Ask Jeeves in the Search Spotlight

In Ask Jeeves CEO Skip Battle’s favorite metaphor, his company is offering Web searchers tea to Google’s coffee. While other search sites try to beat Google by brewing a better flavor of coffee, Ask Jeeves has a natty British butler brewing up an alternative.

This week, with the simultaneous news that the company would sell its enterprise search division and raise $100 million through a sale of bonds, Battle plans to test the market’s enthusiasm for his tea. His bet: The market for search is big enough to accommodate more than just Google and the mega-portals, MSN, Yahoo and AOL.

Battle is betting that the frothy market for search companies make the $100 million in convertible bonds attractive to investors. With that cash and the $4.25 million from the sale of Jeeves Solutions, the company will have $140 million to stake its place in the search market. Thanks to securities regulations, Battle and Ask Jeeves executives could not say what the company plans to use the money for, other than saying acquisitions were a possibility.

The Lopsided Search Market

Yet for all the giddy talk, Ask Jeeves remains not just a second-tier search player but very far behind the market’s leaders.

According to comScore Media Metrix’s qSearch service, Ask Jeeves garnered just 3 percent of the 3.9 billion searches done in April. In contrast, Yahoo racked up 31 percent and Google 29 percent.

From a financial perspective, Ask Jeeves is particularly dwarfed. While the $140 million cash trove will prove helpful, Yahoo recently moved to free up as much as $1 billion in a bond offering.

“The question is how do they continue to thrive when they’re facing the colossus of Google and another colossus of Yahoo and MSN,” said Danny Sullivan, editor of Search Engine Watch, which shares the same owner with this site.

Bring on the Butler

Battle points out that consumers do not view search as an either-or behavior, using many different search engines for their needs. With a strong brand identity established to the tune of $100 million during the dot-com boom, Ask Jeeves hopes to begin raising its brand profile slowly but surely.

Late last year, the company began dipping its toes back into the advertising waters, returning the Jeeves float to the Macy’s Thanksgiving Day Parade and supporting it with some outdoor advertisements in Manhattan. Slowly but surely, the company has rolled out similar outdoor campaigns, before officially marking its return to full-fledged marketing with an outdoor and radio campaign in April.

Still, the company faces steep competition. While Google for the most part shuns paid advertising, relying instead on word of mouth and the good press the company garners, Yahoo recently launched a far-reaching ad campaign to push its revamped search functionality.

Battle said the company would spend $4 million on advertising this year, after adding $1 million to the budget from the proceeds of the Jeeves Solutions sale.

The Teoma Advantage

Battle said the main differentiator would remain the Ask Jeeves search experience, which has evolved from the natural-language search to a sophisticated system based on the company’s timely Teoma acquisition.

Before Yahoo plunked down $235 million for Inktomi and Overture spent $240 million on Alta Vista and FAST, Ask Jeeves was able to acquire a robust search technology for a song: under $2 million in cash and stock. In April 2002, the company launched Teoma, which is Gallic for “guide.” Ask Jeeves believes the search engine is a credible alternative to Google because of its unique approach to search. Teoma groups results into categories to identify “expert” resources and offers suggestions for refining searches.

Ask Jeeves spent 2002 hammering out the kinks in Teoma and integrating it into the Ask.com search engine. Early this year, the company took the wraps off Teoma 2.0, its first update of the search engine. The updated search engine boasts improved relevancy and user-friendly tools like a spellchecker.

“They have a really good search engine,” Sullivan said, “and there aren’t a lot of search engines out there.”

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