Marketing News: Ask Jeeves Launches New Advertising Network

With backing from a new owner known for shaking things up, Ask Jeeves Inc. is launching a new advertising network powered by their own search engine and set to debut on Monday. The move is sure to rile Google Inc., their longtime business partner, as the marketing system is in keeping with the very profitable model used by Google as well as Yahoo Inc.

Ask Jeeves has been in business for nine years, one of few to survive the dot-com bust. They have recently been acquired for $2.3 billion by InterActiveCorp, a New York-based company controlled by media mogul Barry Diller. Diller is best known for his risky yet successful launch of a fourth broadcast television network at Fox nearly twenty years ago.

With the expansion of the advertising network, Ask Jeeves is entering territory previously dominated by Google and Yahoo, a move which Microsoft Corp. hopes to do as well with their MSN.com site. The advertising model used by Google and Yahoo enables advertisers to bid to have their text-based advertisement links displayed when users enter specific requests into a search engine, with advertisers paying a fee for each time a user clicks on their link. This paid search concept has been very profitable, in fact it's an estimated $5.4 billion industry. Further, according to eMarketer Inc., it accounts for approximately 42% of the $12.9 billion that advertisers are estimated to spend this year on the Internet.

Ask Jeeves has participated in Google's network under a contract running through 2007, sharing in commissions from clicks on Google ads on one of their sites to the tune of about 70% of their $261 million last year. In fact, this relationship helped Ask Jeeves to survive the dot-com bust. Neverthless, there is a significant demand from advertisers to have another choice, and Ask Jeeves is well-positioned to fill that spot. They plan to continue displaying Google ads, but positioning them below those listings from their own ads given that users have been shown to be more inclined to click links displayer higher up on a page.

Overlap between Yahoo and Google audiences is 22%, while just 16% of Ask Jeeves' audience overlaps with Yahoo and 14% with Google. In addition, in recent analysis completed by Compete Inc., Ask Jeeves' users are typically less active than those of Google, Yahoo and MSN search engines, returning to the Ask.com site an average of two times per month compared to four times and six times per month for Yahoo and Google respectively. According to comScore Networks, Ask Jeeves ranked in fifth place in the U.S. search engine network with a 6% market share, compared to 36.9% with Google and 30.4% with Yahoo.