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Jul 23, 2002, 07:38 #1
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News: Google Bumps Overture From Jeeves
July 19, 2002
Google Bumps Overture From Jeeves
By Christopher Saunders
The shootout continues among paid listings providers as Ask Jeeves (ASKJ: Quote, Company Info) becomes the latest major Web site to sign onto Google's paid listings service, ousting current vendor Overture (OVER: Quote, Company Info).
Through the three-year contract, Emeryville, Calif.-based Ask Jeeves will syndicate Google's keyword-based AdWords listings, beginning in September. Additionally, the site receives the right to syndicate Mountain View, Calif.-based Google's sponsored links to its own affiliates, in connection with the distribution of results powered by its Teoma search technology.
"By utilizing Google's sponsored links service alongside our Teoma search technology, we will deliver a great search experience to millions of users on Ask.com and Teoma.com," said Ask Jeeves Chief Executive Skip Battle. "The deal with Google also improves our returns substantially."
As a result of the arrangement, the companies said they anticipate sharing more than $100 million in revenue over the life of the contract. Additionally, Ask Jeeves -- which is gunning for profitability in the fourth quarter -- said it expects to double quarterly revenue from paid listings by the end of the year, though it did not release specific numbers to support this.
Other financial specifics of the deal were not disclosed.
Part of the tremendous upswing in listings revenue that Jeeves predicts for fourth quarter could be expected to stem from the seasonal upswing in fourth quarter, as third quarter typically represents ad-supported companies' softest period, with traffic slowing during the summer months.
Overall, the firm anticipates third quarter revenue -- about 75 percent of which usually comes from ad sales -- of $16.5 million, increasing to $21 million by fourth quarter.
If the company makes good on its bid to double listings revenue, it would continue a trend begun at the beginning of the year. Ask Jeeves said it had seen a 40 percent increase in the business during the first half of the year, thanks in large part to new keyword-based ad products.
"As we continue to increase the percentage of revenue from paid placement we'll increase the predictability of our revenue streams and cash flow," said Steve Berkowitz, president of Ask Jeeves' Web Properties division. "This should have a very positive impact on our financial projections and allow us to make additional investments in our search technology and site experience."
As it had with Pasadena, Calif.-based Overture, Ask Jeeves will continue to sell its own paid listings and paid inclusion products, which coexist with search results delivered from its partners.
For Google, its new agreement becomes only the latest instance of it replacing Overture as a major Web site's paid-listings provider. Earlier this year, Google succeeded Overture in deals with AOL Time Warner (AOL: Quote, Company Info) and Earthlink (ELNK: Quote, Company Info).
For Google, the agreement also extends its reach to Ask Jeeves's 2.6 million monthly users -- based on Nielsen//NetRatings (NTRT: Quote, Company Info) numbers -- and syndication partners. NetRatings' data indicates Ask Jeeves' traffic is 85 percent unduplicated on Google.
"This agreement will put our advertisers in front of millions of new users while also offering them new audience characteristics distinct to Ask Jeeves," said Google Chairman and CEO Eric Schmidt. "Google and Ask Jeeves have a shared vision of making it easy and efficient for people to search on the Web. By working in partnership, we will help grow the overall search market."
Separately, Ask Jeeves on Wednesday posted a second-quarter loss that beat Wall Street expectations. The firm saw a net loss of $10.4 million, or $0.26 per share, on $17.6 million in revenue -- topping estimates of $0.21 per share, according to Thomson Financial/First Call consensus.