IAC Looks It Up

If you can't find the Answers, you may as well Ask.

IAC's (Nasdaq: IACI  ) Ask.com is buying Lexico -- the company behind Dictionary.com, Thesaurus.com, and Reference.com -- months after Answers.com (Nasdaq: ANSW  ) botched its own buyout.

You have to go back to last summer to find Answers on bended knee with a $100 million engagement proposal for Lexico. Like many starry-eyed potential grooms, Answers didn't have the money to complete the ceremony. The company planned a secondary stock offering, but its timing was lousy. Weak market sentiment left Answers with little choice but to cancel the offering. It finally broke things off with Answers three months ago.

We don't know how much IAC is paying for Lexico, but we can be sure that it's not panhandling for the money. Barry Diller's new media giant is clearly on better financial footing than Answers is.

Lexico's websites will also fit right in. Ask.com is repositioning itself this year, by returning to the query-based searches that made the site stand out from more conventional search portals such as those from Google (Nasdaq: GOOG  ) , Yahoo! (Nasdaq: YHOO  ) , and Microsoft (Nasdaq: MSFT  ) . Ask.com's retro approach will look great with Dictionary.com, Thesaurus.com, and Reference.com on its arm.

The beauty of Lexico's properties is that 88% of its traffic comes from users who simply type in one of its generic domain names. IAC won't have to pay to acquire natural traffic. Lexico's sites attracted 15.6 million monthly unique users in March, according to market watcher comScore. Traffic has grown by 29% over the past year, three times faster than the global search market.  

The trick here will be finding ways to monetize that traffic. Paid search is great -- just ask Google -- but if you're stumped on whether "barrel" has one or two Ls, you're just going to look up the appropriate spelling or glance at the definition and move on. The challenge for IAC will be to turn that traffic into leads for advertisers. You don't need to go to Dictionary.com to look up the meanings of "challenge," "opportunity," and "monetization." You know those already. So does Ask.com. Now let's see whether it knows how to turn words into action.

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Longtime Fool contributor Rick Munarriz thinks Answers.com has a growth driver in WikiAnswers, but he would have loved to seal the deal on Lexico. He does not own shares in any of the companies in this story and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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