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IAC Goes Google Route

The firm is following a new golden rule: Best search engine wins.

Barry Diller's long list of credits from his days as a media executive include inventing the TV Movie of the Week. So, it figures that the IAC/Interactive (IACI) CEO would know how to tell just the right story for the times.

And IAC's transition from stodgy holding company into an Internet conglomerate with some of the hottest online properties -- strung together by a rapidly growing search engine -- seems to be exactly what Wall Street wants to hear these days.

Shares of IAC closed at a 52-week high of $31.60 on Wednesday, climbing 62 cents, or 2%. The rally followed Tuesday's run-up, when IAC gained nearly 4% off the strength of its latest earnings report.

The stock has now surged by one-third since the beginning of August.

Fresh off its well-received earnings announcement, IAC continues to plug away on some of its fastest-growing properties. IAC unit, currently the fastest-growing major search engine, announced on Wednesday that it had reached a partnership with Lycos, the fifth-most-popular Web portal in the U.S. nudged out larger rivals,


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, which had previously provided the search technology and advertising listings, respectively, for Lycos. expects to field a 100 million queries a month for Lycos because of the arrangement.

Also on Wednesday, Ticketmaster, another IAC property, continued to expand an enviable global footprint through the acquisition of Biletix, a popular Turkish ticket vendor. The announcement comes on the heels of news last week that Ticketmaster will provide ticketing operations for the 2008 Olympics in Beijing.

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Like, Ticketmaster reported a strong showing in the latest quarter. Moreover, investors are likely pleased to see that IAC is sticking to a strategy of making small, targeted acquisitions.

These latest news bites again focus the spotlight on the stronger aspects of IAC's holdings. While the company is showing improvement at its Home Shopping Network division, which is part of a retail unit that accounts for nearly half of company revenue and one-third of its profit, that turnaround is likely to be a long, drawn-out process.

But IAC's future lies in its other faster-growing and market-leading properties, which include No. 1 ticket vendor Ticketmaster,, the world's biggest online dating site, and ServiceMagic, the leading online marketplace for homeowners and service providers, among others.

And while will play a key role in making the most of this far-flung empire, a real key to its success in the wildly competitive search market will be determined by its ability to tap its sister properties for unique content.

For example, a Web search launched on could direct a user to a local home-service provider on ServiceMagic or find tickets to an event at At the same time, IAC has placed search boxes across a number of its sites that are powered by, and the unique content available there because of its partnerships should provide further incentive to use the search engine.

But overarching corporate strategy aside, the experience for the end user will be the only consideration in deciding what does -- or does not -- get bundled with, says Jim Lanzone,'s CEO. "User satisfaction is the primary factor in how we integrate with the other companies," says Lanzone. "We would only partner with companies that we would want to partner with -- even if we were not owned by IAC. Of course, being sister companies, we have a way of getting under the hood and integrating at levels that are very deep."

And while the quality of its searches should benefit from IAC's other holdings, will ultimately compete on its merits as a search engine alone, and not because of any other affiliated offerings. This path will stray from the approach taken by



and MSN -- which offer a variety of other features ranging from content to email in order to funnel users to their search functions -- and put in a more head-to-head competition with Google.'s decision to put all its bets behind search quality alone stems from the growing importance on the Web of the search function. A decade ago, it was thought that users would simply click on the search engine most convenient for them -- such as the portal they were trolling.

But users now flock to the search engine that delivers the best results -- especially in the 18-to-45-year-old demographic coveted by advertisers, says Lanzone. "More and more, people who in the past used portals are now migrating to search experts like Google and," he says.

It's an ambitious plan. For one thing, a lot of users will continue to use portals out of force of habit. The fact that Lycos -- an all-but-forgotten relic for most Internet users -- continues to get the kind of traffic that it does is testament to this.

But for those users intent on finding the best search engine, will be competing against Google itself, a tall order on the best of days.