It’s about growth, Jeeves CEO Steve Berkowitz said. Jeeves’ properties have about 42 million unique users, according to comScore, and IAC’s properties, which include Expedia, Hotels.com, Evite and LendingTree, have about 44 million users.

IAC CEO Barry Diller said the companies hope to close the deal late in the second quarter or early in the third quarter, and will almost immediately launch the cross-promotional efforts that appear to be the primary reason for the acquisition.

Each of IAC’s properties will have a prominent Jeeves search box. Jeeves’ properties will promote IAC’s brands in the form of responses to questions, such as providing CitySearch links to questions about local services.

Diller talked about creating a traffic echo system, sending traffic back and forth between IAC sites, from Ask to our brands and vice versa. Berkowitz added: IAC shares our view of search as a gateway that connects consumers to content goods and services.

Jeeves runs its main site at Ask.com, and global versions, but also owns Excite, iWon, Bloglines and MyWay. Together, it is a top-five search player, but still considerably lagging behind Google, Yahoo, AOL and MSN in terms of share.

I don’t think there are real cost synergies, Diller said. The very first thing we looked at was ‘Can we grow Ask Jeeves share?’ Until we were convinced that with our resources that was able to be done we didn’t get past the first gate with this transaction.

The all-share deal will have an indirect cash component. IAC plans to issue 1.2668 shares for each Jeeves share it plans to buy, but will buy back at least 60% of those shares with a repurchase program that has already been authorized.

We’re convinced this hypergrowth is still at its early stages, Diller said. A group of four or five players is going to be able to thrive in this market, much like other advertising supported media business.

Using Merrill Lynch data, IAC estimates that online search-related advertising will grow 24% a year over the next five years, and that online ads, currently at 4% of total US ad spend, will become a much larger piece of advertising budgets in future

Jeeves currently uses Google’s sponsored search service to generate much of its revenue. That deal expires in 2007. There is no get-out clause if Jeeves is acquired, and Diller said there are no plans to drop Google even in 2007, although he did point out that CitySearch, for example, already does localized advertising.