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LookSmart Aims To Mend Fences

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Nearly two months into its new pay-per-click listing program, LookSmart has posted a letter on its web site from chairman and CEO Evan Thornley to answer questions and concerns from customers. The letter, made available last Friday, has also been circulated to various search engine forums.

In the letter, Thornley defends the higher pricing of the new LookListings Small Business program as necessary in order for LookSmart to build distribution partners, explains that "grandfathering" old customers to exclude them from new pay-per-click fees would have "disadvantaged" attracting new customers, discusses reporting problems that have made some people question LookSmart's statistics and pledges to use a more "personal approach" rather than a "big company" tone in resolving issues and in communications with customers.

The letter concludes with a FAQ section that answers the most common questions LookSmart says it has been hearing, such as about reporting problems, stressing that credit cards will not be charged if "free" accounts are activated without increasing their budgets and noting that accounts with multiple listings can have budgets set for each listing.

The letter is part of a new effort by LookSmart to win over critics and calm some concerns that have cropped up since the LookListings Small Business program was unveiled in April. The company is also planning a survey in the near future to better understand complaints and needs of small search engine marketers, it says.

"We've seen a really good uptake in the product and a positive response from the majority of users," said Robert Goldberg, LookSmart's senior vice president of sales and marketing. "Most of the negative feedback is from a small and important user base, which is SEOs. We've started a large outreach program to understand the issues that they are facing."

Let's take a look at some of the major problems LookSmart says it has been hearing from customers.

Reporting Issues

LookSmart says that companies have been complaining that LookSmart's tracking system will show a large number of clicks to their site which cannot be verified when the companies reconcile against their own traffic logs. LookSmart says its "batch processing" of clicks before reporting is to blame.

For instance, let's say you check your LookSmart statistics at the beginning of your billing cycle. On the first day, you get no traffic. On the second day, the same thing happens. Then, on the third day, you get 165 clicks. What happened?

Going back to your own server logs, you might get further concerned. On day one, you might detect about 50 people coming from LookSmart. On day two, about 40 people. On the third day, you get about 75 people. Why didn't LookSmart show the traffic for the first two days, and how could the third day be so high in comparison to your server logs. Certainly the company's reporting must be totally messed up!

What's happening is that LookSmart is processing clicks through a fraud detection system, to clear out robotic clicks or those from the same person who might be purposely clicking excessively on a listing. However, it doesn't do this processing each day. Instead, a couple of days may go by, then an entire "batch" of clicks is processed and posted to your account.

In other words, in the example above, those 50 clicks you received on the first day (and can see in your logs) weren't posted because they hadn't been processed. The same thing happened with the second day's 40 clicks. On the third day, all the clicks from all three days were added together, processed and posted. That made it seem that there was a sudden "spike" in your traffic, when in reality, it was simply that traffic from several days was suddenly posted all at once.

"Our goal is to do it each day, so its nice and even and the trend line is something they can plot," said Tony Mamone, LookSmart's vice president and general manager of small business services. "We're working as quickly as we can, and my guess is that it will be sometime in the next couple of weeks."

Keep in mind that even if things do even out, it will still be up to you to log in each day and see how traffic has risen. LookSmart does not yet currently allow you to see how much traffic came to your site on any particular day, only a running total over the course of your billing period.

LookSmart also said there have been requests for reporting to show the actual search terms used by those who click on LookSmart listings to reach a site, but this is a feature not likely to come anytime soon.

"It's not currently on the docket for development," said Mamone.

Account Management

Another big area of concern LookSmart says has been over handling multiple listings per account. The company said its small business account management system was designed primarily to serve the needs of those with only one listing. However, many search engine marketing companies may want to manage a range of listings within the same account.

Moreover, during the transition, some of these companies may not have had the multiple listings that they manage consolidated into a single account. Conversely, there are some companies who did have multiple listings placed into the same account but which would prefer to have separate accounts.

In both cases, LookSmart says it is working to organize accounts as desired.

"We've identified a big chunk of those customers already and will be working to consolidate," said Mamone. "If theyve been in touch, weve got them logged and they should get some communication from us and given us a time line. If not, they should contact customer service."

Mamone added that the consolidation changes are likely to take LookSmart about two weeks to perform.

Budget Issues

LookSmart says that a number of people with multiple listings in one account apparently didn't realize that they could assign a budget to each listing. Failure to do this means that a "popular" listing could eat up all the free or paid clicks in an account.

In contrast, by setting a budget for each listing, you can prevent one listing from using up all the credit and ensure that other listings in the same account have a chance to appear.

