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InterActiveCorp bought Ask Jeeves for $1.85 billion, furthering consolidation in the search market.

On the surface, Diller acquired an unsexy, yet profitable company in the hottest sector of online advertising: paid search. But underneath, the deal underscores a trend in search toward marrying content and navigation. Jeeves, among many other search companies, had been heading in that direction, with "smart answers" embedded in search results, e.g. a "San Francisco weather" query would call up the current temperature. But InterActiveCorp could expand on the theme by harmonizing its CitySearch local guides with Jeeves, for example.

Furthermore, search could be the platform to drive traffic and e-commerce at all of InterActiveCorp's far-flung properties, including Tickemaster, Expedia, Hotels.com, Match.com and CitySearch, among others. In that light, sponsored search ads could eventually play second fiddle to ecommerce-driven revenues.

That is what America Online seemingly aspires to with its search unit. For example, if AOL's search results drive a new customer to a local dentist, it might take a cut of the lead.

Similarly, GuruNet is drawing heaps of attention for its acumen in answering people's questions, and down the road it could tie ecommerce to its service. And Google is even perfecting algorithms to add more answers and content into its results.

 

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