Posted July 31, 2007 6:56 pm by with 2 comments

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I wonder if Ask’s parent company is regretting spending the big bucks on Crispin, Bogusky + Porter yet—increased advertising costs for was one of the many factors cited in contributing to poor results in this year’s Q2, as reported today.

Overall, InterActiveCorp’s revenue rose 5.6% over last year’s Q2, to $1.51 billion (after adjusting for “special items and one-time gains,” as Reuters put it). Their net profit nearly doubled to $95.97 million, up from $53.8 million last year. However, this growth only represents a one-cent increase in earnings per share over last year’s (and falls one cent short of analyst’s expectations).

Of course, in a business that includes everything from to, from Ticketmaster to LendingTree to the Home Shopping Network, there are a lot of bills to pay—and a lot of businesses that can really undermine the company’s performance. Reuters attributes most of these fluctuations to IAC’s biggest businesses: the Home Shopping Network and Ticketmaster, both of which have seen some rough times lately. (However, the new Home Shopping Europe helped contribute to the upside, as well.)

As for specifics on’s performance, is part of their Media & Advertising business. That business, which is also home to Citysearch and Evite, saw revenues of $174 million, up from $131 million in Q2 2006. However, “due primarily to increased marketing costs and higher revenue share payments to third parties,” the business ended up operating at a loss of $10.7 million (better than last year’s $11.3 million loss, resulting in 6% growth).

The official earnings report acknowledges a few key points from this business:

Media & Advertising revenue growth was driven by an increase in queries from syndicated search and increased queries and revenue per query at Fun Web Products, partially offset by lower revenue per query across most other properties. As expected, users need fewer clicks to find what they are looking for on the new, resulting in lower revenue per query since the launch in June but higher frequency and retention. Within IAC Search & Media, network revenue growth outpaced that of proprietary revenue, primarily due to an increase in syndicated sponsored listings. Proprietary revenue grew on the strength of Fun Web Products, partially offset by declines at

Media & Advertising Operating Income Before Amortization benefited from a reduction in the current year expense of $7 million resulting from the capitalization and amortization of costs related to the distribution of toolbars which began on April 1, 2007. These costs had previously been expensed as incurred. Absent this benefit, profits would have declined year-over-year due primarily to increased marketing costs and higher revenue share payments to third parties.

With at least some people disappointed with the results from every major search engine, will this negatively impact search marketing? Has search really begun to level out?