear anonymity that online tracking proposes for the online user experience.

The full report study is available to download for free at the following url:

http://www.dotomi.com/newsevents/research.html

Value of Message is Key for Consumers January 19, 2005 By Alan Chapell

New research from the Ponemon Institute reveals consumer attitudes towards permission and privacy.

Last week, the Ponemon Institute released the 2005 Online Consumer Permissions Study. The study represents a step forward in our collective understanding of permissions management. It also makes a strong case for equating responsible privacy practices to smart marketing policies.

In the interest of full disclosure, I’m pretty familiar with Larry Ponemon’s work. I’m a research fellow on the Ponemon RIM council, which helped put together the questions for this study, and I conducted a similar study of consumer perceptions last year with Larry and Revenue Science.There’s some great information to be culled from this study, and I encourage everyone to download the study on the site of its sponsor, Dotomi. Here are some of my thoughts:

Consumers mean it when they opt-out of your marketing programs… sort of -- According to the study, most consumers wouldn’t mind being contacted by an online merchant -- even after they’ve specifically opted out of the merchants’ marketing programs. In fact, nearly all (92 percent) of the respondents indicated a willingness to receive post opt-out marketing messages “If the new product or promotion would be of great value to me based on my past purchasing habits.” The net/net of that statement is that consumers are overwhelmingly accepting of marketing messages that are relevant to their interests, and are looking for marketers to use their data intelligently to increase relevance. Consumers don’t mind getting marketing messages, but they don’t want to be deluged by them.

Personalized messaging is not necessarily the same thing as relevant messaging --The Ponemon study notes that understanding customer interests is a far better way for a marketer to demonstrate that they value a customer’s business than simply sending personalized messages. In fact, over twice as many respondents indicated that understanding interests (56 percent) is a key way for companies to demonstrate that they value a customer’s business. Only 25 percent of respondents felt the same way about personalization. Permission marketers are wise to take this lesson to heart.

The email marketing space is rife with examples. Email marketers like to pull a customer name and some basic preference data from their database, and use that to personalize a message to the email recipient. While I certainly don’t think that’s a bad thing, the real trick is to take personalization to a much higher level. Using data to send me the red banner instead of the blue banner is nice. Using data to help you understand that I’d be interested in the new Flaming Lips album is better.

The consumer really does want control of this relationship -- Eighty-four percent of respondents indicated that having direct control over the types and frequency of Internet ads sent by online merchants would be preferred. Over half (56 percent) indicated that the ability to exercise control is a way for Web merchants to demonstrate that they value the consumer’s business. I strongly believe that in the not so distant future, smart marketers will provide a preferences page for their customers -- similar in nature to many email preference pages that you see today. The new preference pages will offer consumers a much greater degree of choice regarding how often they receive marketing and other outreach messages. Moreover, consumers will be offered a choice regarding which channels they’d prefer that the marketer use. Perhaps the customer would rather be contacted via text message, email, RSS, TiVo, phone, postal mail, or via something else that comes down the pike in the next year or two. Part of the problem today is that there are too many messages trying to get through too many pipelines. Companies that are able to offer a simple way for their customers to exercise control of the preference marketing process will be in a good position.

Consumers worry less about their privacy when they feel there’s a value exchange -- Let’s face it, folks. Consumers tend to be a fickle lot. They want the power of the SUV, but they don’t want to pay for the gas. They want the $250 million infielder, but they don’t want to pay $9 for the stadium hot dog. And they want to receive ads that are relevant to them, but they are skittish about having their behaviors tracked across the Web.

According to the Ponemon Study, only 20 percent (the lowest number) would let a marketer share information in order to track their buying behavior and project future buying decisions. Conversely, many more (71 percent) of respondents would be willing to let that same marketer share information if that helps to better understand what they as customers want. And nearly all (89 percent) respondents would be willing to let that marketer share their data if it would improve the quality of the products or services the consumer would receive.

Why are consumers unwilling to have their buying habits shared, but willing to allow marketers to share their preference data? My sense is that consumers are generally more willing to share their data if they believe that a marketer will use that data to directly benefit them. If they are certain that a marketer can be trusted to handle their data with care, AND to use that data to benefit them in some way, consumers will be much more willing to share that data. Having said that, I think this is an area that definitely merits some additional research.

Consumers Provide More Data to Trusted Companies January 11, 2005

Depending on how personal data is handled and how much trust consumers have in a company consumers are willing to provide substantial amounts of information about themselves to online marketers, according to study findings released by the Ponemon Institute of Tucson, AZ and the Boston-based interactive advertising firm Dotomi.

