LookSmart Changes To Cost-Per-Click Listings
NOTE: Since this was written, it is clear that LookSmart has been migrating accounts to the new system described, regardless of whether you accept the offer. Moreover, this means the company is effectively deleting listings without editorial review, since so much feedback is coming in that people disappear within a few days, when their 100 monthly clicks are reached. That has a serious impact on the relevancy of LookSmart. I'll be revisiting how the implementation is going for the May 6 newsletter.
Pay -- and keep paying -- or don't appear, LookSmart told existing and new listing customers this month, in a significant change to how the human-powered search engine lists web pages from commercial web sites.
LookSmart previously allowed web pages to be included in its commercial listings by paying a one-time review fee, through its "Basic Submit" and "Express Submit" submission programs. These have now been eliminated, replaced last Tuesday by a new cost-per-click "LookListings Small Business" program.
The new program still forces submitters to pay a mandatory, one-time review fee, though at US $49, this is much less than the $149 or $299 charges levied under the old programs. However, the new program also charges web pages that are listed a flat $0.15 fee for each click they receive.
In addition, LookSmart has a $15 per month minimum spend requirement. This means that if a listing fails to generate $15 worth of click revenue for LookSmart in a particular month, the company will still bill for that entire amount. For example, if a web page only gained 50 clicks in a month -- $7.50 worth -- LookSmart would still charge the listing's owner a full $15.
As a result, commercial listings with LookSmart will now cost at minimum $180 per year, not including the one-time review fee. That sounds less expensive than the $299 per year that Yahoo charges for its commercial listings. However, Yahoo does not have a cost-per-click component. Yahoo's annual fee provides "all you can eat" clicks, to whereas LookSmart's $180 minimum cost per year is limited to 1,200 clicks, for that time period. If you want more traffic beyond this, you need to pay beyond the minimum.
Not Likely To Hurt Relevancy
LookSmart's change raises issues as to how useful its directory will be for searchers, just as did the Yahoo shift to annual fees at the very end of last year. Chances are, this won't be a major problem. Notably, LookSmart will continue to list non-commercial content for free, which it gathers through submissions to its Zeal.com service. In addition, the company said any commercial web pages deemed "absolutely essential" to relevancy will be retained, regardless of payment.
This means that the biggest impact will probably be in "oversubscribed" categories, where there are many different businesses represented. Web site hosting is one good example of this. Companies offering hosting that cannot afford the new ongoing LookSmart fees or refuse to pay them will likely be removed from the directory, eventually. However, there will still be ample web site hosting companies that remain listed, so the consumer impact is likely minimal.
Overall, the change at LookSmart is a continuation of the trend begun in 2000, when payment for commercial listings became mandatory at both Yahoo and LookSmart. That made the commercial listings at both places closer to the Yellow Pages model, where advertisers who don't pay don't get included.
Fees Made Retroactive
The real controversy in LookSmart's new program is the company's decision to make the cost-per-click model retroactive to existing listings. Tens of thousands of people who paid to be listed through the old programs since the beginning of 2000 have now been told they must transition into the new program or risk being delisted, according to LookSmart.
As an incentive, LookSmart has offered $300 in free clicks to everyone who made use of the old programs, regardless of the amount they originally paid. The idea is that no one will have "lost" any money, because they are being given back what they paid originally, if not more.
Some -- if not many -- have not been soothed by this offer. They paid what they believed was a one-time fee to be included in the directory, and now LookSmart is essentially changing the rules on them, in order to earn more money for itself.
"My company paid LookSmart to be included in their directory years ago, and we were promised that we had to pay a one-time flat fee. Once it was accepted, it was understood that our listing would remain there permanently," one reader wrote me. "It seems like LookSmart is breaking its promise and forcing all its past customers to move to its new business model without our due consent. I am sure there are many LookSmart customers out there who are enraged with LookSmart's unilateral move."
LookSmart's retroactive decision reminds me of a recent story where a woman had won lifetime flights on a low-cost European airline. The airline later decided to limit her flights. As you might expect, the woman was unhappy -- so unhappy that she's taken the carrier to court.
Could the same happen with LookSmart? Perhaps. LookSmart's defense is that its terms and conditions under the old program allowed it to change the program at any time, and that its credit offer should smooth customer relations.
