Ask Jeeves Targets Direct Hit in Acquisition

SAN FRANCISCO (01/26/2000) - Aiming to give consumers a broader set of search results and rankings based on popularity of sites, Ask Jeeves is acquiring Direct Hit Technologies in an all-stock transaction worth about $532 million.

Ask Jeeves plans to integrate Direct Hit's technology into its consumer and children's sites, as well as include it in its corporate services, which allow companies like Microsoft, Nike and E-Trade to offer natural-language queries and other search and advice capabilities on their web sites.

While Ask Jeeves relies on human editors to help determine the relevancy of many results, Direct Hit's technology is fully automated and covers more of the Web, executives from both companies say.

Direct Hit's database includes more than 1 billion search records while its popularity engine tracks more-frequently-visited Web sites, as well as the amount of time people spend there and how often they return. Some searches can be personalized, so people can find out what sites were most popular with others in their specified demographic, says Direct Hit CEO Mike Cassidy.

The acquisition will enable Ask Jeeves' corporate partners to offer more targeted advertising and sales to their customers, said Frank Vaculin, senior vice president and general manager of corporate services for Ask Jeeves. In addition, Ask Jeeves will be able to get corporate customer question-and-answer sites up faster. "Before it was taking us two to four months to bring a site up," said Vaculin. Now, a Q&A site with broader search and popularity rankings can be offered in a matter of days, he adds.

Although Ask Jeeves is capturing the lion's share of corporate customers with its support and help desk services, the company trails other general-purpose search engines in the consumer space. Media Metrix ranks Ask Jeeves tenth for search engine sites in terms of traffic. Ask Jeeves executives expect the Direct Hit technology to move it higher.

"In an era where companies consolidate around powerful competitive positions and market leadership, we are making our claim to be one of the premier providers of, not just search, but great personal services to online customers," says Rob Wrubel, Ask Jeeves president and CEO.

Ask Jeeves also sees more market opportunities from syndication of the Direct Hit technology. The popularity engine is already used by a long list of companies including Microsoft, Lycos, LookSmart, Disney's Go Network, AT&T WorldNet, About.com, Infospace.com and Go2Net.

Under the deal, expected to close before the end of March, Ask Jeeves will give 5.12 million shares, equal to about 12 percent of the company, to Direct Hit.

The agreement has been approved by the board of directors of each company, but still awaits approval from Direct Hit stockholders. Ask Jeeves' stock was up $5 to $104 after the announcement Tuesday.

Direct Hit filed to go public in December after receiving about $3.4 million in financing from Draper Fisher Jurvetson and Mosaic Venture Partners in 1998. "We [went] public a month sooner," quips Cassidy.

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