Ask.Com Case Study

Ask.com

"Just when you thought Microsoft and Yahoo were going to get on with their lives, it’s (Ask.com) going to paralyze them once again." CEO of Ask.com after acquisition of Lexcio Publishing Group1

Ask.com is America’s fourth largest search engine with a considerable fan following and market share of around 4%. Recently Ask.com has expanded into European and Asian market. Ask.com is known for its technical innovation even thought it is not a market leader in search engine technology, yet it is one search engine which refuses to fade away. Interestingly it has been seen that while Google continues to expand, while Yahoo and Windows Live are struggling to maintain their market share, and one time giant Time Warner (AOL) is now reduced to a small player and gets its search results from Google, Ask.com has managed to retain its small but considerable market share. This may be attributed to heavy spending by Ask’s parent company IAC on advertising and Marketing. But continuous innovation like Ask3D which merges all results with images and maps in same result page, technological advance like morph which intelligently shows most relevant result type, and sometimes cashing on Market situations like the introduction of AskEraser after privacy concerns erupted when AOL released data of 650,000 users have managed to keep Ask.com in the market2.

It has not been shy of competing with the market leaders like Google, its Ask3D feature was a winner over Google’s Universal Search technology3. Its features are so appealing that some of them have been copied by Yahoo and Windows Live like the display of related searches or suggested queries. Ask.com may not seem to rival Google, but its continued survival in search market and ability to generate revenue makes it profitable. As predicted by JPMorgan Chase analyst Imran Khan, search market will be around $60 billion by 2011. So there a lot of revenue will be generated thought advertising. And even a small share in the market can be very profitable4.

Company History

Ask.com which was formally known as Ask Jeeves was founded in 1996 in Berkeley, California by David Warthen, veteran software developer, and Garrett Gruener, venture capitalist at Alta Partners and founder of Virtual Microsystems5. At its start, the concept of the Ask.com search engine was to allow searchers to type questions in natural language in order to get results, rather than to type in a random string of keywords, although typing keywords also worked. A cartoon character butler names jeeves was chosen as the company mascot. By October 1998, Ask.com was getting 300,000 searches per day, which increased to 700,000 by January 1999, and then one million in May and two million by October of the same year6. The company was undergoing exponential phase of growth. In July 1999 the company launched its first national advertisement campaign. The company, led by Robert W. Wrubel, who was appointed president in May 1998 and chief executive officer in November 1999 took advantage of this situation by completing an initial public offering (IPO) of stock. The IPO was completed in July 1999 and was a spectacular success. It was the third most successful first day performance in business history7. The company’s stock value soared, rising to high of $190 per share. Ask Jeeves revenue also grew exponentially. The company generated $23,000 in sales in 1997, $800,000 in 1998, $22 million in 1999, and $58 million in 20008.

During the early years of the new decade, the novelty of a natural language search engine had faded. Of critical importance to a search engine's popularity was its effectiveness, its ability to produce relevant results to the query posed by the user. The technology employed Askjeeves produced results that were at times irrelevant .The company’s downfall began after 1999. Profits failed to materialize amid the energetic revenue growth. The company sustained annual net losses that reached $675 million by 2001. The investors were losing faith in the company, causing Ask Jeeves's stock value to plummet severely. From a high of $190 per share in 1999, the company's stock began spiraling downward, falling to just $.86 per share by 20029. The company was in trouble and sweeping changes were made to arrest its spectacular fall. Ask Jeeves's efforts to effect a turnaround began in earnest in December 2000, an occasion marked by the arrival of a new chief executive officer. A. George Battle. When Battle arrived, the company began streamlining its operations in an effort to increase revenues and reduce costs. Battle replaced most of the company's senior management and reduced the company's payroll by over 50 percent in a three-year period following his arrival10. The most important accomplishment of Battle's tenure occurred in September