"We feel covered from a legal perspective but more importantly from the customer perspective, we feel we are making good," said Jennifer Schindler, LookSmart's director of product marketing.
Let's take a look at those terms. Here's a key section of LookSmart's agreement with customers for "Express Submit" back in February 2000, just after the program debuted:
"LookSmart reserves the right in its sole discretion to determine the sites selected for inclusion in the Directory and to change, modify, add or delete any or all of this Agreement at any time....if Applicant's site is accepted for inclusion in the Directory, LookSmart reserves the right in its sole discretion to determine Applicant's listing's title, review, and categorization and LookSmart editors retain control over the content and wording of all site reviews. LookSmart also reserves the right, in its sole discretion, to remove your site from the Directory, move the listing to a different category or subcategory, and change or remove any keywords, comments or annotations at any time, for any reason."
Pretty much, LookSmart kept the right to do whatever it wanted. There's no doubt that those using the submit programs received exactly what was explicitly promised, which was a promise by LookSmart to review their web site within a set period of time and provide a yes or no answer about whether is would be included. However, there's probably a strong case that people using the program had a reasonable expectation to continue to be listed for their fee, not to be moved into a new program causing them to pay yet more inclusion fees.
Yahoo neatly sidestepped such controversy when it rolled out an annual fee at the end of last December. An annual fee was required for all new submissions, but old listings were exempted from the change. While people may have griped that it cost more for new sites to submit to Yahoo, no one could complain that something unfair was imposed on them retroactively.
LookSmart would have been far wiser -- and enjoyed much more support -- had it followed Yahoo's lead. It could have told those with existing listings that they'd continue to be listed regardless of the new program, but by switching over to the new program, they could have some of the benefits it offers, primarily that of clickthrough reporting and cheaper costs to alter listings.
Carrot: Free Credits; Stick: Delisting Threat
What happens if you take up the LookSmart offer? As said, you'll get $300 worth of free clicks -- but you only get $15 of them per month. That means you can remain listed in the directory for up to 20 months, without charge -- but it also means this will only happen until you get 100 clicks in a particular month. Once that quota is used up, your listing will cease to be available until you get new credits in the following month or unless you decide to fund your account with your own cash.
In addition, those choosing to convert are spared from having to pay the $150 deposit against future click charges and are given a coupon so they can use the LookSmart listing update program at a discounted rate.
"Theres really no risk for them to participate," said Peter Adams, LookSmart's chief technology officer. "It's unlikely that people are going to say that Im not going to take free clicks from you for 20 months."
Unlikely, but not impossible. So what happens if you refuse LookSmart's offer? It's being extended to people for the next 90 days. Those failing to take it up risk getting delisted, though this may not actually happen. LookSmart says that any site being considered for delisting is reviewed by their editorial team. If it is deemed crucial to the directory breadth, it will be retained.
"Before things get wiped out, we will do an editorial review and decide if we need to keep some listings in, if they are absolutely essential," Adams said.
How do you know if you're going to be essential? There's no way to tell, but you can get a good idea by looking at the category you are listed in. For instance, if you are an online florist and listed with 150 other online florists, LookSmart's relevancy is unlikely to be impacted if you no longer appear. Consider yourself expendable. In contrast, if you are one of three sites listed in a category about custom protective cases for PDAs, you are less likely to be dropped.
Being a big brand should also help keep you in, if you don't pay. For example, LookSmart is unlikely to drop someone like 1-800-FLOWERS from the florist category, because users would expect them to be there.
"Were going to retain sites that are critical to relevance," said Kate Wingerson, LookSmart's editor in chief. "Just because GM doesn't buy a listing from us, through wed love that, they are going to stay in. They are critical to relevance."
Ultimately, the decision is up to you on whether to accept LookSmart's offer. My advice would be to wait as long as possible. LookSmart is notorious for constantly changing its mind when rolling out new programs. It might sweeten its offer as the expiry period draws near. As noted, LookSmart might also do nothing, allowing you to remain for free. But, there are possible threats. The company might leave your site listed but limit the clicks it gets per month, effectively placing you into the new program regardless. The ultimate penalty remains being delisted -- and losing out on the credits.
One URL Submission Limit
Under the old submission programs, a single web site could submit up to five different URLs. The new program institutes a one URL per site limit. This is a real downside, because even small businesses might have substantial content areas that warrant having multiple listings.