The level of trust consumers have a company correlates to the relevance of online communications directed to them. Eighty-four percent of consumers prefer have control over the types and frequency of advertising sent to them. About 64% of consumers said they would trust online marketers more if they had control over the types of online communications they receive.

Perception of how data will be used matters. Once a customer relationship is established, 89% of consumers would let a trusted marketer share information about their personal interests with a third party without asking permission, in order to increase the quality of services and products offered to them. However, consumers generally dislike the perception of their purchasing behavior being tracked for the purpose of influencing their future purchasing decisions, the study found.

About 82% of consumers said they want to be notified by online merchants offering incentives such as discounts or free offers. A larger number 92% said they want to be notified if a product or promotion would be of greater value to them based on past purchasing habits.

When consumers have a trusted relationship with a marketer, 22% are more willing to share banking information, 21% to share reading interests, 17% are willing to share information about their hobbies and 19% are willing to share data concerning special events or anniversaries.

Among the most frequency types of information shared are home and business telephone numbers, postal and e-mail addresses, date of birth, hobbies, mother's maiden name, marital status and clothing size.

Control, Quality, Relevancy Key to Establishing Consumer Trust January 10, 2005

As online merchants and marketers search for the shifting line between invasion of privacy and effective targeting to consumers, a new study by the Ponemon Institute, a research institute dedicated to privacy management practices in business and government, has published an analysis of how online marketers can build and capitalize on trust through their communication with consumers. The Online Permissions Survey, sponsored by Dotomi, is based on 1,799 responses from Internet users in all major regions of the United States.

The Internet has quickly developed into a ubiquitous presence in commerce, and the public's perception of online marketing and merchants continues to evolve. Consumers are becoming more comfortable with buying online, but remain wary of sharing vital information such as credit card numbers with merchants they don't trust. Building and retaining trust with consumers is therefore critical for online merchants to succeed, and the survey found that trust is significantly correlated to improving the relevance of communication with consumers:

• 84 percent of consumers stated that they want control over the types and frequency of Internet ads sent from a specific merchant.
• 64 percent of consumers would trust a marketer more if they had control over the types of online communication that were sent to them.
• 89 percent of consumers would let a trusted marketer share their personal interests with a third party without permission, in order to increase the quality of services and products produced.
• Merchants using adware or spyware to advertise online should take note, however, that only 20 percent (the lowest response) would let the marketer share information to track their buying behavior to influence future purchasing decisions.
• 56 percent of consumers feel that the online merchant respects them when it demonstrates understanding of their interests and is better able to market to them.
• 82 percent of consumers responded to wanting to be notified by an online merchant if they are provided with an incentive (i.e. discount or free offer), and 92 percent asked to be notified if a product or promotion would be of great value to them based on past purchasing habits.

This, of course, points to Dotomi's business model which is opt-in, on page banner ad messaging. Dotomi works to bring publishers, advertisers and consumers together for a permission-based relationship that adds value to publisher's advertising programs, advertiser's targeting efforts and consumer's move towards control over media consumption.

Customers Want Control A new survey finds that customers’ control of solicitations is key to the success of marketing efforts. January 1, 2005 by Jennifer McCarthy

Consumers are more willing to share vital information with online merchants and marketers whom they trust, according to a study conducted by the Ponemon Institute, a research firm focused on advancing responsible information management practices for government and business. The Online Permissions Survey analyzed almost 1,800 responses from Internet users and found that online marketers can improve the effectiveness of their communication with consumers by capitalizing and building on trust-the more relevant the communication, the more trust the consumer has.

The survey found that the ways in which consumers see online marketing and merchants continues to evolve. While many consumers are becoming more comfortable making purchases online, they are still uncomfortable providing important information, such as credit card numbers, with merchants they don’t trust. In order to succeed, it is essential for online businesses to build and maintain trust with consumers.

The attractiveness of these companies was underscored in November, when Microsoft Corp. cofounder Paul G. Allen made a venture investment in Eliyon Technologies Corp. of Cambridge, creator of a business search engine using natural language processing.

The survey found the following:

• 84 percent of consumers said they want control over the types and frequency of Internet ads sent from a specific merchant.
• 64 percent of consumers would trust a marketer more if they had control over the types of online communication that were sent to them.
• 89 percent of consumers would let a trusted marketer share their personal interests with a third party without permission, in order to increase the quality of services and products produced.
• Only 20 percent (the lowest response) would allow merchants using adware or spyware to share information that tracks buying behavior to influence future purchasing decisions.

