Here’s a brief recent history of Ask:

• July 1999: Ask Jeeves goes public
• March 2005: IAC buys Ask Jeeves for $1.85 billion
• February 2006: Jeeves the Butler goes into retirement
• April 2006: Steve Berkowitz, head of Ask.com, leaves to join Microsoft. Jim Lazone named CEO of Ask
• June 2007: Lanzone launches innovative Ask 3D UI, which other engines copy to varying degrees
• January 2008: Lanzone is out as Ask CEO, Jim Safka replaces him but later leaves
• April 2009: Jeeves the Butler returns in the UK
• July 2009: Doug Leeds takes over as CEO of Ask
• July 2010: Ask embraces “social search” (Q&A) and establishes current strategy

Ask has a relatively stable following at about 3 percent of overall search volume.

Current Ask CEO Doug Leeds says the following about where the company is going:

During the next few years, Ask will increasingly be able to deliver answers and information based on what you tell us about who you are, where you are and what you’re doing. Factoring in this kind of context will mean things like:

— The ability to control the social graph around your Q&A behavior, such as routing and filtering questions and answers based on people you know and your relationships with them.

— Asking questions about a specific location, browsing questions and answers from people nearby, directing specific questions to people near you or people who visit the places you frequent most.

The underpinning of this, naturally, is mobile and this is an area Ask will continue to tackle aggressively over the next few years:  a growing suite of mobile apps designed to accommodate a variety of use cases, ubiquity on all mobile platforms and operating systems, and more integration and transparency with third party developers. We want to be your de facto mobile Q&A experience. That’s what we’re aiming toward.

While Ask still has a meaningful following and usage it’s struggling to overcome insiders’ perceptions that it is no longer relevant in search. That’s not something that regular users care about however. But if mobile is the focus for the future — something consumers do care about — Ask really needs to execute at an unprecedented level.

Related Entries

• Ask.com To Focus On Q&A Search, End Web Crawling
• Ask Making A Bigger Bet On “Social Search” Or Q&A
• Ask Comes Full Circle With “Q&A” Offering
• Barry Diller No Longer CEO Of IAC, Ask.com
• Diller: Ask.com Was The Little Search Engine That Couldn’t
• Obit: A West Coast Digerati Deadpools Ask.com
• Ask Relaunches: Now “Ask 3D”

Groupon also just raised a gigantic funding round, between $500 million and $950 million according to reports. Within the past 12 months there have been other massive rounds of more than $100 million at companies such as Zynga and Yelp.

Part of what’s going on in these cases is early investors selling shares, as well as founders and early employees “taking money off the table.” This relieves some of the pressure to go public. However, once the number of shareholders of a company reaches 500 or more Securities & Exchange Commission (SEC) rules apparently force companies to start reporting financial information as though they were public.  It’s not clear how close Facebook is to the “500″ number officially or clear to me how that number is calculated precisely. (Clearly Facebook has more than 500 employees who have stock options, which are classified differently.)

As an aside, SEC has begun an investigation into the trading of private company shares. I suspect that we’ll see some new regulations down the road, though not in this Congressional term, that alter the ability of companies to do this kind of private fund raising and trading at this level of scale without going public.

On to the fun stuff: what might Facebook do, beyond making more people rich, with all the money? More headcount and more acquisitions are obvious moves. In addition the company is reportedly going to move to a new, larger home in Menlo Park that was a former Sun Microsystems campus — sometimes referred to as “Sun Quentin” after the California prison in nearby Marin County.

Facebook is reportedly making about $2 billion annually (run-rate) on advertising. But it’s serving almost 25% of all US display ads according to comScore. So I would expect its display revenues to increase accordingly. Yet where might Facebook look for more revenue growth when it does go public eventually?

Mobile advertising is one obvious place, e-commerce is another (shopping is a big opportunity for Facebook) and local is a third opportunity. But search might also be another place that Facebook inevitably turns.

Given the Microsoft relationship and Facebook’s lack of core competency in search it would not seem logical that the company would go there. But the “gravitational pull” of search may ultimately prove too great. As you know, after email search is the web’s “killer app.”

Imagine that Facebook were to become convinced that having its own search engine was a key to delivering a better user experience overall, as well as generating new ad revenue. One obvious and immediate possibility would be to buy Blekko, which has pushed social integration with Facebook Likes further than Microsoft itself.

Blekko has raised just over $24 million and could probably be acquired for some multiple of that figure below $200 million. Presto: just ad search. Other more unlikely possibilities would be to buy someone like Infospace or even Ask, though in both cases it would cost more than $200 million and potentially much more in the case of Ask.

For its part Blekko is very innovative but faces a long uphill climb against Google and Bing. Under the hood at Facebook, with 500 million users, it would be quite a different matter. In my view the thing that today separates the Facebook experience from being “truly useful” is a strong search offering, notwithstanding the Bing integration.

