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8/14/2007
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Yahoo Surpasses Google In Customer Satisfaction Survey

Diminishing satisfaction with Google may be the result of Google's failure to communicate effectively about changes to its services, analysts suggest.

Having recently seen several unimpressive quarters, the departure of CEO Terry Semel, and Google's lengthening lead in search, Yahoo has reason to smile: the company took the top spot in the University of Michigan's American Customer Satisfaction Index (ACSI) report on e-business Web sites.

Yahoo gained four points to reach 79 on the ACSI's 100-point scale. Google lost four points, dropping to 78 in the company's second consecutive year of decline.

In written analysis of the study, Larry Freed, president and CEO of online satisfaction management company ForeSee Results, observed that the report's results bode well for Yahoo's bid to improve its profitability. "Yahoo is emerging as the leading portal, fighting Google [and losing] for the search business, and Google is clearly the leader in search, fighting Yahoo [and losing] for dominance as a portal," he said.

"Yahoo is pleased with the results of this year's ACSI study, which reflect our continued efforts to enhance the consumer experience for our more than 500 million users of Yahoo-branded properties around the world," said a Yahoo spokesperson via e-mail. "We believe that this trend will continue as we further leverage our user insights, continue to open up the Yahoo network, and solidify our position as the partner of choice for advertisers, publishers, and developers."

Google's response was more muted: "We are continually working to provide the best online experience for our users and welcome strong competition that helps drive market innovation," said a Google spokesperson via e-mail.

Freed speculates that diminishing satisfaction with Google may be the result of Google's failure to communicate effectively about changes to its services. "Google built its core search business with customer satisfaction and word of mouth alone, without using any advertising or marketing," he said. "Google's home page is clean and non-cluttered: a quality that has long been considered an advantage. But, Google's home page design may also be its downfall. People may not be taking advantage of Google's additional capabilities because they are hidden on the home page (unlike Ask.com, which makes its additional functionality more apparent)."

Google's decline coincides with a broader trend toward dissatisfaction. Overall consumer satisfaction in the e-business sector fell 1.7 points in 2007, to a score of 75.2. The decline is the first recorded since the e-business sector was added to the ACSI in 2000.

"This could be in part because recent innovations have been of interest and use to the most tech-savvy users (maps, social networking sites, etc.), but not necessarily to the population at large," Freed said.

Ask.com showed the largest gain in the survey. It increased its customer satisfaction score 6 points to 75. That ties MSN.com, following MSN's one point gain this year.

"Ask has had the biggest increase over time of any e-business company measured by the ACSI, up a total of 21% since it was first measured as AskJeeves.com in 2002, which should scare Google even though the gap between the two companies is still large," said Freed.

"The latest ACSI scores show that the search category is still evolving, and innovation still really matters," said Jim Lanzone, CEO of Ask.com, in a statement. "Given Ask.com grew our user satisfaction scores more than any other search engine this year -- despite the fact that the study was conducted before the release of Ask3D -- we're looking forward to even better results in 2008."

AOL.com showed the largest decline, dropping 9 points to 67. Freed attributes this to the company's failure to differentiate itself from Google, MSN, and Yahoo, and to the difficult transition from a pay service to a free service.

Freed points out that the ACSI "is a proven predictor of financial performance" and that "a stock fund comprised of high-scoring ACSI companies has consistently outperformed the S&P 500." As a result, he predicts that Google's declining ACSI score may be reflected in future stock movements and that Yahoo "is well-poised to have a strong financial performance this year, no matter what the naysayers think."

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