LookSmart has relaunched its Sponsored Listings program using a new bid-for-placement model, a move it hopes will let the company win distribution partners from rivals Overture and Google, as well as increase its advertising revenues.
"We fully intend to unseat Google and Overture from any distribution we can with bid-for-placement," said Dakota Sullivan, LookSmart's vice president of marketing.
Sponsored Listings have already been offered by LookSmart to advertisers for well over a year. It's a paid placement system, where advertisers are guaranteed to show up for particular search terms that they wish to target, assuming they pay more than others.
The previous Sponsored Listings program involved only a relatively small number of large advertisers who paid negotiated flat-rates for each click they received. In contrast, the new program is open to anyone and competitive bidding will set the prices.
By allowing in more advertisers and letting them bid against each other, LookSmart hopes to replicate the high prices that advertisers have shown themselves willing to pay in the paid placement systems operated by Overture and Google.
For example, Overture currently has advertisers willing to pay in excess of $3 to be listed tops for "hotels" while that favorite search term of lawyers, the asbestos-caused cancer of mesothelioma, has advertisers willing to pay up to $45 per click. In contrast, LookSmart in the past has reported Sponsored Listing pricing that been below $1.
The Switzerland Of Search
The higher per click prices, if they happen, will help more than LookSmart's bottom line. It could make the program more attractive to potential distribution partners, especially since LookSmart is positioning itself as the only "neutral" vendor offering paid placement to ISPs and others who may want it.
"Google has focused extensively on building its own brand, and that's created some conflict for its distribution partners. Now Overture's being purchased by Yahoo. Both of these situations have created a need for another large-scale proven player in the space," Sullivan said.
The neutral card had been something Overture used in the past when fighting it out with Google for distribution deals. The pitch was that, unlike Google, Overture wasn't hurting its partners by trying to generate traffic to its own web site.
Being neutral didn't always work. Google still gained important deals with AOL and Ask Jeeves last year. However, being neutral probably helped Overture keep important partners such as Yahoo and MSN.
Today, Overture has lost its neutrality. It's currently being acquired by Yahoo, a company which has every intention to increase traffic to its own search sites. This alignment recently cost Overture its deal with major German portal and ISP T-Online, which shifted to Google. (Despite a court action by Overture, Google paid listings remain on the T-Online site). T-Online has admitted seeing Google as a competitor, but less so than Yahoo and by extension, a soon-to-be Yahoo-owned Overture.
For its part, Google has always downplayed that it seeks to be competitive with anyone. And after Yahoo announced it would buy Overture, it also maintained that it wanted to keep working with all existing distribution partners and seek new ones. Indeed, while Overture lost T-Online to Google, it also recently won major UK ISP Freeserve from Google.
Nevertheless, the impending acquisition by Yahoo also has many observers -- including myself -- assuming that MSN will eventually dump Overture's paid listings in place of something else.
The Survivor Of Search
Naturally, LookSmart would like to step up as a solution for MSN, especially given that its current relationship with the Microsoft-owned portal seems shaky. MSN is developing its own web search technology, a service it has outsourced partially to LookSmart.
Now LookSmart, the perennial Survivor of the search world, may have added something new to help keep it on the search island along with other major search providers. It's likely MSN would consider using paid placement listings from LookSmart, if the company can prove that revenue will be on par with what Overture has been producing for MSN.
Has MSN expressed interest? LookSmart won't comment, beyond to speak generally:
"We're in active discussions with every distribution partner that counts," Sullivan said.
And what if MSN wanted to acquire LookSmart, as a way of speeding up the process of building a paid listings program in house?
"Jason [Kellerman, LookSmart's CEO” has said, our job is to deliver significant shareholder value. If someone came along and offered more, we'd look at that with great interest," Sullivan said.
For its part, MSN also is keeping things general:
"MSN Search has business relationships with a variety of partners with the goal to deliver the most relevant results to end-users. While we certainly are always evaluating products and services in order to deliver the most relevant results to consumers, we have very solid relationships with our partners," said MSN product manager Karen Redetzki.
Beyond MSN, LookSmart hopes others will better see it as a viable search provider option. Until now, only Overture and Google have offered serious, stress-tested "all-in-one" search solutions.