I’m speculating and I don’t know what the Microsoft-Facebook deal terms look like. They might contractually preclude Facebook from developing or introducing its own web search engine for some period of time.

Formerly I would have argued that it would be very difficult and almost pointless for Facebook to develop its own search engine given the Bing relationship. But with all this new money flowing and not that many revenue opportunities like paid search out there, the push and the pull of search may just be too strong for Facebook to resist.

Postscript: Clint Boulton at eWeek has an interesting post arguing that Facebook might buy the Chrome-based social browser RockMelt. He suggests this is another way to compete with Google, although Google is the default search option on RockMelt.

Related posts:

• Blekko, Bing & How Facebook Likes Are Changing Search
• What Social Signals Do Google & Bing Really Count?
• Bing, Now With Extra Facebook: See What Your Friends Like & People Search Results
• Bing Expands Use Of Facebook ‘Likes’ In Search Results
• Facebook 101: A Simple Guide To Understanding When & How To Use Basic Features

Now Diller is the chairman and senior executive of IAC, and the current CEO of IAC portfolio company Match.com, Greg Blatt, will take over as the CEO of IAC/InterActiveCorp.

Part of this news is that cable company Liberty Media has bought out of the company, trading in their shares of IAC in exchange for $220 million in cash and Gifts.com and Evite, once part of IAC.

John Malone, Liberty Media’s chairman said:

We are pleased to welcome Evite and Gifts.com to Liberty Interactive’s e-commerce companies. These companies are established leaders and build on our strength in specialty commerce. Our 17-year relationship with Barry has been very beneficial in creating value for our shareholders, and this transaction represents an efficient exit for Liberty from our IAC stake. We will continue to work together through Expedia and various other public vehicles created from our association.

TechCrunch has a statement from Diller:

“These last 17 years of my association with John Malone and Liberty Media have been a great, and occasionally, wild ride. We began this grand tour of interactivity a few years before the internet became widely used, and we were able to create, acquire and build up substantial businesses over that time.

While I’ll continue my association with Dr. Malone in Expedia, and as significant shareholders of the multiple spun-off companies, Liberty’s exit from IAC is a turning point, and I want to state my thanks and gratitude to Dr. Malone for his support and encouragement throughout (with one brief period of mutual discontent which we both believe was an aberration).

This has been a most productive partnership and I’m glad it will continue in other venues.”

More on this news can be found at Techmeme.

The Need, Or Not, To Crawl

Search engines like Google and Bing try to have answers to anything someone might search for by “crawling” the web, making copies of all the pages they find and storing them in a searchable database, or index. Ask has done the same thing since around 2001, when it acquired the Teoma search engine.

Crawling helps ensure that you have a comprehensive index. However, crawling is an expensive job — as is maintaining ranking algorithms, the systems that sift through the billions of pages stored in an index to select the best ones in response to a search.

For Ask, it no longer makes sense to maintain that technology. Earlier this year, the company shifted from trying to compete directly with Google and Bing as an all-purpose search destination to instead being a place where people can do Q&A search (see Ask Comes Full Circle With “Q&A” Offering). Running its own comprehensive web search system wasn’t helping with that mission.

“In some ways, we built a hammer and were looking for nails. We realized to the extent that they were doing general web search, our flavor of web search and the other favors out there, we weren’t adding much using our own technology,” Ask.com president Doug Leeds told me.

Outsourcing For Search

Ask will continue to use its web crawling technology, but far more selectively. Rather than trying to find everything from across the web, the crawling will be much more focused around sites that provide answers to questions people search for at the service. Ask will also continue to maintain its own news search service, both through crawling and pulling in news feeds.

Of course, Ask doesn’t want to be in a position where if someone does a search, they come up empty if Ask’s own database of answers has nothing. So the company will outsource for the comprehensive web search matches that it used to gather itself.

Which company will provide those results? Leeds said he’s not allowed to say. Almost certainly, it’s Google. Ask already has a deal with Google through 2012 to carry some of Google’s ads. There have also been reports that Ask has tested using Google’s results in the past, though Ask has never confirmed these and at one point, flat out denied it.

The outsourcing also means layoffs. Leeds said Ask will consolidate its operations to Oakland, California. It has about 60 people focused on search technology in Edison, New Jersey. About 1/3 of these will be offered relocation, with the remainder let go. It also has about another 60 based in China, where everyone is being laid off.

Postscript: I asked Google and was told:

We cannot comment on our partnership with Ask.  Ask has been a long standing partner of Google and we look forward to continue working with them in the future.

I also asked Bing if they were powering Ask and was told that it had “nothing to share on this.”

