Companies with technologies that help bring together Internet users and firms with something to sell are walking around with bulls-eyes on their backs these days -- and one such company found itself mounted in a hunter's den this morning as natural language search service Ask Jeeves (Nasdaq: ASKJ) today announced the acquisition of privately held Direct Hit.
Direct Hit and its core "Popularity Engine" will cost Ask Jeeves 5.12 million shares, approximately $500 million based on last night's closing price.
Direct Hit has developed a widely used popularity-based search technology that recommends websites to surfers seeking a particular topic by pointing out the sites other users have selected when researching that same topic. Typing, for instance, "cats" into a search engine using Direct Hit might produce results not only based on the engine's own meta-search technology but a listing of the sites most frequently clicked on by people who've also inputted "cats."
It's much like a database Ask Jeeves is already developing, through which it hopes to gain a broader understanding of what Web users are looking for and where they are going for it so the company can drive leads toward its customers. You can read more on this in our late-December StockTalk interview with Ask Jeeves CEO Rob Wrubel linked at the bottom of this page.
Ask Jeeves, which operates the ask.com search portal as well as a corporate service that provides customized customer service search interfaces to companies like Microsoft(Nasdaq: MSFT), Nike(NYSE: NKE), and DaimlerChrysler(NYSE: DCX), expects to benefit from this deal not only because it can add Direct Hit's capabilities to its own searches but because Direct Hit is already syndicated widely across the Web.
Among Direct Hit's clients are About.com(Nasdaq: BOUT), Go2Net(Nasdaq: GNET), and InfoSpace.com(Nasdaq: INSP); Ask Jeeves expects the acquisition to greatly expand its reach and boost its ability to collect Web-user data.
And Ask Jeeves believes Direct Hit's capabilities will be as valuable to its corporate customers as to its consumer users. "The technology we gain through this acquisition will allow us to combine human insight with advanced automated technology that can be scaled and implemented on company Web sites across the Internet," said Wrubel in a statement. "Now we can offer corporations an automated, intelligent service driven by customer preferences that can be up and running quickly."
"We will also expand the syndication of Direct Hit's search service," Wrubel said, "to aggressively pursue new business-to-business and business-to-consumer market opportunities."
That pretty well sums up Ask Jeeves' gung-ho approach to finding new ways to serve both corporate and consumer users in the short time the company's been around. A scan of the recent news file shows the company setting up personalization options, and executives are also mulling stand-alone sites for people seeking adult-oriented content. Investors have been impressed with the company's approach this far and, judging by the stock's move this morning, continue to be.