LookSmart says it has now been made more prominent in the account management system about how to assign budgets to each listing and help files providing further explanation are being drafted.

Grandfathering

Another key area of concern is obviously those upset at being moved into a new cost-per-click program when they'd paid a one-time submission fee already. Don't expect to see a reversal from LookSmart on this policy.

"It was impossible to grandfather people in," said Goldberg. He echoed the line in Thornley's public letter that having some people not in the pay-per-click program would make it difficult to attract new people into it and build up the revenue needed to gain new distribution deals.

I tend to hold the opposite view, that it should have been entirely possible and advantageous for LookSmart to have done this. LookSmart could have quickly built up a new customer base of pay-per-click customers, and older customers could have been brought into the new program in a variety of ways.

For example, one incentive might have been the ability to change a listing. Anyone might have been able to change listings for purposes of better optimizing it to gain traffic (as opposed to factual corrections) but only if they were part of the new pay-per-click program.

Instead, LookSmart has angered some existing customers and gained continuing bad publicity on forums and in various articles, not to mention may now be facing a class action lawsuit.

Other Issues

LookSmart says it is continuing to hear from search engine marketing companies that are not set up to bill clients on a cost-per-click basis. Here the company is advising these firms to at least start by considering monthly billing, which can be linked to an account budget with LookSmart.

In a previous article, I mentioned that I was uncertain what would happen to those with multiple listings from the same web site, when transitioned into the new program. The new program only allows one listing per site. LookSmart confirmed that those with multiple listings can retain them.

"The new policy is on a go forward basis," said Mamone.

Also, the relevancy keywords feature added to the new product is still not being used by MSN Search for ranking purposes, Mamome said. However, it is something he said MSN Search is evaluating for the future.

Another issue has been the fact that Inktomi still carries the entire LookSmart directory. This means that is possible that your site can be listed with Inktomi twice -- first through the listing that Inktomi found by crawling your for free or through paid inclusion, and secondly through picking you up as part of the LookSmart feed. Moreover, if someone clicks on your LookSmart listing, then you would indeed be billed by LookSmart for this, if it is a pay-per-click listing.

Unfortunately, there is no way to have LookSmart suppress your pay-per-click listing from being sent to Inktomi. That's considered part of the entire LookSmart distribution network, and as with Overture, you have to take the entire network or nothing.

Update for our Small Business Listings Customers
LookSmart, June 1, 2002
http://listings.looksmart.com/help/evan_letter.jhtml

The letter from LookSmart chairman and CEO Evan Thornley.

LookSmart Changes To Cost-Per-Click Listings
The Search Engine Update, April 17, 2002
http://searchenginewatch.com/subscribers/articles/02/04-looksmart.html

Explains how the new LookListings Small Business program works and covers complaints and concerns that have arisen from it.

LookSmart Hit With Potential Class Action Lawsuit Over Submission Program
The Search Engine Update, June 3, 2002
http://searchenginewatch.com/subscribers/articles/02/06-lawsuit.htmll

A proposed class action lawsuit claiming breach of contract, fraudulent business practices and misleading advertising has been filed against LookSmart over a recent change in how the company sells some of its commercial web site listings.

Seething Over the Search for Cash
Wired, May 23, 2002
http://www.wired.com/news/business/0,1367,52741,00.html

Recent article about complaints over the new LookSmart program, ironically noting that the same company LookSmart uses to highlight the success of its new program also wishes MSN would drop LookSmart and use a "cheaper listing service," since his expenses are now higher.

Early Success of LookSmart 'Small Business Listings' Exceeds Expectations
LookSmart Press Release, May 13, 2002
http://www.shareholder.com/looksmart/releaseDetail.cfm?ReleaseID=80355

To support the contention that the new program is a success, LookSmart issued a release in the middle of last month saying more than 8,000 businesses had purchased LookListings Small Business listings since the program launched on April 9, exceeding its expectations.

From January through March of this year, according to LookSmart's financial documents, the company averaged about 144 small business listing sales per day. This means when the release was issued, 35 days after the new program was launched, you would expect LookSmart to have sold at least 5,040 listings.

Selling nearly double this amount does sound like the program is extremely successful, but that figure also includes the conversion of some part of 90,000 existing customers. The true measure of how successful the new program is won't really be known for a couple of months, when the impact of converting existing customers levels out. However, even if there are fewer sign-ups, greater revenue may still come through the pure cost-per-click model that provides recurring fees.


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