Consumers Still Ga-Ga for Google, Not True for Yahoo, Finds American Customer Satisfaction Index; Analysis by ACSI E-Business Sponsor ForeSee Results Says Google Still Tops, with Yahoo, MSN, AOL Vying for Second Place

Business Wire, August 15, 2006

ANN ARBOR, Mich. -- Google leads all e-businesses in customer satisfaction for the fifth year in a row, according to the annual e-business report from the American Customer Satisfaction Index (ACSI). The search engine standard-setter widened its lead after Yahoo! dropped 4 points into a battle for second with MSN and AOL. The e-business report covers search engines, portals and online news and information sites. The overall category score went up slightly, 0.8 percent to 76.5 on the ACSI's 100-point scale.

The e-business category continues a remarkable climb and has improved every year since it was first measured, now up a cumulative 21.4 percent since 2000. Though the pace of those improvements has slowed, e-business is still one of the best performing categories in the ACSI and leads the cross-industry Index (current score: 74.4).

The ACSI is produced by the University of Michigan, in partnership with American Society for Quality and CFI Group. ForeSee Results, an online satisfaction measurement firm, is co-sponsor and author of the ACSI e-business report.

ACSI data have proven to be strongly related to a number of essential indicators of micro and macroeconomic performance. For example, firms with higher levels of customer satisfaction tend to have higher earnings and stock returns relative to competitors. And at the macro level, customer satisfaction has been shown to be predictive of both consumer spending and gross domestic product growth.

Google dropped one point this year (from 82 to 81), but maintains the highest score in the category despite expanding its range of services into many fronts. Though the company is far and away the leader in search, the same cannot be said of its forays into other services, even though Google is drawing users to them. Still, Google's focus on the customer has resulted in rising market share.

"Google's customer-centric focus is clearly the way to do business on the web," said Larry Freed, online satisfaction expert and president and CEO of ForeSee Results. "By putting the user in control of the online experience, Google has maintained dominance of the search market as they expand into a host of other services. It's no wonder Google has Microsoft quaking in their boots, and E-Bay and Amazon have got to be feeling the heat, too."

After hitting an all-time high last year, Yahoo! dropped 4 points (or 5 percent) to 76. Yahoo's revenues have been flat for the past 3 quarters and its stock recently took a hit when it announced delays in releasing a long-awaited upgrade to its ad-search technology. Paradoxically, Yahoo's problem may be that it is offering too much. In trying to be "everything to everybody," Yahoo may overwhelm and confuse with more options than its users need or want.

Joining the battle for second place are AOL and MSN, both scoring a 74. MSN has been a steady performer, but it fails to differentiate itself from other portals.

AOL, however, has changed with the times and improved its score a whopping 32 percent since it was first measured in 2000. This year, AOL is up another 4.2 percent. AOL built legions of followers as a low-cost dial-up ISP for the Internet novice. As users became more sophisticated and sought high-speed Internet, AOL has added services including instant messaging, software downloads and on-demand videos- many of them now available for free. But with strong competition from broadband service providers, AOL's subscriber base has shrunk significantly over the past several years. Shedding dissatisfied members may contribute to higher satisfaction scores.

"AOL's sustained satisfaction growth, as its most loyal customers remain, signals the company is still very much in the game," said Claes Fornell, Director of the National Quality Research Center that produces the Index for the University.

Another e-business undergoing change is Ask.com (formerly Ask Jeeves). The search engine eliminated its familiar butler and added new functionality such as mapping and encyclopedia. But Ask's score dropped one point to 71, as users adjust to the new look and feel.

"It's not uncommon for customer satisfaction to take a temporary dip when a web site implements big changes," said Freed. "But if Ask.com does it right, it'll be one step back, two steps forward. Yahoo's drop gives Ask a real opportunity to make a play for the #2 spot behind Google."

The News & Information subcategory of e-business dropped 2.7 percent to 73. In the convergence of web services, news and information sites like NYTimes.com, USAToday.com, ABCNews.com, MSNBC.com, and CNN.com increasingly compete against news aggregators like Yahoo News and Google. The range of scores within the subcategory is only from 72 to 74, indicating that there is little differentiation among news and information sites.

NOTE: For a full list of 2006 e-business scores by company with an analysis including trends and predictions, please contact Chaat Butsunturn at 415-391-7900, x114 or cbutsunturn@kearnswest.com.

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