Consumers also indicated that they don't mind being contacted by merchants, as long as they get something out of it. Eighty-two percent of consumers said they would want to be contacted by an online merchant if provided with an incentive (i.e. discount or free offer), and 92 percent asked to be notified if a product or promotion would be of great value to them based on past purchasing habits.

"The correlation between the relevance and frequency of online ads with the trust of that merchant was much stronger than we anticipated," says Dr. Larry Ponemon, founder and chairman of the Ponemon Institute. "The results suggest that consumers seek quality over quantity in the ads they receive, and merchants would be wise to target campaigns to each consumer as individually as possible."

In the shadow of Google Although Google dominates the market in Internet search, a number of companies are hoping that profi table niches remain January 17, 2005 by Robert Weisman, Globe Staff

Google Inc., the reigning king of Web search, cast a long shadow in the high-technology world last summer when it raised $1.67 billion in an initial public offering and saw its share price quickly double.

But for those who missed out on the riches, a small sector of search companies has sprung up on both sides of the country. Many are venture-backed start-ups that, rather than competing with Google head to head, are focusing on smaller business or consumer niches.

The attractiveness of these companies was underscored in November, when Microsoft Corp. cofounder Paul G. Allen made a venture investment in Eliyon Technologies Corp. of Cambridge, creator of a business search engine using natural language processing.

Eliyon is one of a cluster of Boston-area companies -- with names like Dotomi, EasyAsk, Endeca, FAST, iPhrase, Northern Light, and TripAdvisor -- engaged in search-related activity. As they scramble for a foothold, high-tech giants like Microsoft and Yahoo Inc. are readying frontal assaults on Google, and researchers at IBM Corp. and Sun Microsystems Inc. are developing new search technologies. Much of the activity is based on the premise that search is emerging as a new technology platform, not only on the Web, but on corporate intranets, computer desktops, and across software applications.

"There's a lot of business to be had in search in the next few years, and it's not all going to Google," said Susan Aldrich, senior vice president at Patricia Seybold Group, a technology research and consulting firm in Boston. "I think several of the local companies have the potential to become wildly successful and get very big."

In the burgeoning search field, there's room for more than one business model.

Google makes the bulk of its money through advertising, selling sponsored links alongside its search results, while companies in enterprise search license their technology to businesses.

"Some of the things that Google does so well, like page rankings, are irrelevant in the enterprise," said Sue Feldman, vice president and search analyst at International Data Corp., a research firm in Framingham.

Microsoft's delay in rolling out the next version of its Windows operating system, code-named Longhorn, which is expected to include advanced search features, creates a window of opportunity for smaller players over the next year or two, Aldrich said. Those that can solve problems for consumers or businesses will have plenty of customers.

"People are struggling with the issue of findability," Aldrich said.

"Over the next five years, you're going to see many niche players surviving, some will disappear, and new niches will be created."

Here's a look at three niche players in the Boston area:

EasyAsk Inc.

Go to a clothing website powered by EasyAsk Inc.'s natural language technology, and you can get precise and meaningful results from a search for "ladies footwear under $75," a query that would yield no matches or a confusing jumble of listings from e-commerce sites using searches for key words.

Over the past four years, EasyAsk's e-commerce search tools have attracted 100 customers, from Lands' End to Talbots to Coldwater Creek. Now the Marlborough company, backed by Sigma Partners of Boston and Flagship Ventures of Cambridge, is branching into the field of enterprise search -- helping employees to locate corporate data.

Bob Alperin, the president and chief executive of EasyAsk, has refined his elevator pitch to reflect the company's move behind the firewall and its targeting of a new class of customers: "We make it easier for corporate constituents to find corporate information and accelerate a path toward more fully informed decisions."

It's not hard to understand EasyAsk's motive for diversification. While Alperin estimates the market for e-commerce search software at less than $100 million a year, Alperin thinks the market for enterprise search tools is closer to $1 billion annually, and growing. IDC estimates knowledge workers spend 15 to 30 percent of their office hours seeking information.

"Companies are realizing they're leaking money because employees can't find the information they need," Feldman said.

"I like to think of this market as the Super Bowl of search," suggested EasyAsk founder and chairman Larry R. Harris, a Dartmouth College computer science professor turned technology entrepreneur.

"When there's real money involved, it really matters," he said.

