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Diller Asks Jeeves to Grow

AOL was long seen as merely a declining cash-cow dial-up business in a broadband world, but with the explosion of Net searches in recent years, the company's Web sites have become a crucial property. The bidding for a stake or ad partnership with AOL drew not only Google and Microsoft but also their chief rival on the Web, Yahoo! (YHOO - Get Report), and fetched AOL an imputed value of $20 billion.

The big players' quest for scale puts also-rans like Ask Jeeves in an even tighter spot. Recent numbers show just how tough a crowd this is.

The volume of queries to Ask Jeeves rose 77% between June and October, a faster pace than its larger rivals, according to Nielsen//NetRatings. But Ask Jeeves still has just a fraction of those sites' reach. In October, Google did 2.4 billion searches, while Yahoo! had 1.1 billion, MSN 583 million and AOL 368 million. Ask Jeeves had 134 million, Nielsen says.

Regardless of the disparity in scale, Ask Jeeves is making progress. Some of its gain in traffic is likely the result of IAC's placement of Ask search boxes on its popular sites. More search boxes will be added over the next few months. In addition, IAC hopes to be able to use the site as a link between its businesses.

"Within the industry, there has been a lot of good, positive buzz," says Jennifer Laycock, editor of , in an interview.

Ask Jeeves' profile with investors also has been rising ever since IAC spun off its Expedia (EXPE - Get Report) travel business in August, says Scott Kessler, an equity analyst with Standard & Poor's in New York. He rates IAC shares a buy and doesn't own them.

"One of the initial goals for IAC is retool the site, to make it more appealing to consumers," he says. "It's less cluttered and more targeted than it has been in the past."

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