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Ann Arbor, Michigan - (via THE HOSTING NEWS) - August 16, 2005 - The University of Michigan’s American Customer Satisfaction Index (ACSI) report on e-business websites released today puts Google and Yahoo! at the top of the list. The e-business report includes measurements of search engines, portals and online news and information sites.

Customer satisfaction with e-business continued its climb, rising 4.7 percent since 2004 to 75.9 on the ACSI’s 100-point scale. E-business narrowed the gap with the ACSI e-commerce measure (78.6) and exceeded the national ACSI average (73.1) for the first time ever.

Google (82), with its roots as a search engine, and Yahoo! (80), traditionally known as a portal, find themselves increasingly competing in the same space, as the categories of search and portals converge. Both companies are in the top-scoring tier of the ACSI, which measures customer satisfaction of over 200 companies across 41 industries.

Larry Freed, online satisfaction expert and President and CEO of ForeSee Results commented on the findings, “The lines between e-business companies are being drawn more in terms of content facilitators and content providers.Google and Yahoo! lead the way with MSN, AOL and Ask Jeeves trailing, but closing the gap.”

The link between customer satisfaction and revenues is clearly drawn as Google and Yahoo, the leaders in customer satisfaction among the content facilitators, both experienced revenue growth that more than doubled from 2003 to 2004. MSN and AOL who trailed the leaders in customer satisfaction saw modest revenue growth from 2003 to 2004.

“The research shows that those that provide the highest levels of customer satisfaction will prosper the most financially,” added Freed.

Dogfight: Google vs. Yahoo!

Over the last three years, Google and Yahoo! have led their respective ACSI categories. Google still holds the top score of 82 in the e-business sector, and its customer satisfaction advantage is reflected in its market share of U.S. searches and in revenues. The number of second quarter 2005 searches conducted on Google exceeds the combined searches on rivals Yahoo!, MSN, America Online and Ask Jeeves. Google’s revenues, meanwhile, have more than doubled from 2003 to 2004. In addition, Google has been innovating rapidly, adding Gmail, desktop search, mapping capabilities, and are reported to be planning to introduce video searches and wireless applications.

“Google is clearly the company to beat,” said Freed. “They’ve got the most satisfied and loyal customers of any e-business company measured by the ACSI, and it has translated into the biggest market share in the sector and huge revenue growth. But Yahoo! is going to battle, and web users are the biggest winners in the competition between the two.”

Yahoo! increased its customer satisfaction score from 78 to 80 (now just 2.5% behind Google in satisfaction ratings), and like Google, it has seen its revenues more than double from 2003 to 2004. Yahoo! continues to expand into new product areas like SMS search and other mobile phone technology. Yahoo has also picked up the pace of innovation, adding a music download service, mobile search, mapping capabilities and is leveraging HotJobs.com to run neck-and-neck with Google. Yahoo’s breadth of services and functionality has always been an advantage for them and they continue to leverage that strength.

“Look for Yahoo! to keep the pressure on Google as the two battle for the dominant position to be the go-to starting point for the user’s Internet experience,” said Freed.

AOL: Positioned for a Comeback

AOL is catching up, having increased its customer satisfaction score an impressive 6% this year, and fueling over 25 percent increase since 2000 (from a very poor score of 56 to a respectable 71, which is just 6% from the e-business aggregate score). As the e-business sector converges, AOL has moved away from its roots as a pure portal/ISP.

“AOL’s meteoric rise comes in large part from their continued leverage of their exclusive content available through Time Warner,” said Freed. “AOL is also making the most of their popular AIM instant messenger and beta testing free web-based email and a non-proprietary web based interface. These changes seem to be resonating with its user base, and a company that was down for the count just a few years ago will give the leaders a real run for their money if their scores continue to rise at this rate.”

MSN: Despite Commitment to Beat Google, Still Lagging Behind

MSN has its roots as a portal, and has overhauled its search capabilities and added satellite mapping to evolve with the converging marketplace. But with an ACSI score of 75, it has a way to go to catch up with Google and Yahoo!, and MSN is in not in a good position to make a serious move. MSN had minimal improvement in customer satisfaction since 2003 and revenues have remained relatively flat.

“Despite the commitment from its top ranks that it is fighting to beat Google, Microsoft hasn’t quite figured out how to transfer its Windows platform ubiquity into a dominant position as an interface to the Internet,” said Larry Freed. “In fact, Google seems ready to start to battle Microsoft on its turf with the introduction of desktop search. Given the links between customer satisfaction and revenues, they need to take a smart look at what users really want and start there.”

Ask Jeeves: Search Engine Makes Strides

Like AOL, Ask Jeeves’ improving customer satisfaction seems to be paying off. Its ACSI score has gone up 16% since 2002 (from 62 to 72), and in the second quarter 2005 it has seen its search queries go up by the same percentage. From 2003 to 2004, revenues have doubled. But unlike most other companies in the e-business category, Ask Jeeves has remained true to its start as a search engine.

“The test for Ask Jeeves will be to leverage the resources of its new parent company, IAC Corporation, which also houses the major brands Ticketmaster and HSN,” said Freed.

News and Information Sites Stagnate, as Niches Move Ahead of Leading Brands

Customer satisfaction with news and information sites remains relatively flat, scoring 75 for the second year in a row. But web browsers have taken a stronger liking to smaller players, as the “All Others” category leads with 78. Leading brands like ABCNEWS.com (74) and CNN.com (72) saw their scores stay flat or even dip a little.

“There is no clear winner in the news and information space, as all of the sites have difficulty in differentiating themselves from the pack and leveraging their unique personalities that exist in their traditional channels,” said Freed.

News and information sites are those that are primarily content providers. Since 2002, customer satisfaction scores for news and information sites have not kept up with the increases in portals or search engines.

                                                    % change  % changeACSI 2005 Q2                                        from last from 1stE-BUSINESS SCORES      2000 2001 2002 2003 2004 2005   year     year———————————————————————-Portals                 63   65   68   70   71   75    5.6%    19.0%———————————————————————-Yahoo! Inc.             74   73   76   78   78   80    2.6%     8.1%———————————————————————-All Others              67   72   72   79   78   79    0.0%    16.4%———————————————————————-MSN (MicrosoftCorporation)            71   67   72   74   75   75    0.0%     5.6%———————————————————————-America Online, Inc.(Time Warner Inc.)      56   58   59   65   67   71    6.0%    26.8%——————————————————————————————————————————————–Search Engines          NM   NM   68   78   80   80    0.0%    17.6%———————————————————————-Google Inc.             NM   NM   80   82   82   82    0.0%     2.5%———————————————————————-All Others              NM   NM   NM   74   75   74    -1.3%    0.0%———————————————————————-Ask Jeeves, Inc.        NM   NM   62   69   71   72    1.4%    16.1%——————————————————————————————————————————————–Information Sites       NM   NM   73   74   75   75    0.0%     2.7%———————————————————————-All Others              NM   NM   73   75   75   78    4.0%     6.8%———————————————————————-ABCNEWS.com (The WaltDisney Company)         NM   NM   74   74   74   74    0.0%     0.0%———————————————————————-MSNBC.com (NBC,Microsoft Corporation)  NM   NM   73   74   74   73    -1.4%    0.0%———————————————————————-CNN.com (Time WarnerInc.)                   NM   NM   72   72   74   72    -2.7%    0.0%———————————————————————-USAToday.com (GannettCo., Inc.)              NM   NM   71   72   72   72    0.0%     1.4%———————————————————————-NYTimes.com (The NewYork Times Company)     NM   NM   71   70   72   72    0.0%     1.4%———————————————————————-

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