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AskJeeves Becomes Hotter Commodity
WebProNews
Staff Writer
2004-04-20
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With search engine AskJeeves seeing it's stock rise 8% to $39 a share yesterday due, in part, to Wall Street accolades, the search engine has become an attractive search engine to the big guys.
Wall Street, according to CBSMarketWatch, "spoke of the company's growing attractiveness to paid-search advertising networks." Google sponsors the ads that AskJeeves displays. Previously it was Yahoo-owned Overture provided these ads.
Because of AskJeeves improving reputation, Google and Yahoo may be prepared to battle for future rights to these ads. "Overture is likely to be very keen to win back Ask Jeeves from Google, possibly enough to bid up the price higher than current revenue share," said Safa Rashtchy, an analyst with U.S. Bancorp Piper Jaffray.
Currently, AskJeeves receives about 80% of the ad revenue generated from Google ads that appear on its site.
The recent acquisition of ISH, which owns Excite.com, by AskJeeves more than doubled the search engine's market share. Although AskJeeves is dependent on Google for revenue, the business merger and the revenue the search engine generates makes AskJeeves more attractive to Yahoo.
In order to win AskJeeves back from Google, Yahoo would have to offer a more lucrative revenue sharing deal than the one currently in place with Google and AskJeeves. Yahoo may also have to compete with an expected renegotiation of the current agreement that will only make winning AskJeeves back all the more expensive.
"Ask Jeeves may be able to raise its cut of the revenue sharing with Google to 90 percent under the agreement that it is expected to negotiate later this year," according to analyst Jordan Rohan at Schwab SoundView.
The question is: Is Yahoo willing to pay the revenue sharing price AskJeeves will demand in order to switch over to Overture hosted ads?
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