I predict that IAC will scrap it’s in-house development of a new shopping comparison engine and buy PriceGrabber.
It’s time for IAC to get into the comparison shopping game. I reported a rumor a couple weeks ago that IAC was internally developing a shopping comparison engine called Red Carpet. At this point, IAC will not comment on the rumor. However, I have comfirmation from a number of people that IAC is indeed working on the project.
While I’m sure IAC’s comparison engine will have great funtionality, to really get in the game, it would be smarter for IAC to acquire one of the remaining independent shopping comparison engines; PriceGrabber or NexTag.
For those of you who don’t know about Barry Diller’s universe, “IAC operates leading and diversified businesses in sectors being transformed by the internet, online and offline… its mission is to harness the power of interactivity to make daily life easier and more productive for people all over the world.” IAC was developed through the merger of Silver King Communications, Home Shopping Network, and Savoy Pictures Entertainment. The company grew throughout the dot com boom and more recently through acquisitions of companies such as Ticketmaster, Hotels.com (formerly Hotel Reservations Network), Expedia, Entertainment Publications, Lending Tree, Hotwire, GetSmart, TripAdvisor, and in March of 2005, Ask Jeeves. Here’s a complete history of IAC.
While the Ask Jeeves acquisition gave the company a foot in the door of the search market, the company still has room to grow as it is a distant fourth after Google, Yahoo, and MSN. The company made a weak entry into the online shopping market in March with the launch of Gifts.com, but the comparison shopping industry is currently the place to be, and Diller is nowhere to be found. Actually, that’s incorrect, AskJeeves does have a ‘Product‘ area similar to Yahoo! Shopping and Google’s Froogle.
And here’s the kicker! Ask’s Product category is powered by PriceGrabber, one of the two remaining big independent shopping comparison engines. Small world, huh?
And Ask Jeeves already strongly promotes the service. As opposed to Yahoo! which weakly pushes Yahoo! Shopping through search results, Ask Jeeves does a great job of calling out the product listings through a large area (which includes product images) above the featured sponsors. Compare Yahoo’s search results for ‘Panasonic TV’ and Ask Jeeves’ search results for ‘Panasonic TV’.
Because of this integration, Ask Jeeves must already know the benefits of comparison shopping engines; consumers are happy because they can find the products they are looking for at a great price, merchants are happy because they get extremely targeted leads which helps improve conversion rate, and Ask Jeeves most likely gets a healthy revenue share. The thing is that its clear IAC wants all of the revenue: the company is planning to launch its own comparison shopping engine (a rumor which IAC will not comment on).
While obtaining traffic for a new shopping engine will not be hard because IAC can just replace PriceGrabber on Ask Jeeves, attracting its own merchant base and developing strong relationships with the merchants will be a lot more complicated. Merchants already have too many comparison shopping engines to work with – I personally have accounts with five engines, and I don’t have time to optimize more than one of the accounts. Add that to all of the other online marketing channels merchants have to manage and those merchants are not going to want to sign up for another shopping comparison engine. And without the merchants, there’s no point in using a shopping comparison engine.
The smart move would be for IAC to acquire PriceGrabber. (Oh, and while Diller is out in sunny California, he should probably stop by Become.com to see how IAC’s TripAdvisor could work with the new engine.)
