Ask Jeeves Ousts Overture, Goes Google in $100M Deal

Further strengthening its position atop the search engine hierarchy, Google (Nasdaq: GOOG) has inked a US$100 million, three-year deal to provide listings to search engine Ask Jeeves, where it will displace rival Overture.

Starting in September, Google will replace Overture as the provider of premium paid search results on Ask Jeeves. The deal is expected to generate $100 million in sales over the next three years, with Ask Jeeves receiving the lion's share of that revenue.

Overture has been supplying paid listings to Ask Jeeves since mid-2001. The latest upset comes about two months after Google cemented a deal to supplant Overture as the paid listings provider for America Online.

More Pay To Play

Ask Jeeves Web Properties president Steve Berkowitz said the deal builds on the growing importance of paid listings within the company's business model. Paid placement sales rose 40 percent between the first and second quarter, he added. More paid listings also means a more predictable revenue stream, he added.

"The deal with Google also improves our returns substantially," Berkowitz said. "We expect our revenue from paid listings on Ask Jeeves and Teoma.com to more than double from Q3 to Q4 and beyond as a result of this agreement."

Consumers Buy In

Lisa Strand, director and chief e-commerce analyst at Nielsen//NetRatings (Nasdaq: NTRT), told the E-Commerce Times that more search engines are embracing paid listings because consumers have shown little resistance to them.

"People understand that the money to pay for these things has to come from somewhere," Strand said. "They're not paying, and as long as they are labeled and broken off, consumers don't seem to mind."

At the same time, more companies are recognizing that having a presence in search engine results is an integral part of overall marketing strategy, according to Strand. "We tell our clients not to overlook it as an option," she noted.

Overture Okay?

Overture CEO Ted Meisel, who previously described the loss of the AOL contract as "a minor setback," told reporters that despite losing Ask Jeeves, Overture will report higher-than-expected second-quarter earnings next week and will raise its outlook for the rest of the year.

Overture recently has signed deals with Lycos, AltaVista and CNET.

Bottom-Line Boost

Ask Jeeves, meanwhile, clearly needs the bottom-line boost that Google results might be able to provide. It posted a loss of $6.5 million on $17.6 million in revenue during the second quarter. The company also found it difficult to post profits despite branching out into enterprise services and other areas.

Google, on the other hand, has risen to prominence quickly. Often cited as the next logical dot-com IPO, the search engine now ranks third behind Yahoo! (Nasdaq: YHOO) and MSN in terms of number of searches, according to NetRatings, and it often ranks ahead of competitors in terms of amount of time spent searching for results.