IAC’s earnings call today was particularly meaty, as Barry Diller shed new light on state of online advertising and talked about specific initiatives to improve the company’s search business and overall profitability. He confirmed that online advertising decelerated in January and continues to slump into February, not good news for those hoping for signs of stability in the online ad market. Some of the other highlights from the call:

—Industry cost-per-click rates are down:. Diller said he was seeing CPC declines of 8 percent to 12 percent at IAC (NSDQ: IACI), and volume declines of an additional 10 percent in its search business. The volume declines are company specific, but the 8 percent to 12 percent declines in CPC (the rates that marketers pay search companies when a person clicks on an ad) indicate that greater-than-expected weakness in the search category as a whole is continuing into the first quarter of ‘09. 

—Bottom falling out of display: Diller didn’t try to sugarcoat the dismal environment for display advertising, saying it could be down 50 percent this month. This likely is significantly worse than many had been expecting for IAC and the industry. But it’s worth noting that many other online companies may fare slightly better that that with display because they have sites that with more targeted demographics, which lead to higher ad rates. (Citysearch, which targets local, seems to be holding up better than other IAC properties.)

—Ask.com has plenty of room for improvement: Diller said the company will shift its marketing strategy for Ask.com because the site’s traffic and retention time tailed off in 2008.  IAC will move from syndication partnerships to providing search for targeted verticals. A deal with NASCAR is the first example, with Ask.com providing search for the popular sporting franchise and its fans. The company has eight to 10 verticals it will focus on in 2009, including the growing health and wellness space.

—Cash is king in this environment.  With over $1 billion in cash, Diller said IAC is well-positioned to weather the current economic storm.  While it does not have immediate plans to spend the cash, the company will likely use it to buy back shares during the second half of 2009 if IAC sees signs of new life in the online ad market, he said.