EasyAsk, which employs about 50 people, offers navigation technologies to help employees of companies and other organizations surmount the problems of not knowing where to look or how to ask for data.

Its searches extend beyond the World Wide Web to relational databases, reports, documents, information warehouses, and e-mail logs within enterprises, enabling their employees to rapidly answer questions like "What color sweaters have total sales in excess of $100,000?" or "What employees speak Russian and know Oracle databases?"

After a dozen quarters of revenue growth, EasyAsk expects to be profitable midway through 2005, Alperin said.

But as it ventures into the enterprise market, it faces tough competition from a pair of larger California rivals, Verity Inc. and Autonomy Inc.

Then there's Google itself, which has been moving into enterprise search with what EasyAsk officials say is a less robust, though cheaper, offering.

Dotomi Inc.

Framed on a wall outside the executive offices at Dotomi Inc., on the edge of Boston's Financial District, are colorful arrangements of Post-it notes bearing motivational slogans offered up by employees during a company workshop: "Relevancy, Retention, Relationship," "Give Consumers Control," "Shaping the Future of Advertising."

At a time of resurgence for online advertising, Dotomi offers advertisers the ability to customize messages to consumers on banner spaces of the various websites they visit, from about.com to nytimes.com. Advertisements on Google, by contrast, are driven primarily by search terms. Through partnerships with big advertising networks, Dotomi claims to have coverage of about 8,000 US websites

"The days of blasting your message all over the Web are over," said John Federman, president and chief executive of two-year-old Dotomi, which is backed by U.S. Venture Partners of Menlo Park, Calif., Investor Growth Capital of New York, and Velocity Equity Partners of Boston. "We're going toward a much more targeted experience. When you have a little kid in the house, you don't mind seeing an ad for Pampers. If you don't have a kid, you'd rather see something else."

Dotomi -- the name is an acronym for "direct one-to-one marketing inc." -- uses permission-based marketing to connect consumers with the marketers they want to hear from.

When a consumer books a flight to Florida from a site on travelcompany.com, for instance, the site will ask her if she wants to receive direct messages. If she does, Dotomi will drop a cookie on her browser. Then, when she goes to a website in the future, the banner ad she sees will contain a customized pitch for the best rates on upcoming flights to Florida. (Neither Dotomi nor the websites to which it delivers custom ads keep personally identifiable information on consumers.)

The technology was developed by Israeli computer scientist Yair Goldfinger, the Dotomi cofounder and chief technology officer. Goldfinger, who is based in Tel Aviv but travels frequently to Boston, was the creator of instant messaging. He turned his attention to Internet advertising after his former company, ICQ, was sold to America Online.

Dotomi, which employs 52 people worldwide, seeks to capitalize on the shift to "retention marketing" by advertisers looking for repeat business. "Retention marketers are just starting to discover the Web as a vehicle to reach consumers," said David Vogel, managing director of Velocity, which invested $1 million in Dotomi in October. Retention marketers now try to reach customers through e-mail that often gets caught in filters or lost in spam-clogged inboxes. In the future, Vogel believes, they will migrate toward customized ads.

Eliyon Technologies Corp.

In early 2000, when he was running Corex Technologies Corp., a maker of hardware and software that scan business cards, chief executive Jonathan Stern had a realization: "If I could collect information about every company in America -- what they do, what products they sell, who works there, and who used to work there -- it would be worth a lot of money," he recalled thinking.

Thus was born the idea that grew into Eliyon Technologies Corp., a Corex spinoff that provides power searches of companies and people. Eliyon, located in Corex's office building on Memorial Drive in Cambridge, has amassed a database of over 1.5 million companies and more than 23.6 million business people. "Currently we believe we have the largest database of people in business anywhere," Stern said.

Convinced of the limitations of Google-style cataloging of words on Web pages, his company developed its own Web crawlers, based on algorithms that analyze websites and correlate information. "There's a lot of relevant information that's scattered," Stern said.

Eliyon's business search engine enables customers to develop detailed corporate and personal profiles that quickly yield information such as the names of everyone at Microsoft Corp. who works on the Xbox or all vice presidents for manufacturing in the Boston area.

The technology is licensed to corporate recruiters, sales people, business development executives, investment bankers, and hedge fund managers.

Unlike many other venture-backed start-ups, Eliyon has been profitable for the past 2 years. The 60-employee company is backed by venture investors, including Venrock Associates and Vulcan Capital, Paul G. Allen's investment group.