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LookSmart Opens Deep Listings Option To Small Businesses

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LookSmart has expanded its LookListings paid inclusion program so that small businesses can purchase "deep listings" previously only offered to large businesses with big budgets.

The change made last month eliminates the former LookListings Small Business program, which LookSmart introduced last year. That program allowed small businesses generally to have only one listing within LookSmart's commercial directory, in most cases a web site's home page.

Having only one listing is a disadvantage to those who want to be found for a variety of specific products, items or search topics. This is because the more unique listings a web site has in a search engine, the more likely it will come up in response to a greater range of search requests.

LookSmart made the change both because smaller companies wanted greater representation and because some larger companies didn't want to make the $2,500 per month commitment that the old LookListings program had demanded of those seeking more than one listing.

"We think the benefit for this will enable an advertiser to start as small as they want and grow without having to switch things around," said Dakota Sullivan, vice president of marketing for LookSmart. "It lets big companies get their feet wet. If you were IBM, you couldn't start slow with us."

New Category-Based Cost-Per-Click Pricing

In the revamped program, advertisers will pay $0.15 per click for the first 5,000 clicks per month they receive to their sites via LookSmart listings. Any clicks over the 5,000 mark are more expensive and priced depending on the business category a listing falls into.

For example, an auto listing is charged $0.15 per click for the first 5,000 clicks generated in a particular month and then $0.23 per click for all clicks over that level. An online gambling listing would also pay $0.15 per click for the first 5,000 clicks. Above this level, it would be charged the highest category CPC rate of $0.75 per click.

Here's another way to look at it. Let's say you have an auto listing that generates 1,000 clicks in a month. You'd pay:

$0.15 x 1,000 = $150

Now let's say you generate 5,000 clicks in a month. The pricing per click stays the same, though you pay more simply because you got more clicks:

$0.15 x 5,000 = $750

Now let's say you generate 6,000 clicks in a month. The first 5,000 clicks will be at the flat rate of $0.15, then all the clicks over that (1,000 in this case) are charged at $0.23 per click. It works out like this:

$0.15 x 5,000 = $750
$0.23 x 1,000 = $230
Total: 6,000 clicks = $980

Finally, take the same situation as above, but let's say you are an online gambling site. Now you'll pay $0.75 for your excess clicks, making the total charge like this:

$0.15 x 5,000 = $750
$0.75 x 1,000 = $750
Total: 6,000 clicks = $1,500

What if you have listings that fall into different business categories? For instance, maybe you sell books and tickets to sporting events. Book listings will cost $0.23 for each click over 5,000 per month, while ticket listings cost $0.30. LookSmart recommends that you create different accounts for different classes of listings. All your book listings would go into one account, while all your ticket listings would go into another.

How does the new pricing compare with the old system? For small businesses, little is different.

In the old LookListings Small Business program, there was a flat $0.15 per click charge. Potentially, this means that the new program could be more expensive for some small businesses. However, most in the old small business program never went over the new 5,000 click level, LookSmart says. If true, then higher pricing won't be an issue.

"The vast majority, 98 percent, fall into getting 5,000 clicks per month [or less”. For most of those customers, nothing is going to change at all. There're going to get the same traffic for the same price," Sullivan said

Of course, one reason small business customers might have been under the 5,000 clicks per month level was because they were pretty much limited to having one listing per month. Now that they can add listings, more of them may generate additional traffic.

As for big businesses, in the old LookListings program, cost-per-click pricing varied depending on what was negotiated with LookSmart negotiated. Now there's a published rate card, from which negotiations can begin. Those spending at least $5,000 per month can bargain for better rates, LookSmart said.

There's also a $29 set-up fee for each listing and a $19 fee if you wish to update your listing more than a month after initially purchasing it. Accounts have a $15 per month minimum spend. You'll always be billed for at least this amount, to maintain an active account with LookSmart.

Why Bother With LookSmart?

Who searches at LookSmart? Not many people, relatively speaking. That's fine by LookSmart. The company's business model is designed around distributing its listings to other search sites.

MSN Search remains LookSmart's most important partner. MSN currently uses LookSmart's data as its main source for answering user queries, in a deal that runs through the rest of this year. So if you want to be in MSN, LookSmart is one of the best options out there, for the near future.

How about long term? Obviously, that remains to be seen. As previously reported, MSN Search wants to build its own crawler and use that for its primary results. However, MSN has not ruled out also working with LookSmart, while LookSmart has said it is negotiating with MSN on what may happen for next year.

LookSmart's deal with MSN also makes it one of the best Google-alternatives out there, for search engine marketers. Currently, Google results power three of the four most popular search sites: Google, Yahoo and AOL Search. That leaves MSN as the remaining search powerhouse with its own unique voice. If you've been failing on Google, then LookSmart at least offers a way to buy your presence cheaply into the search space.

Of course, you could always purchase Overture listings to show up on MSN -- and this remains an option. However, LookSmart's hope is that you'll find they offer a cheaper alternative. LookSmart's paid inclusion model doesn't guarantee placement, so it remains a toss-up whether you'll appear for any particular term. But if you do, there remains a good chance you'll get that top ranking for less expense than going with Overture.

