IAC/Interactive to throw more money at Ask.com

Sometimes giving up is the best idea, but it's hard to do. IAC/Interactive (NASDAQ: IACI) search property Ask.com has about 5% of the market. Microsoft Corp. (NASDAQ: MSFT) has over 10%, Yahoo! Inc. (NASDAQ: YHOO) has about 28%, and Google Inc. (NASDAQ: YHOO) about 50%. And these aren't small companies with small budgets.

Nonetheless, Ask.com is getting a new multi-million dollar advertising campaign. The marketing is built around the company's algorithm, the technology that makes search engines work, according to The Wall Street Journal [subscription]. Algorithm "is a funny word that people don't hear every day," said Jim Lanzone, chief executive of Ask.com." Well, it is a funny word, but that does not mean it will be interesting to consumers.

Ask.com is asking potential users of its algorithm-based service to see it as better than the ones provided by companies like Google. But IACI already has the answer to that question. Almost no one wants to use its search service, and spending money on advertising is not likely to change that. Operating income for the IACI marketing and advertising unit which includes Ask.com was only $10.5 million. That is about 8% of IACI's total operating income when corporate costs are backed out.

IACI could do what News Corp. (NYSE: NWS) did with MySpace. It could auction the search function for its websites to Google or Yahoo!. That might put some real money in the company's pocket, which is something shareholders would probably prefer.

Douglas A. McIntyre is a partner at 24/7 Wall St.