For example, if you sold science fiction models, you might submit a URL describing your Star Wars models, and another about your Star Trek models, one about your Lost In Space models and a fourth about your Babylon 5 models. These could be in addition to submitting your home page URL, that describes your entire web site.
Doing this is advantageous, because each particular URL would be more targeted to different phrases. A description of your Star Wars models could mention different type of ships, which means you might rank well for those ships. However, if you could only have one listing, then there simply wouldn't be room to name those ships along with more general information about your entire web site.
Indeed, multiple listings are so advantageous that they represent big business to LookSmart. Its "LookListings" program is designed for large companies that want hundreds of targeted listings in the directory. As with the small business program, these are sold on a cost-per-click basis, ranging from $0.15 per click to beyond $1, depending on the topics targeted. There's also a $2,500 minimum spend requirement per month.
That price is going to be well beyond what some small businesses can afford, meaning they are now stuck with having only a single URL listing option. That's unfortunate. LookSmart should have allowed small business web sites more flexibility to get at least one or two more URLs from the same site listed, so there'd be some middle ground.
LookSmart says instituting the limit isn't a problem, because most of the people using the old programs only submitted their home pages. However, should there be demand, the policy could change.
"If we see a significant population that needs three listing for their business and those are relevant for what we are targeting, well evaluate that on an ongoing basis," said Kevin Krim, a LookSmart product manager who deals with small business listings.
By the way, under the new rules, subdomains are counted as part of the same web site. So, if you created several sites like this:
and tried to get each listed, LookSmart would see that as violating the one URL per web site rule (with the web site being models.com) and likely reject your other submissions. On the other hand, if you did this:
that doesn't seem to violate the terms. I will double check with LookSmart to reconfirm this, however. I suspect that if they felt the sites were all owned by the same company, they might decide to reject them, anyway.
Changing Listings And Adding Categories
LookSmart says one of the big advantages to the new program is that it is cheaper to modify listings. Changing a description is now $49, down from $199. The price drop is welcomed, but given that the entire program is now cost-per-click based, it still seem absurdly high.
Why do you want to change a description? Probably because you want to have your site rank better for different terms. LookSmart is OK with this -- the company even encourages you to do it on its page about the update product: "Optimize your listing and drive additional quality traffic to your site."
Of course, LookSmart still wants to review your description for relevancy, so it charges the $49. However, LookSmart competitor Overture doesn't do this. At Overture, you can also change your description at will. A human editor will check it for relevancy, but you will not be charged for this. Overture covers its costs for the review through the cost per click fees it receives.
Charging a flat fee for description updates made sense when LookSmart had a non-CPC based product. Now that it is collecting recurring fees, charging for updates simply feels like a way to get more money out of site owners. It would be better to see LookSmart allow a set number of changes to your description over the course of the year, especially if you are already hitting certain levels of monthly fee payments to them.
LookSmart has also dropped the price to add a listing to an additional category, $39, down from $149. I was never a big fan of the multiple category option, seeing it providing only limited value to site owners using the old submission programs. Instead, it was far more advantageous for them to obtain multiple listings. Now the multiple listing option is gone, but that doesn't make the additional category choice any more attractive. You might find the money is better spent on other things.
Is The Program Worth It?
Is LookListings Small Business a "must do" option for small businesses who are newly submitting to search engines? Maybe. You do need to consider it, and it probably will still be worthwhile for most small businesses. However, LookSmart is no longer the absolute must that it was in the past.
Previously, paying the LookSmart one-time submission fee was an easy decision to make, because the value in traffic was greatly returned over time for the vast majority of people. With the new cost-per-click pricing, the decision is far less straight-forward.
If you are simply after traffic, and as much as you can get, LookSmart will be attractive. That's especially so if you can make any visitor to your site pay off for $0.15 per click. However, everyone will need to weigh this decision individually. Sites that are on a tight budget might decide they simply have to forgo LookSmart, especially if they are already not making use of other cost-per-click programs such as paid listings through Overture.
The program's start-up cost may also be too high for some, which is ironic, in that LookSmart believes it has lowered the cost to entry for small businesses.
