IAC/InterActiveCorp announced it will buy web search engine Ask Jeeves Inc. for $1.85 billion to capitalize on the growth of online advertising and search markets. IAC's site include travel site Expedia, online dating service Match.com and the shopping site Gifts.com.
IAC's acquisition of Ask Jeeves will pit the company in direct competition with web search giants Google Inc., Yahoo! Inc. and Microsoft Corp.
Merrill Lynch Equity Research reports that search is now 36 percent of U.S. online advertising and expected to grow 24 percent per year over the next five years.
"Ask Jeeves was founded almost ten years ago based on the idea that simple text search results alone are not sufficient or satisfying -- but, rather, that consumers want answers to questions -- and questions posed in natural language and answered with spot-on accuracy were especially desired and appealing," says Barry Diller, chief executive officer, IAC.
"We believe that in the future Ask Jeeves has the potential to become one of the great brands on the internet and beyond, and by beyond we mean in wireless, in the search for anything on any device," adds Diller.
IAC says it plans to integrate IAC's brands while pioneering new search revenue models through Ask Jeeves properties.
"Joining IAC will enable us to play on a much larger field. We are excited about the opportunity to serve as the connection between IAC's constellation of leading online properties to share users and content. Ask Jeeves will now be in an even stronger position to aggressively grow market share," says Steve Berkowitz, chief executive officer, Ask Jeeves.
"The Ask Jeeves engine has always had a kitschy kind of feel and a unique means of at least pitching users on a more educated interaction with the site. Indeed, many of the search engine marketing firms we know today have leadership that can trace their origins to the butler. While Ask Jeeves remains a solid choice for searchers, actual user activity tells the story falling way behind leaders Google, MSN, and Yahoo!. The acquisition, if integrated efficiently will mean broader reach for a search site with a defined need for a broader user base," says Kevin Ryan, iMedia Search Editor.
