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Yesterday there was a very interesting AP (Michael Liedtke) interview with IAC's Barry Diller. From the interview:

Diller ultimately wants to transform from a second-tier search engine to a serious threat to Google. He is mulling the possibility of breaking away from Google's highly profitable online advertising network after Ask Jeeves' current contract expires in 2007 to launch a rival marketing system, building upon his years of media experience.

Piper Jaffray Senior Analyst Safa Rashtchy is cited, questioning IAC's ability to build the network. But he suggests that Ask might be able to gain some market share at Google or Yahoo!'s expense:

Rashtchy doubts Diller will be able to create another advertising network, but he believes the executive's media savvy and IAC's deep pockets will give Ask Jeeves a legitimate shot at chipping away at the market share of Google and Yahoo Inc., which runs the Internet's second most popular search engine.

Accordingly, one huge asset that Diller has is $100 million in "free" TV advertising from NBC as part of his deal with Vivendi Universal. But deep pockets are not enough. Yahoo! and MSN have not substantially been able to move the market share bar (if at all) vs. Google, notwithstanding considerable traditional marketing and furious product rollouts and upgrades.

In addition, of the major engines and portals, has the smallest percentage of users that rely on it exclusively (according to a recent online survey from iCrossing).

If Ask is to be the "the mortar binding all of his other Web sites" and either help IAC create a network or chip away at Google's market share, it would be best to use IAC's deep pockets to create a highly differentiated search experience before trying to tap the $100 million in TV ads. Otherwise, Diller is probably wasting his money.

This Post Has 2 Comments

  1. If the scenario plays out, Google would also presumably lose Citysearch, currently a significant advertiser. You recently reported that some newspapers are preferring to invest in their own online ad sales rather than support a competitor's network. For a SME seeking to enter the online arena, a proliferation of advertising platforms renders the process more complex.

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