In Google's Shadow, Ask Jeeves Grows

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While Google and its gigantic stock offering draw the attention, Ask Jeeves has been content to quietly build its share of the search market.


"The amount of attention focused on the Google brand has already been extreme," said Jim Lanzone, vice president of product management at Ask Jeeves. "We've had to deal with that every day."


Lanzone, fresh off interviewing a job candidate for the expanding Emeryville, CA, company, makes the case that Ask Jeeves has become a force in search. The company increased queries 42 percent year-over-year in the first quarter, users by 20 percent and search frequency by 14 percent.


The company's acquisition of Interactive Search Holdings, which closed May 6, doubled its share of the search market to 7 percent. In addition to Ask.com, the company now operates iWon.com, MyWay.com and MySearch.com -- a stable of search properties that it reckons raises its reach to 29 million searchers. Combined, the Ask Jeeves search properties handled 1.7 billion queries last quarter.


The key to Ask Jeeves' position in the competitive search market, its executives say, is that it owns its search technology. Unlike MSN, which is building algorithmic search capability, and AOL, which relies on Google, Ask Jeeves has Teoma, a Web search technology it bought for a bargain-basement price of $4.5 million in September 2001, well before the search boom.


"Index search is the great differentiator in the opportunity for value creation in this space," Ask Jeeves CEO Steve Berkowitz said in a conference call after closing the ISH acquisition.


Unlike Google, which determines search results based on link popularity, Teoma takes a community approach, judging relevance based on authorities it ties to subjects. By combining Teoma with its own roots in natural-language search, Ask Jeeves has been a leader in directly returning information to user queries through its Smart Search initiative.


With Smart Search, a query for "capital of Latvia" yields "Riga" and one for "weather in San Francisco" returns a forecast, in lieu of an index of Web pages. Ask Jeeves executives bank on steps like these to expand its search market share at the expense of rivals.


"I think Jeeves has excellent prospects for competing against Yahoo and Google," said Chris Sherman, associate editor of Search Engine Watch, an industry newsletter.


Ask Jeeves plans to use ISH's search properties to offer users various points of access. Ask.com features natural-language search; iWon operates a portal that gives away prize money; and MySearch is a meta-search engine using five search providers. The acquisition also brings Ask Jeeves SmileyCentral.com and FunWebProducts.com, desktop software applications bundled with a search toolbar.


"Most searchers use more than one search engine -- we call it jumping," said Paul Gardi, senior vice president of strategy and growth initiatives at Ask Jeeves. "They're doing that because you can actually improve your experience by using different engines. It's not like one engine is going to win this game."


Berkowitz said Ask Jeeves will invest in the ISH properties to improve the user experience. It also will keep ISH's Max Online ad network, which places banner ads on 15,000 small Web sites.


Though Ask Jeeves executives stress that Google controls only one-third of the search market, they acknowledge it looms larger because its paid search listings appear on other search engines, including Ask Jeeves. Google even accounted for 69 percent of the company's revenue last quarter, helping Ask Jeeves boost its profit 74 percent from the year-ago period.


Berkowitz said Ask Jeeves is happy to let Google sell the majority of its ad inventory while it focuses on providing a better user experience.


"I don't think we're large enough to own our own sponsored-links system," he told investors.


But Ask Jeeves sees room for improvement in Google's ad targeting. Lanzone notes that too many non-commercial queries draw ads. He cited one for "Steve Jobs" that returns ads for Monster and other employment services.


"They're not as smart as they could be," he said of Google's paid listings.


One area where Ask Jeeves hopes to make search listings smarter is with its branded-response unit. The graphical banners are returned on certain searches to give users more interactivity. For example, a search for "cheap tickets" yields an Orbitz unit where a searcher can enter dates and travel destination to check availability immediately. Ask Jeeves has deals with 200 advertisers for branded-response units, which accounted for 31 percent of its sales last quarter.


"I've always believed that index search applies to advertising also," Berkowitz said. "Hopefully, maybe we can work at new ways, either working with Google or by our self, to find better ways of targeting."


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