Ask: Arbitrage Doesn't Exist In The Growth Strategy

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Google's policies on Arbitrage ruffled a few feathers in Oakland, Calif. after Ask.com CEO Doug Leeds said rumors began spreading across the Internet that the Q&A site committed arbitrage.

Google's policy describes arbitrage as when advertisers use AdWords to drive traffic to their Web sites at a low cost, and pay for traffic by earning money from the ads placed on those Web sites. The rules state a Web site may get suspended if it has excessive advertising or designed for the sole or primary purpose of showing ads. 

"Arbitrage means you're trying to get a click and send the user to an app or site with a bunch of ads," Leeds said. "That's not what we're about."

Leeds told MediaPost that Ask.com offers something a little different than traditional search engine query results. It offers an information service supported by content and monetized with ads to drive traffic. He believes the explanation on Search Engine Land prompted by a SEL reader jumps to conclusions because of the recent change in the company's content business model.

Ironically, Google's mantra has been for marketers to create ads that answer customers' questions in queries.

Google declined to comment on the situation. "In general, we don't comment on specific advertisers or ads," said a Google spokesperson. "We're constantly reviewing and updating our policies, and search partners are subject to these policies."

Leeds said alienating users with a short-term arbitrage play is not what the company is about, adding that the company has been working with Google to ensure compliance.

The strategy is working. Leeds said daily queries rose Oct. 24 by 25% year-to-date, because site visitors get answers to the questions they seek, so they come back. Mobile query growth rose 45% in Q3 2012 compared with the year-ago quarter. And the company has seen 69% year-to-date page-view growth in Ask's Q&A community.

In September, Ask.com held 3.5% of search market share -- up from 3.2% sequentially, according to comScore.

Piper Jaffray Analyst Gene Munster said the search business at InteractiveCorp "could demonstrate a clearer growth opportunity in mobile, particularly in search." Based on certain acquisitions and improvements in the company's strategy, Munster estimates 11% growth in the company's search business in 2014.

Growth continues from investments in acquisitions, such as About.com, as well as branding campaigns. Next week, Ask will launch two new spots as part of its national cinema campaign with National CineMedia, which began in July 2012 across 40,000 screens nationally.

The branding campaign illustrates Ask's investment in marketing, which contradicts the definition of an arbitrage business. Arbitragers don’t spend money in offline brand awareness.

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3 comments on "Ask: Arbitrage Doesn't Exist In The Growth Strategy".

1. Kevin Lee from Didit
   

   commented on: October 29, 2012 at 9:15 a.m.
   Hard not to describe what Ask does as arbitrage. Several monitoring services list Ask.com as one of Google's largest advertisers. http://www.spyfu.com/TopList.aspx?listId=1 (and several others) We've all seen plenty of situations where ask.com advertises on Google includingthe application of linguistic transformations of the original query into a related (higher yielding) query. Conspiracy theorists wonder why ask is allowed to continue while all the comparison shopping engines saw their quality score degraded sufficiently to make arbitrage untenable.
2. Robert Pettee from DigitalMouth Advertising
   

   commented on: October 29, 2012 at 10:03 a.m.
   Well put, Kevin. As an SEM pro of 10 years, Ask has been a thorn in my side for many of them... despite being a "sister company" during one of my roles under IAC. Not mentioned in the article is how Ask takes "search ads" and inserts them into display ad units in remnant network inventory. I was at the party in NYC the night Jeeves was officially fired, something tells me that he's laughing on a beach somewhere.
3. Ross Bradley from Qeg Pty Ltd
   

   commented on: October 30, 2012 at 3:16 a.m.
   I'm maintaining that these 'changes' seen to be occurring are as a result of what I'm seeing as the new capability of an independent 100 Billion 'Events' Per Day ["intent based"-Looksmart] marketplace that few seem to want to comprehend my reasoning for this claim. Further mention has been made on this claim, in my comment on the above, on my own post re; this topic, here: Advertisers And Anonymous 'Cross-Platform', Geo-Located, Personalized Ad Targeting [And, View the instapost] http://seekingalpha.com/user/36191/comments

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