"The goal is that there will be an even smaller percentage of folks who havent submitted a listing that meets our guidelines," said Schindler, speaking of the $49 one-time review fee. Her comments were echoed by Adams:
"We think that opens it up for new advertisers to come into the system. The barrier for entry is much lower. We also think that allows it for more relevant content to come into the system," Adams said.
Unfortunately, sites are also asked to stump up an additional $150 deposit that is used against future per click charges. That means the start-up cost for LookListings Small Business is $199 -- a $50 higher than the old $149 Basic Submit option. If LookSmart was already finding that people couldn't come up with the $149 initial fee, it's hard to see how a program charging more than that to get started is a plus to small businesses.
Is There Anything To Like?
LookSmart steadfastly insists that the new program was designed in response to requests from its current small business customers, so let's review what LookSmart says these have been:
One key complaint apparently has been that those making use of the old "Site Promote" program, which has now been eliminated, wanted to get more than the maximum 200 clicks per month that the program offered. They also wanted to pay for those clicks on a true cost-per-click basis, rather than a flat monthly fee.
Site Promote, introduced just four months ago, placed people in the "Featured Listings" area of LookSmart's results and in this area on partner web sites that rebrand LookSmart's results pages, such as Prodigy. In the new program, all Small Business listings are eligible to appear in the Features Listings area. So, potentially more sites will have an opportunity to get traffic.
However, there's no way to control whether you will appear in Featured Listings or not. The only people who do have this ability are companies making use of the much more expensive LookListings program. For the others, your listing will appear in Featured Listings only if the LookSmart algorithm determines that you are "relevant" based on the words associated with your listing. And, you only get to appear if there is space left after the "big customers" in main LookListings program are served.
That leads to another new feature, "relevancy keywords" associated with each listing. You can have up to 10 of these, and the implication is that they help you optimize your listing even better than in the past. The reality is that these are simply additional words with no greater weighting value than that of terms already in your title or description, when it comes to LookSmart's main editorial results.
Relevancy keywords do get more heavy weighting when it comes to determining what sites appear in the Featured Listings area, LookSmart says. In addition, they are more likely to help you come up on some metacrawlers that use LookSmart, such as Dogpile and Mamma, LookSmart added. However, they are not used by MSN Search at all.
Ultimately, if the idea behind relevancy keywords was to let small businesses have better targeting, then that could have been delivered in a better way -- either a true paid listings program that everyone could participate in, where targeting is guaranteed, or continuing to allow multiple listings for small businesses, so they'd have important content more fully represented.
LookSmart says another complaint it received was that people felt like they were paying $149 or $299 for a review with no guarantee of getting traffic. Shifting to a cost-per-click basis means they now only pay if LookSmart performs.
"You dont pay us $300 and hope you get something. You pay us only when you get something," Adams said. "The risk is about as low as we could possibly make it."
Of course, the risk of losing your $49 remains. LookSmart will allow an appeal, if it should reject your listing. However, if the company really wanted to make the risk even less, it would drop the review fee entirely. Again, Overture doesn't charge a review fee for the listings it processes. Now that LookSmart is fully playing in the cost-per-click or "pay for performance" competition, it should be able to do the same, making up review charges as part of its recurring income from customers.
Another new feature is clickthrough reporting, but that's necessary to provide because LookSmart is now charging by the click -- making it much more expensive to get traffic than in the past. And, as a disappointment, that reporting will not show exactly where the click came from, such as a LookSmart listing on MSN, as opposed to on LookSmart or on another LookSmart partner web site.
One feature not yet live but promised to come will be a search term research tool, which will help people better understand what terms are most popular on the LookSmart network. In turn, that means listing descriptions can be better targeted toward terms of interest.
Ultimately, the real advantage of the shift to a cost-per-click model is that LookSmart thinks it will gain greater distribution for its listings by having more recurring income to share with partners. In turn, that greater distribution means more potential clicks for its advertisers.
"In todays world, the distribution market is really centered around the pay for performance model," said Adams. "Thats not to say we can't create commercial opportunities under the old model, but we think we can produce lots more under this model."
MSN Search occupies a unique position among LookSmart's distribution partners. LookSmart won't quantify exactly how important MSN Search is to it, but the massively popular service clearly provides more reach and traffic to LookSmart's listings than any of the company's other distribution partners. MSN Search is also the only major partner not to rebrand LookSmart's results. Instead, MSN Search applies its own ranking algorithms to the LookSmart database.
