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Ask.com becoming the search engine that could

Search engine is gaining ground and snagging business from rivals in move to focus on technology, not ads.

Elinor Mills Former Staff Writer
Elinor Mills covers Internet security and privacy. She joined CNET News in 2005 after working as a foreign correspondent for Reuters in Portugal and writing for The Industry Standard, the IDG News Service and the Associated Press.
Elinor Mills
4 min read
The butler is dead, the name has been tweaked, but executives at Ask.com would like to remind the world that they are still very much in business.

In fact, they're actually doing pretty well these days.

"We certainly are the underdog. We're certainly living in a Google world," Ask.com Chief Executive Jim Lanzone said. "But Ask is anything but small compared to the rest of the Web. We're the fourth-ranked search engine and one of the top 10 Web properties."

Just this week, the portal Lycos announced that it had chosen Ask.com to replace Microsoft for its natural search listings and Google for sponsored listings.

"We selected Ask.com over other providers because of its great search technology and tools like Zoom-related search, which cannot be found on other engines," Lycos Chief Operating Officer Brian Kalinowski said in a statement on Wednesday.

Once the perennial also-ran, the search site formerly known as Ask Jeeves has undergone a significant transformation over the past two years. Jeeves, the cartoon butler logo, was ousted and the cutesy name was finally streamlined in February. The site also added new features that have earned praise from technology columnists.

While Ask.com is still a long way from being in the top three of search sites, it's finally making some progress. Ask.com recently nudged out AOL for the fourth spot among search engines in the U.S., behind Google, Yahoo and Microsoft, according to comScore. ComScore shows Google with a 45.1 percent share in the U.S. in September, Yahoo with 28.1 percent, Microsoft with 11.9 percent, Ask with 5.8 percent and AOL with 5.6 percent. (AOL's search is powered by Google.)

According to Nielsen/NetRatings, Google and Ask.com are the fastest-growing search engines based on the number of U.S. searches. They showed growth of 24 percent and 19 percent respectively in September, compared with the year before. In market share, Nielsen shows Ask in fifth place, just behind AOL.

"I suspect Ask has a shot at perhaps ousting AOL over time," said Danny Sullivan, editor of Search Engine Watch. "AOL's been dropping, in general, from the figures I've seen, while Ask has stayed steady."

Granted, any rise is big for Ask.com given its relatively small share. But even a 1 percent gain in market share translates to double-digit percentage growth in revenue, said Lanzone.

"Double-digit market share is a very realistic goal for us," said Lanzone, who was promoted to Ask.com chief executive in May. "In a year where we've had the toughest critics in the industry, from (Wall Street Journal columnist) Walter Mossberg to (Atlantic Monthly contributor) James Fallows, switch to Ask.com, we've established our credibility as the most significant challenger (to Google) in the market."

Neither Mossberg in an article in March nor Fallows in October said they were dumping Google. But they did recommend people give the new Ask.com a try following technology and interface changes made in February when the company changed its name.

They liked Ask.com's Smart Answers of editorially suggested links; the Zoom feature, which allows people to narrow or broaden a search; the Binoculars feature, which offers a preview of a Web page in the results; the walking directions on the map service; improved image search; and the fact that there are only three ads at the top--fewer than on other search sites.

"Every so often, an underestimated contender rises up to compete with a champion play for play, or even to beat the champ. Something like that is happening in the search business," Mossberg wrote.

Search Engine Watch's Sullivan called Ask.com engineering "smart, innovative and nimble," and praised the company for not "forgetting search while the others more and more play the portal and content game."

It's starting to look like the Ask acquisition was a good move for InterActiveCorp (IAC), said Scott Devitt, an analyst at Stifel Nicolaus.

"The user interface is quite good. The challenge is making a reason for users to switch," he said. "Marginal improvements at Ask don't necessarily shift market share."

IAC, owned by Barry Diller, acquired Ask in March 2005 in a deal then valued at $1.85 billion. This week, IAC posted higher third-quarter profits, and a 62 percent rise in revenue in its media and advertising unit, which includes Ask.com.

IAC shares reached a 52-week high of $32.29 in intra-day trading Wednesday, the day after the company reported earnings, before closing at $31.60. The previous 52-week high was $31.50, set in March.

"We think Ask.com remains an '07 story, but have been encouraged by market share gains and promotional efforts," Standard & Poor's Equity Research analyst Scott Kessler wrote in a note released on Wednesday.

IAC is integrating content into Ask.com from its sister sites, including LendingTree.com, Match.com, Ticketmaster and Gifts.com, said IAC President Doug Lebda. With IAC's backing, Ask.com has been able to invest in its technology and marketing without having to worry about operating costs, say Ask.com executives. Thus, the reduction in ads on the search results page.

"We have fewer ads, and the strategy has worked," Lebda said. "While it reduced monetization in the short term, over time--because consumers come back more often--that has made up for it. We have happier consumers, more frequent users and more loyalty," he said.

Lanzone added, "Our approach, to make an analogy, is to sell more copies of the magazine, rather than try to stuff more ads in each copy. That's working for us."