Jeeves Takes On Google, Yahoo With Ad Move
Backed by a new owner known for shaking up the status quo, Ask Jeeves Inc. is launching an upstart advertising network powered by its own search engine -- a move likely to rankle its longtime business partner, Google Inc.
Ask Jeeves’ marketing system, scheduled to debut today, follows the same model that has been generating tremendous profit growth for Google and Yahoo Inc. during the last three years.
The expansion heralds a new era for Ask Jeeves, a 9-year-old company that survived the dot-com bust to be acquired for $2.3 billion by IAC/InterActiveCorp in a deal completed less than two weeks ago. New York-based IAC is controlled by media mogul Barry Diller, who defied skeptics nearly 20 years ago when he orchestrated the successful launch of a fourth broadcast television network, Fox.
Now Ask Jeeves is invading territory that has been dominated by the makers of the Web’s two most popular search engines -- Mountain View, Calif.-based Google and Sunnyvale, Calif.-based Yahoo. Microsoft Corp. also hopes to grab a piece of the action with a similar advertising network revolving around its MSN.com site.
Both Google and Yahoo allow advertisers to bid for the right to have their text-based ad links displayed online when specific requests are entered into a search engine or other relevant content is posted on a Web page. Advertisers pay a fee each time their links are clicked on. The bidding frequently changes, meaning the ad placement shifts throughout the day.
The paid search concept has mushroomed into an estimated $5.4-billion industry, accounting for about 42% of the $12.9 billion that advertisers are expected to spend on the Internet this year, according to EMarketer Inc., a research firm.
Like scores of other websites, Ask Jeeves has shared in the boom by participating in Google’s network. Under a contract that runs through 2007, Ask Jeeves shares in the commissions from the clicks on the Google ads displayed on one of its sites -- a family that includes Ask.com, Excite.com, IWon.com and MyWay.com.
Google accounted for about 70% of Ask Jeeves’ revenue of $261 million last year.
Ask Jeeves plans to continue to display ads from Google’s network but will feature them below the listings generated from its own auction-based ads. Since users generally click on the links displayed higher on the page, that hierarchy could mean less revenue for Google -- a dynamic that figures to cause tensions.