MSN Search stands to gain revenue through the LookSmart change, but the service insists that relevancy remains the most important factor to it.
"LookSmarts a great partner of ours," said John Krass, MSN Search's director of business planning. "At the same time, though, we look to them for a high quality directory. If we think they are doing the wrong thing, well tell them."
And so far, Krass said MSN Search is not concerned that anything's going wrong with LookSmart.
Of course, you don't need to be in LookSmart to appear at MSN Search. For several months now, the MSN Search has carried paid listings from Overture. If you pay enough to be in one of top three spots for a particular term at Overture, then you will show up in the "Sponsored Sites" section at MSN Search, which appear above the editorial results derived primarily from LookSmart's database.
The downside is that you'll likely pay Overture more than the $0.15 per click that LookSmart will charge you. LookSmart charges you less, because there's no guarantee that you will show up for a particular term at MSN Search. It remains down to where MSN Search finds your site relevant based on the terms you've included in the title and description of your LookSmart listing.
Converting "Free" Links
Separately from the small business program change, LookSmart has apparently for some time been trying to convert those who never paid a submission fee to the service to make use of its paid programs. Moreover, LookSmart itself admits that some of its advertising representatives may be overly aggressive in pushing for a conversion, suggesting that all unpaid links are to go if a business agreement is not reached.
For example, this is what a LookSmart ad representative told one of my readers last month:
"LookSmart is approaching all non paying customers and giving them the option to pay for their links. If the client is not interested, we will be removing the non-paid links."
The reader was upset, because he had approached LookSmart on behalf of a large client about advertising opportunities with LookSmart. The client already had over 100 deep listings, which LookSmart itself apparently had created on its own. Now the reader had to go back to the client and say that LookSmart wanted $2,500 or more per month for the same traffic it had been giving to the client for free.
LookSmart readily admits that it wants to see these "free" commercial links converted into revenue-generating ones and says that such a move is necessary in order for its paid programs to succeed.
"To have multiple sites that are paying in the paid inclusion program and then to have their next door competitor in there having a free ride doesnt help the business model, and we dont think is fair," Adams said. "So sometimes, we go back and say you should be participating in a paid inclusion program."
I dislike the concept that someone who was given a free listing by LookSmart itself is now somehow doing something "unfair" to the service. Those who were on the web in its early days got advantages for being out there first. Many of them took risks or made investments to develop web sites, when doubters about the web's future remained. There's nothing unfair at all that they have gained these first mover benefits.
Having said this, LookSmart has absolutely no obligation to continue maintaining free links to commercial sites. It didn't promise to list these sites for free, forever, nor is it easy to argue that there was any implicit promise to do so.
LookSmart's only real obligation is not to remove links if they are going to hurt the relevancy of its directory. For that reason, LookSmart says its editorial team reviews any listings that are to be pulled. This also means that sales reps who suggest that links will automatically be removed may not be correct.
"No ad rep can say whats going to be pulled from the directory. My group says whats going to be pulled," said LookSmart's editor in chief, Kate Wingerson.
If you have free listings, are you suddenly going to get a call from LookSmart asking you to convert? This is more likely if you are in popular and oversubscribed categories, such as offtrack betting and casinos, LookSmart says. The likelihood is also that you will lose your free listing, if you are not an extremely important site to that category.
Conversely, it seems likely that if you approach LookSmart about an advertising program, it will review all of your listings and may discover that you have free ones. In that case, it could be that you'll get pressure to move ahead with an ad buy or risk seeing your listings removed. However, if the links you have are to good content, this may be less likely to happen.
Adding Affiliate Links
Another thing that LookSmart says it has been doing for some time is converting both "free" listings and non-cost per click commercial listings into affiliate links, if a company offers an affiliate program.
For example, if you ran your own affiliate program, LookSmart may discover this and sign itself up as your affiliate. In turn, it would change the link it previously had to your site to one that would pay it an affiliate fee from you, depending on the terms of your program.
Planet Ocean's search engine newsletter has a long article on the issue, which it says began en masse in February. If this impacts you, a link is below, through you have to become a paying member of the newsletter to read it.
