Google and Ask.com: Inseparable?

Barry Diller, InterActiveCorp CEO, sang the praises of Ask yesterday, hailing it as the “dream” IAC “glue” fostering a “virtuous circle of information and commerce” (see “Ask is IAC’s glue: AskCity to AskX to AskNews”):

It is the dream convergence. IAC’s 200+ million visitors become interdependent, cross-sharing traffic and users, capturing growth that would otherwise be up for grabs by our competitors. 

IAC is keen on “capturing growth” from competitors:

Expect to finish 2006 with 25% query growth on Ask.com U.S.…We will continue to invest in Ask in 2007 to continue taking share and for growth in 1) users, 2) queries and 3) revenues. 

While Ask.com seeks to “continue taking share” from competitors for growth, however, it is also helping its main competitor, Google, grow. 

“What percentage of search ads advertising at Ask are from the Ask sales force, organically, versus using Google inventory?” IAC was asked yesterday:

It is predominantly Google, there is a small percentage of the ads that are served up from what we call Ask sponsored listings, but the vast majority is Google; That said I will say that our Ask sponsored listing product is quite good, it is dramatically increasing the number of advertisers, it is increasing its monetization quite well, has a very strong syndication network and the business is doing great. 

If Ask’s own advertising product and sales force “business is doing great,” why does Ask need Google? Why is Ask sharing advertising revenues with the dominant search engine and helping its competitor grow even more?

IAC’s Latest 10K underscores Ask's dependence on Google:

A material portion of the revenues of the Media & Advertising sector is derived from advertising. In the case of IAC Search & Media, the substantial majority of its advertising revenues are attributable to a paid listing supply agreement with Google, which expires, unless renewed by mutual agreement, on December 31, 2007. Pursuant to this agreement, paid listings appear on search results generated on Ask websites in response to keywords selected by advertisers with which Google has entered into contracts. While IAC believes that, in the absence of the renewal of this paid listing agreement, IAC Search & Media could enter into similar arrangements with alternative paid listing providers, as well as continue to contract with advertisers directly through the introduction of new advertising products and services, no assurances can be given that this will be the case in the future, or if so, that these arrangements will be on equally favorable terms. The failure of IAC Search & Media or any of the other businesses within the Media & Advertising sector to retain existing, or attract new, advertisers and/or distribution partners, as well as generate traffic to their respective websites, could adversely affect the business, financial condition and results of operations. 

Ask Sponsored Listings is “an online marketing product pursuant to which advertisers may purchase online traffic by bidding for placement in Ask search result pages.”

Can IAC strengthen its Ask Sponsored Listings in 2007? Does Ask.com need Google for monetization? Can Ask.com control its own advertising revenues?

Will Ask.com have the monetization answers in 2007?

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