Diller Asks Jeeves to Grow

The rising tide of Internet advertising is lifting all boats, but catching a wave could still be tough for IAC/InterActiveCorp (IACI Quote - Cramer on IACI - Stock Picks).

Barry Diller's Internet empire expects to increase the staff at its Ask Jeeves search engine by about 20%, Ask Jeeves head Steve Berkowitz says. The expansion comes as Jeeves, which employs 650 workers now, posts solid gains in traffic but remains overshadowed by its more famous and deeper-pocketed rivals. IAC shares are down 10% for the year.

The search company has a storied history, of sorts. Ask Jeeves shares quadrupled on their first day of trading in 1999, only to crash when the Internet bubble burst. Now the company, which became part of New York-based IAC in a $1.9 billion deal completed in July, is expanding both its operations center and its corporate headquarters staff.

With Internet advertising surging in popularity, Berkowitz is trying to carve out a niche for the 9-year-old site, with or without its butler mascot Jeeves. Among other improvements, Ask Jeeves wants to bolster its site by giving people suggestions on how to refine their queries.

"What we really want to do is grow share," says Berkowitz, who has headed Ask Jeeves since 2001, in an interview. "A lot of stuff is going to be happening" next year.

Indeed, a lot of stuff has happened already. Just the last year-plus has seen the rise of Google (GOOG Quote - Cramer on GOOG - Stock Picks) from a mere search engine to a many-tentacled media giant with aspirations ranging from books to music and just about everything in between. Last week the company reportedly beat out software titan Microsoft (MSFT Quote - Cramer on MSFT - Stock Picks) -- whose MSN network is heavily trafficked but has failed to win many fans -- in a competition to set a deeper partnership with Time Warner's (TWX Quote - Cramer on TWX - Stock Picks) America Online.

The sprint to set up shop with AOL illustrates the increasing power of Internet advertising.

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