LookSmart will continue to do the affiliate conversion of free link and non-CPC listings, where available. However, LookSmart said it should not be "double-dipping" by entering into an affiliate program for any of its advertisers who are already paying it a cost-per-click fee. However, despite saying this, the LookSmart Small Business terms still give LookSmart the right to do so:
"Affiliate Programs. By participating in the Service, you acknowledge and agree that LookSmart may, at its sole discretion, (i) place affiliate tracking codes on your listing and (ii) participate in all affiliate programs with respect to your web site(s) (subject to LookSmart's compliance with your affiliate program general rules, if any). LookSmart reserves the right to decline Small Business Listings applications from merchants who operate an affiliate program in which LookSmart was previously or is currently a member."
To cover yourself, you might want to specifically note in your affiliate program rules that LookSmart cannot take part in your affiliate program, if you don't want them to. That should negate the clause.
Of course, it may be that you'd prefer to get listed in LookSmart and pay them affiliate fees. The company says it will do this for those who are large businesses likely to generate significant revenue.
"A lot of people will approach us and say they prefer to do it through the affiliate program," said Krim. "If they have relevant content, then we will work with them on that basis."
Did you sign-up through one of the old paid submission programs but haven't yet received the offer to convert? It could be that LookSmart has simply lost your contact details or may not know if you've changed your email address. It may also be that you had submission work done by a third-party, and they provided their contact details, rather than yours.
In either case, you've got two options. You could step forward to LookSmart and ask to have your listing converted. Or, you could sit back and wait, watching your listing. Nothing may change. However, if you see it go, then you might get in contact with LookSmart and ask what happened. It may be that the company will still grant you the credits, since you never received the initial offer. Or maybe not -- I'll see if I can get greater clarification. In any case, you still have the next 90 days or so before you need to panic.
Are you a non-commercial web site that signed up through the old programs, simply to make things go faster? There are a small number of people like this. LookSmart says it is proactively trying to identify them and move them into the Zeal listing area, where they will not have to pay any fees.
"There are a handful of charities that got listed through the paid program, so were going to hand hold them into Zeal," Wingerson said.
If you are one of these people, you should feel comfortable getting in contact with LookSmart now, so that you can avoid having your listing accidentally deleted.
What about WiseNut? There is no new news to report, other than LookSmart's purchase of the service officially completed on March 12, with the all-stock deal valued at $9.25 million.
It still seems likely that LookSmart will begin using WiseNut in the near future as backup to its human-compiled listings, in the way it currently uses Inktomi on its US site today. You'll also likely continue to see WiseNut include URLs for free, but it's almost certain LookSmart will follow the lead of nearly all the other major crawlers and roll out a paid inclusion program for WiseNut, as well.
And what about Zeal? Listings over there remain unaffected by all the changes I've mentioned. Indeed, there may be even commercial sites who provide non-commercial content that is listed through Zeal. That non-commercial content should continue to be listed for free.
LookListings Small Business
Want lots of traffic and not scared by a $2,500 per month minimum buy? Then checkout the LookListings program.
How LookSmart Works
I'm in the midst of updating this page, to reflect all the new changes. However, there's a lot of information already posted that will probably be useful to those newly submitting to LookSmart.
LookSmart Overhauls Submission Process, Increases Prices
The Search Engine Update, August 2, 2001
This older article still provides some more helpful tips on why you might want to pay a fee to change your existing listing with LookSmart. It also examines the issue of being in multiple categories in more depth. Just keep in mind that the prices are now much less.
LookListings Small Business Terms
Yahoo Now Charging Annual Listing Fee
The Search Engine Update, Jan. 7, 2002
More details on Yahoo's switch to annual fee charges.
WebmasterWorld: Directories Forum
Lots of threads and people upset about the LookSmart change can be found here
Search Engine Forums: LookSmart
Again, more threads on the change and complaints about LookSmart's move.
The article about LookSmart's use of affiliate links is in the April 2002 newsletter. A membership fee is required to access the article. FYI, the newsletter is worth it to those serious about search engine marketing, and there's a refund policy if you find you don't like it.
Woman claims Ryanair reneged on free travel prize
Irish Times, Feb. 28, 2002
Ryanair's one millionth passenger was awarded free flights for life in 1988. Nine years later, the airline tried to limit her flights, prompting a court case.
BRW, April 11, 2002
Looks at how LookSmart's stock has risen in the wake of growth in listing sales.
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