• by Tameka Kee , November 6, 2007

Google will continue to power the search ads on Ask.com (and much of IAC/InterActiveCorp's other Web properties), in the renewal of a deal that analysts have said is worth about $3.5 billion to IAC.

But IAC's Board of Directors have still laid out a plan for the media company to be split into five separate, publicly-owned companies-- aiming to bleed off losses from its Lending Tree division (in part due to the mortgage meltdown) and allow each new entity a chance to thrive with operational clarity and renewed focus.

In the months leading up to the renewal of the Google sponsored search deal, insiders speculated about whether the search giant would choose to continue the relationship.

According to IAC's Chairman and CEO Barry Diller, Ask.com accounted for 10% of Google's partner site revenue--or about $100 million in Q2 07. That's a drop in the bucket for a company that raked in nearly $1 billion in ads from "partner sites"--and over $1.4 billion in revenue from their own properties in the same quarter.

Still, Google had more to gain than just revenue with the Ask partnership. According to industry thought-leader and search pro Danny Sullivan, "Google may be big, but winning paid search syndication partners is still important and a competitive space." Sullivan commented on the speculation over whether Google would renew the deal in a post at Search Engine Land --noting that the giant would work to keep "the recognition of powering paid listings on an important site like [Ask.com]" out of Yahoo's and Microsoft's grasp.

Ask.com has its own sponsored search offering--but it has been largely filled with AdWords inventory. According to Frank Lee, vice president of search marketing, The Search Agency, the renewal is a benefit for the agency and its clients.

"We've always allocated a percentage of our media buys directly with Ask.com," said Lee. "And since a large percentage of our media buys is on Google Adwords, we will continue to benefit from the distribution of Google search ads in Ask.com results. The partnership broadens our clients' ability to get their products and services in front of more qualified users."

But while the deal strengthens Google's effectiveness as a distribution channel, Lee said that it didn't set off any anti-competitive or monopoly bells for the industry.

"We think this is another example of Google's leadership in the marketplace," said Lee. "But it doesn't represent any substantial shift--to the best of my knowledge it's just an extension of a pre-existing relationship."

In a press conference on Monday, IAC/InterActiveCorp announced that it would spin off HSN (and its complementary retail properties), Ticketmaster, Interval (a vacation properties business) and Lending Tree into separate companies--while keeping its media and advertising businesses like Ask.com, CitySearch, Match.com and ServiceMagic under the IAC name.