Backed by a new owner known for shaking up the status quo, Ask Jeeves is launching an upstart advertising network powered by its own search...
SAN FRANCISCO — Backed by a new owner known for shaking up the status quo, Ask Jeeves is launching an upstart advertising network powered by its own search engine — a move likely to rankle longtime business partner Google.
Ask Jeeves’ marketing system, to debut today, follows the same model that has been generating tremendous profit growth for Google and another Internet powerhouse, Yahoo!.
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 Barry Diller-controlled InterActiveCorp (IAC) in a deal completed less than two weeks ago.
Now Ask Jeeves is invading territory dominated by Yahoo! and Google. Microsoft also hopes to grab a piece of the action with a similar advertising network revolving around its MSN.com site.
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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 someone clicks on their links. Bidding frequently changes, meaning ad placement shifts through the day.
The paid-search concept has mushroomed into an estimated $5.4 billion industry, accounting for about 42 percent of the $12.9 billion advertisers are expected to spend on the Internet this year, according to research firm eMarketer.
Like scores of other Web sites, 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 Web sites — a family that includes Ask.com, Excite.com, iWon.com and MyWay.com.
The Google relationship turned out to be Ask Jeeves’ salvation as it struggled to survive shortly after the dot-com meltdown.
Google accounted for roughly 70 percent of Ask Jeeves’ revenue of $261 million last year.
With its survival no longer in doubt and its Web sites growing in popularity, Ask Jeeves believes it’s time for its own advertising network.
“We are definitely very optimistic about the prospects for this product,” said IAC ad executive James Speer. “We think there is going to be significant demand. We have definitely heard from advertisers that they would like another choice.”
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.
Speer said Ask Jeeves hopes Google will regard the new approach as “an evolution of an existing product.
Both Google and Yahoo! declined comment.
Ask Jeeves believes its network will appeal to advertisers, because its audience isn’t as inclined to use the search engines at Google and Yahoo!. Ask Jeeves says 16 percent of its audience overlaps with Yahoo! and 14 percent overlaps with Google.
But Ask Jeeves’ audience tends to be less active than users of the Google, Yahoo! and MSN search engines, according to a recent analysis by Compete. The average Ask.com user returns to the site two times per month compared with four times per month for Yahoo! and six times per month for Google, Compete said.
IAC recently spun off Bellevue online travel agency Expedia.com and several related Web sites into a separate company. Ask Jeeves is widely expected to be integrated into those properties, too, since Diller retained a major stake in those operations.