IAC Asks for a Second Chance

A new search product called Ask3D takes aim at Google and Yahoo!.
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Finally, search has more attitude.

IAC/InterActiveCorp

(IACI)

unveiled a new flavor to its Ask.com search engine on Tuesday, featuring a new customizable design along with the most comprehensive multimedia search results available from a major search engine so far.

The promising new service, named Ask3D, isn't just good news technologically for Web users who reflexively turn to

Google

(GOOG) - Get Report

and are consistently disappointed by the stagnant offerings of rivals like

Yahoo!

(YHOO)

and

Microsoft

(MSFT) - Get Report

.

It could also help investors in IAC, the $10 billion conglomerate that has bet big on the success of Ask. IAC CEO Barry Diller frequently referred to the search engine as the "glue" that would bind together far-flung online services ranging from mortgage loans to event ticket sales.

Despite the high expectations, however, Ask's share of the search market has been slipping as Google continues to pull ahead. In April 2007, Ask garnered only 5.1% of the search market as compared with 49.7% for Google, according to researcher ComScore. But Ask had 5.8% of the market a year ago, compared with Google's 43.1%. And in 2005, Ask garnered 6.1% compared with Google's 36.5%.

IAC hopes to turn the tide with its new Ask3D service. And with its slick look and intuitive approach, it might give the company a solid shot at doing so.

Users searching for "Bill Gates," for example, will find the usual search queries returned by most search engines -- but also two innovative new result panels.

The left panel shows additional queries available for users to further hone their searches. There are tabs for drilling down not only into Gates' biography, but one that answers the question of "how much money does Bill Gates have."

Users are even pointed to "related names" tags that feature

Apple

(AAPL) - Get Report

head and longtime rival Steve Jobs. The right-hand side, meanwhile, instantly brings up images, video and news listings about the Microsoft chairman.

The service also has some clever features. For example, users can see their search queries completed in full as they type them out. That helps avoid the hassle of misspelling an entry and having to launch the search again. Scrolling over an image with a mouse pops out the image in an enlarged form.

Ask3D anticipates where search has been heading. In May, Google launched a universal search service that also ties in search results from categories like news, videos and images.

But Ask3D presents its search results in a much more organized and accessible manner than Google, which tends to dump a mix of results on users. Moreover, the mild hand-holding that Ask3D indulges in by giving users a framework for results and suggestions can be a big help in getting to the answers of the most frequent search queries.

In reality, Ask3D hardly has to dethrone Google in order to be a wild success. Even nibbling away at the search giant's market share could make a serious impact on Ask's bottom line, given the sheer size of the search business. Google posted gross revenue of $3.7 billion for the first quarter. By contrast, the entire media and advertising group at IAC, which includes Ask, brought in $168 million.

Perhaps even more importantly, a gain in market share for Ask could translate into a big boost for many other of IAC's properties. Unique content from other IAC sites is supposed to give the search engine an edge, while at the same time helping those sites grab users.

Listings from the company's popular Ticketmaster ticketing service tell Ask local-search users about concerts, for example. And its high-profile CitySearch property provides reviews of local restaurants. Given the huge and rapidly growing number flocking to search engines, even a small uptick for the Ask search engine could spike the popularity of other IAC sites.

And helping IAC's other properties is no small thing. Shares of IAC have yet to recover from a selloff in early May that followed the company's admission during its latest earnings announcement that its shopping divisions were struggling. A week later, troubles in its LendingTree mortgage unit required a management shake-up and a cut of 440 jobs. IAC closed Monday flat at $34.80.

For Ask.com, being the little guy means having to push the envelope. "They need to take risks because of their market share," says Greg Sterling, an analyst at Sterling Market Intelligence. "They are the underdog and needed to do something bold. And they have."