That was odd. I see no reason for Bing to clarify that they are not powering Ask. Heck, I see no reason for Google not to confirm it, other than perhaps it doesn’t want to attract attention that overall, it has even more share of the US search market than might be known (only about 3% more, but still).

Switching Over

When does the technology switchover happen? Leeds said that Ask has been testing using its search partner’s results for some time, and there’s no actual “on/off” switch that will be flipped for its own technology. Instead, Ask will blend results together, as it makes sense initially. Over time, more of the partner’s results will show.

“I don’t think you’re going to see any particular difference in our results versus tomorrow or next week.”

Earlier this year, Ask also brought back its Teoma web site, which featured “pure” search results from Ask’s Teoma search technology. Leeds said the company hasn’t decided what to do with the site yet.

Moving On With Q&A

Ask marks the second major search engine this year to give up its own search technology. Yahoo did so earlier this year, outsourcing to Bing in August. I’m sad that we’ve lost yet another search “voice,” though the launch of Blekko last month provides some optimism, on that front.

I’ve been pretty dubious about Yahoo’s chances of success in maintaining search market share. Major players that have given up their own search technology typically haven’t stayed in the majors. Yahoo has argued that search is just a “chip” like that in a computer — and what sells computers isn’t the chip inside but the overall experience. We’ll see if that metaphor plays out. I remain doubtful.

I was also pretty dubious about Ask’s future way back in 2008, when it had a leadership change and wasn’t clear about what its next move would be. As a major search player, I think that remains true. Ask isn’t going to build itself into a Google-killer, much less a Bing-killer. Barry Diller, CEO of IAC which owns Ask, recently admitted as much himself.

Over at Bloomberg, Brad Stone has a more detailed look today’s move by Ask from a business perspective, IAC’s Diller Surrenders to Google Juggernaut, Ends Ask.com Search Effort.

As a Q&A service, Ask may have some potential. Certainly it plays to a niche, and one that it still is known for despite having, until recently, really been out of the Q&A world for years. Since the reemphasis on question answering, Leeds said the service has gone from 30% to 60% of questions being answered.

Leeds also provided some stats from internal brand surveys that have been done. In one, Ask ranked well ahead of Google as being thought of as a place to get questions answered (46% to 27%):

In another, asking questions was a top reason for the most recent search someone did at Ask (20%) versus looking for information about a planned purchase at Bing (12%), Google (11%) or Yahoo (9%):

“No one is taking the Q&A communities and blending with Q&A search,” Leeds said. “My charge to people at Ask is ‘Great, let’s build it’.”

Of course, one of the big challenges I see in the Q&A space is the incredibly poor answers that some of them provide. I’ll be doing a future piece on this, but it’s common to get incorrect answers or no answers at all. It’s somewhat alarming, actually, how much “answer farm” content is polluting the results I find at places like Google and Bing.

Leeds also talked about former Ask CEO Jim Lanzone being right about focusing on retention and loyalty of Ask’s existing base — and it is a base, he says, that wants Q&A.

“If we increase our frequency and retention of existing users, that’s a huge market opportunity for us,” Leeds said. “The product they want, and they’re telling us they want, is to get more answers to their questions.”

John Mulaney said, and here is the transcript:

First up in the world of technology.

I heard this week that AOL might be buying Yahoo. I love it!

That is so sweet. It is like when two people in a nursing home start dating. They may not have much time left, but at least they have each other.

I love it!

You can watch the skit on Hulu, if Hulu allows you to. It is the introductory part of the snippet below, it starts right after the commercial and is over within 40 seconds. I’ve also embedded it below.

Hat tip to Peter Kafka for spotting this.

I don’t think Ask.com is going to gain search share; everyone copied us . . . Ask has no value inside of IAC, so why would it add value as a standalone site?

That can’t be correct because Ask contributes substantial revenue to the company’s Media & Advertising division. But when Diller’s IAC acquired the site in 2005 in an all-stock deal, he thought he would be able to grow Ask’s market share by 5 and maybe even 10 points. There was much skepticism at the time of course but apparently not enough on Diller’s part.

In 2007 Ask was ahead of the “universal search” curve when it released Ask 3D. Google and Yahoo followed with their own blended search offerings. But from a “look and feel” standpoint Bing is the one most similar to Ask’s earlier 3D design.

In accordance with that, one of the other things that Diller reportedly said at the conference today was that all the other search engines copied Ask and so there’s effectively no way for Ask to differentiate and grow. Several hundred miles north Microsoft CEO Steve Ballmer is making a similar accusation: Google is copying Bing.

Diller’s “copied by everyone” remark seems something of a cop out. Ask insiders, no longer with the company, previously told me that IAC corporate declined to sufficiently invest in core relevance. So while there were novel UI innovations basic search relevance lagged Google.

In addition, by arguably over-monetizing SERPs and neglecting relevance, assuming that’s accurate, Ask really sealed its own fate as a search also-ran.

