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Why IAC's Pronto Will Succeed: Partnership With Ask

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There are many reasons to like Pronto among the many crawler based shopping search engines:

- Comprehensiveness (read last week's press release)
- Upcoming features that provide a better user experience
- Monetization through an ad system not called Google AdSense
- Not relying solely on the PPC engines for traffic
- Online ad market is hot and will continue to grow
- Ecommerce is hot and will continue to grow

While these things are the building blocks of a great new shopping service, they aren't the be all, end all. Other companies can and will develop powerful crawling technology (although Pronto is obviously proud of their own). There are other companies in the shopping space whose sole focus seems to be to provide a better user experience. Other companies will develop powerful ad systems (Kevin Ryan has done it before) or focus on high CPM based graphical advertising. Other companies have and will continue to focus on marketing channels besides the PPC engines. Oh, and everyone is benefiting from strong ad rates and ecommerce growth.

So you want the real reason why Pronto will succeed? The company is part of the IAC family. At some point in the next year, assuming Pronto continues to innovate and build on its solid foundation, the company will replace PriceGrabber as Ask's Smart Answer partner for all product searches. This was by no means confirmed with Pronto or Ask or IAC, but it's an obvious evolution.

And here's why it matters:

Ask.com currently has a 6% search marketshare with 6.5B searches being conducted in August (according to comScore). Assuming no growth in monthly searches ever (which isn't realistic), that means there are 390m searches conducted on Ask each month. I'd estimate that 20% or 78m of those searches are product related. Now if the Smart Answers featuring Pronto are triggered for about 70% of those searches (probably a very high percentage compared to the number PriceGrabber gets), there will be aprx. 54m total impressions for Pronto's listings. Assuming a CTR of 6% for those listings, Pronto will receive aprx. 3.2m clicks per month on it's listings or aprx. 40m clicks per year. A strong start.

There are a number of business issues to work out before Pronto replaces PriceGrabber. First, I don't know when PriceGrabber's contract runs out. I asked a long time ago and got no answer. Second, I'm sure that PriceGrabber's listings monetize a hell of a lot better than Pronto's listings (every PriceGrabber click is paid). So if Ask changes partners, it's going to lose out on some revenue...yes, Pronto can and will increase it's CPM, but it could take a long time to be really competitive with the established players. The business decision for Diller and crew then revolves around the opportunity cost of cutting revenue (albeit probably a small percentage) for Ask in favor of building up an ancillary IAC brand. Knowing a bit about Diller's track record, I have a feeling he's going to be fine with backing Pronto.


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