Who Just Nabbed Microsoft as a Customer? Ask Jeeves!

The company is also introducing a 'shopping adviser' product to attract the e-commerce market.
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SAN FRANCISCO -- The butler is on a roll.

Ask Jeeves


, the search company whose mascot is a butler, signed up


(MSFT) - Get Report

as a customer for its corporate question-and-answer service. The company also unveiled a new service targeted toward e-commerce sites.

The Microsoft deal is in the "low seven figures" and has the potential to become a "multiyear deal," says Robert Wrubel, the 38-year-old CEO of Ask Jeeves. Including Microsoft, Ask Jeeves claims 17 customers for its corporate service, a sort of virtual customer-service representative. Getting the money from Microsoft is less important than the way in which the deal helps solidify Jeeves' reputation.

"It gives them instant brand recognition and validation in any market," says Christopher Lord, general partner with

Pivotal Asset Management

. Since snapping up Ask Jeeves shares in its initial public offering, Pivotal has increased its stake in the company. "They can get into any account in the world now," says Lord.

Ask Jeeves had been working with Microsoft on a pilot project for several months before closing this bigger deal. That project, designed to improve customer service on the software giant's Web site, was answering 250,000 questions a month. Wrubel says the project will now be expanded to other parts of Microsoft's Web site.

The company didn't disclose terms of the agreement, but Wrubel says the financial model will be similar to its other corporate contracts. On top of an up-front fee to build a database of questions, Ask Jeeves will receive a monthly maintenance fee and a small commission for each answered question.

The deal was Ask Jeeves' second last week. Last Tuesday,


book publisher

IDG Books


tapped Ask Jeeves to power a Q&A service on its Dummies Help Desk. Since then, shares of Ask Jeeves have risen 57% to 50 7/16 as of Friday's close.

Ask Jeeves is also introducing a "shopping adviser" product that could open it up to the growing e-commerce sites. After choosing a product such as "stereo receivers," Ask Jeeves' software guides consumers through a series of questions that help them choose what kind of receiver they want. One question, for example, asks, "First things first -- how big is the room where you'll be setting up your home-entertainment system?" The product has signed on its first customer, electronics-equipment retailer



Wrubel says the shopping adviser is different from other shopping helpers such as Excite's Jango or



shopping engine. "It guides you to a purchase decision when you don't know what you're looking for," says Wrubel.

By contrast, other Web-based shopping services help consumers find the best price and place to purchase a product that they've already identified. Other than e-commerce sites, Wrubel says the product could have other applications such as helping consumers determine the best travel packages or investment portfolios.

"I think that Rob is doing a great job running the company," says Lord. "This kind of activity doesn't surprise me."