All-in-one search means that the provider offers its partners both "editorial-style" listings from across the web, where payment isn't supposed to influence rankings, along with paid listings. The results is supposed to be a balanced set of results that serve both users and a company's bottom line.
LookSmart has long had one part of the solution, web search results -- and with the added twist that its web search results could earn a partner money because of paid inclusion deals within them. Those deals ensure a site has a chance to come up for particular words but offer no explicit guarantee of this, so the amount advertisers pay is much less than with paid placement. Now LookSmart has a proper paid placement program, giving it a real all-in-one solution.
LookSmart has announced some immediate distribution partners for its Sponsored Listings, such as InfoSpace and Road Runner, but none are new wins. These partners had already been carrying Sponsored Listings from LookSmart, and they are continuing to do so.
Up Close With LookSmart's Sponsored Listings
What does the new LookSmart change mean from an advertiser's point of view? Let's run down some key points:
Enrolling: To be in Sponsored Listings, you need to have a separate Sponsored Listings account. If you're already in the LookListings paid inclusion program, LookSmart has designed things so that you can enable specific listings to be copied over into your Sponsored Listings account. Just keep in mind that the two programs are completely separate. You can do either or both.
Ranking: Like Google AdWords, listings are ranked based on a combination of how much you bid and the clickthrough rate your ad gains -- what I've termed the clickvalue rate when dealing with Google. Thus, someone paying less than you could possibly rank higher. But in general, the more you are willing to pay, the more likely you'll have a top ranking.
Bidding & Discounting: As with both Google and Overture, you need to set a maximum cost-per-click you are willing to pay. And as with both of these, LookSmart says it will automatically reduce your bid so you never pay more than the ad below you. However, the use of both clickvalue rates and max CPCs means that you can still have bid gaps open up -- just as similar discounting has not eliminated these with Google (see Up Close With Google AdWords) or Overture (see Up Close With Overture's Bid Management).
Backfill: If LookSmart does not have enough Sponsored Listings for a particular term, it will "backfill" the empty slots with the top matches from its LookListings paid inclusion program. Because of this, you might get some top placement in Sponsored Listings even though you don't pay for it.
Smart Match: By default, LookSmart will slightly broaden the terms it matches in a system it calls Smart Match. Smart Match will automatically match any common misspellings related to the words you bid on, plural forms (shoe = shoes) and does stemming (run = running). It does not match synonyms (cars does not match autos). It also matches searches that contain the target words along with conjunctions, prepositions and other "noise" or "stop" words. For example, a bid on "new york hotels" would automatically match "hotels in new york."
Editorial Guidelines: Listings are subject to restrictions on promotional language and face similar editorial criteria that listings in the LookListings program must meet.
MSN: Getting into Sponsored Listings does not get you into MSN. Instead, if you want to be in MSN, you'll continue to need to be in Overture, LookSmart via its LookListings paid inclusion program, LookSmart via its Zeal web site or Inktomi. See the How MSN Works page for a complete rundown on all of these and the How LookSmart Works page for the LookSmart-specific methods.
About.com: Sponsored Listings do not appear on this major distribution partner. Instead, About.com only carries LookSmart's directory listings.
Other Distribution Partners: LookSmart has a variety of distribution partners that carry Sponsored Listings, and these also appear on the LookSmart site itself. Here's a short rundown on where Sponsored Listings appear. The links bring up search results pages for the term "designer sunglasses."
- LookSmart: Sponsored Listings show in the "Results for 'SEARCH TERMS' from our Sponsors" section at the top of the page.
- RoadRunner: Identical to what happens at LookSmart
- Dogpile: This meta search site run by InfoSpace shows LookSmart's Sponsored Listings in the "Search Engine LookSmart" section of its results, when in "Viewed By Search Engine" mode, the default choice. Listings should also appear when the "View By Relevance" option is selected, but they may be scatted anywhere on the page.
EDITOR'S NOTE: There is no family relation between LookSmart's Dakota Sullivan and Search Engine Watch editor Danny Sullivan. They just coincidentally have the same last name.
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