Returning to the question of whether Ask has any value now, the company signed a $3.5 billion search-ads deal with Google in 2007. It has a term of five years and so would be still worth something like $1.5 billion. At the very least Ask.com also has some still-valuable search technology that a third party might want to acquire.

Despite Diller’s dismissal and disappointment, the Ask staff are still working to make the engine competitive. Most recently Ask launched Q&A as a way to differentiate from Google & Bing.

Postscript: IAC provided the following statement on behalf of CEO Barry Diller clarifying his comments made earlier today at the TechCrunch Disrupt conference:

I did not say that Ask has no value inside of IAC, period. In response to a specific question, I said that many of our assets are not ‘valued’ in the stock, and Ask is one of them…I was asked specifically if Ask would be better off with us or another company or standing alone. In the context of that question, I said that since it wasn’t valued in IAC – like so many of our businesses, because we have so many – that it would only be ‘valued’ stand alone.

Diller downplayed Ask.com’s role in the over IAC company but said he ultimately failed at thinking Ask.com can compete with Google. Diller said:

But one thing I want to make clear to investors is that Ask itself is not a large segment of the company. I had hoped it would become one, but I was wrong about that. I was wrong about the competitive landscape with Google. And a lot of our new features that Ask has been sporting has only helped the competition, as they’ve copied us at every turn and they look a lot like Ask.

Ask did relaunch itself this week with a questions and answers service powered by Ask.com’s users. This does make Ask.com somewhat unique from the other search engines core focus, but with all the competitors in the Q&A space, who knows if Ask.com can compete in this space. For example, just yesterday, Facebook brought a Q&A service to their 500 million user base. Plus we have well established and known competitors such as Aardvark (owned by Google), Amazon’s Askville, Answers.com, ChaCha, LinkedIn Answers, Mosio, Quora, Replyz, and Yahoo Answers.

An other interesting admission by Diller was that his ad campaigns really didn’t work. Diller said, “We’ve learned that spending a lot of money on marketing search products doesn’t get you very far.” As you may remember, Ask.com produced several, media campaigns over the years, trying to make a dent in market share.

To me, this is a huge shame. Back in 2004, I called Ask.com the Little Search Engine That Could and now we know, it couldn’t.

Much of the search growth came from toolbar searches, which was up by 35% in terms of revenue. Search also was up 5% in terms of income, but IAC decided to write off a $1 billion “impairment charge” on Ask.com. The exact amount was $1,020.6 million loss on the search business, which includes Ask.com.

Here are some more details from Reuters on the impairment charge and some notes from the IAC release:

Search consists of our search properties such as Ask.com, Fun Web Products, and Dictionary.com, our distribution business, which includes distributed search, sponsored listings and toolbars, and Citysearch.

Search revenue reflects an increase in proprietary queries and the continued growth in distributed toolbar partners and queries, partially offset by a decline in revenue per query. Ask.com’s site enhancements have improved monetization, leading to increased revenue per query, but have resulted in fewer queries per visit as users find their desired results more quickly. Citysearch’s revenue declined, primarily reflecting lower display revenue due to lower pricing and a planned reduction in inventory availability.

Operating Income Before Amortization was favorably impacted by higher revenue and lower marketing costs, partially offset by higher traffic acquisition costs as a percentage of revenue versus the year ago period. Operating loss in the current year was negatively impacted by impairment charges totaling $1.045 billion related to the goodwill and intangible assets of IAC Search & Media. These charges were identified in our annual impairment assessment and are due to lower growth projections for revenue and profits for IAC Search & Media in future years that reflect the Company’s consideration of industry growth rates, competitive dynamics and IAC Search & Media’s current operating strategies and the impact of these factors on the fair value of IAC Search & Media and its goodwill and intangible assets.

Jared Cluff, Ask’s senior VP of marketing, says the deal produced some measurable results in 2009:

“We saw double-digit increases in usage among NASCAR fans. With the fan cards that our Ask Ambassadors passed out at the track, we saw a 27 percent conversion rate to the site, so fans were coming back from the track and going to the site. That’s a remarkable stat.”

The Sporting News says Ask spent about $15 million on its NASCAR-related sponsorships last year. The deal was announced last January, with Ask saying the agreement would help it compete against Google, Yahoo, and Microsoft. But a year later, Ask remains a distant fourth in market share according to both Hitwise and comScore, and fifth according to Nielsen.

Armstrong said this at Citi’s annual entertainment, media and telecommunications conference today. This was prompted by a question about possibly using Microsoft Bing as a search partner at the end of this year, when the Google deal expires. Armstrong added that a new search deal, under the new independent AOL, will be financially good for them. He specifically said they “may trade search dollars for more display dollars.”

Armstrong is a former Google executive, who was named the CEO of AOL back six months ago.