For example, let's say you wanted to be on MSN Search for "designer sunglasses." Currently, you'd need to agree to pay between $0.38 and $0.41 to make it into the Sponsored Sites section that's filled with Overture's top three listings for that term. In contrast, LookSmart would cost you $0.15 per click.

But would you make it into the first page of results? The odds are pretty good. There are only 17 total "Web Directory Sites" listings at MSN for that phrase -- and these listings generally come from LookSmart. Get a listing at LookSmart with the words "designer sunglasses" in the title and description, and you'd stand a pretty good chance of making it into the first page at MSN.

LookSmart has also signed a new deal with Lycos. Currently, main results at Lycos come from AllTheWeb. Beginning around September, this will change so that 10 LookSmart-powered results will appear ahead of any AllTheWeb listings. This will occur for 50,000 queries that LookSmart has determined to be commercial in nature. It will ramp up to 100,000 queries, over the course of a year.

LookSmart hopes this new strategy of supplementing search results will let it survive in a world where those looking to outsource may assume there is only the two giants to choose from: Google and Yahoo (which owns Inktomi and expects to own Overture by the end of the year).

"We decided to concentrate on a healthy subsegment of the query stream where we can and do provide better relevancy than Google, while simultaneously delivering significant revenue," said Sullivan. "It's an attractive, high-revenue, high-relevancy solution that is being evaluated by portals including our current partners."

In other words, if LookSmart can guarantee high-relevancy as well as high-monetization (since its commercial "editorial" results will nonetheless generate paid inclusion revenue), then it may hang in there as a supplement to offerings from either Google or Yahoo.

As for the relevancy issue, Lycos may be a good test case. The company says it has the right to do third-party relevancy reviews of the LookSmart results and end its contract, if criteria are not being met.

While Lycos is a recent LookSmart gain, AltaVista is a recent loss. You might not have even realized that LookSmart results were an option at AltaVista, but clicking on the service's Directories tab would have brought you to them. That relationship ended last month, when AltaVista went over to the Open Directory.

Reason? AltaVista is now owned by Overture, and Overture sees LookSmart as competitive to it, so the relationship was terminated, said Fred Bullock, senior vice president of marketing in Overture's web search division.

Close Up With LookSmart Distribution

Aside from MSN and Lycos, LookSmart also has partnerships with ISPs such as RoadRunner, powers web search results at About.com and distributes listings to meta search engines such as Dogpile.

MSN is notable not just because it is the biggest traffic partner LookSmart has. MSN also uses its own search algorithm to sort through LookSmart's listings. This means that a search on MSN will be much different than what you'll see if you do the same search on LookSmart or a LookSmart partner that simply rebrands LookSmart's results.

For example, here are some links that bring up searches for "designer sunglasses" at various LookSmart-powered sites:

  • LookSmart
  • RoadRunner (identical to LookSmart)
  • About ("On the Web" results identical to LookSmart's Reviewed Web Sites listings)
  • Dogpile (see note below)
  • MSN Search ("Web Directory Sites" listings use sites from LookSmart but order determined by MSN algorithm)

If you explore the links, you'll see that RoadRunner simply rebrands the exact results that LookSmart provides. A "RoadRunner" logo is added, but the results appear just as if you did a search at LookSmart itself.

Over on About, listings in LookSmart's "Sponsored Listings" area are not picked up. What are these? Paid placement listings, where listings are guaranteed to come up in response to certain terms.

I'm planning a further follow-up on Sponsored Listings, to better explain how you can purchase them, if desired (you'll find nothing about them on the LookSmart site). To date, I've been told by LookSmart that these are sold on a flat-rate CPC basis, rather than auction-style similar to Overture or Google. My assumption is that large advertisers may choose to pay a higher CPC rate in order to get bumped into this area.

It can also be the case that you'll show up in the Sponsored Listings area, even if you haven't paid. This is because anyone who pays LookSmart on a CPC-basis gets a shot at being in this area. Those with explicit agreements get guaranteed placement, then any extra spots get "backfilled" with ordinary LookSmart commercial listings that are relevant for the search.

The Sponsored Listings area is important when you consider LookSmart's distribution with Dogpile. This is because Dogpile generally picks up these listings from LookSmart, then maybe adds one or two listings from the LookSmart "Reviewed Web Sites" area after that.

For example, in the "designer sunglasses" search, Dogpile picked up the last three of the four listings in the Sponsored Listings area at LookSmart plus listings 9 and 10 from the Reviewed Web Sites section.

Why didn't it take all four listings that were in the Sponsored Listings area? The first one came from eBay, and it could be that eBay's Sponsored Listings deal with LookSmart does not extend to meta search engines. Similarly, a search for "dvd players" finds that a Home Shopping Network listing in the Sponsored Listings area doesn't make it into the Dogpile results.

Finally, at MSN Search, you'll see that many of the sites from LookSmart's Reviewed Web Sites area make it into the largely-LookSmart powered Web Directory Sites area at MSN (occasionally, MSN editors may insert some non-LookSmart listings into this area). However, the exact order is much different -- a results of MSN's own algorithm being used to search through LookSmart's database, rather than letting LookSmart do the actual sifting itself.

Aside from the ranking, there's another oddity. If you count all the listings in the Web Directory Sites area at MSN Search for "designer sunglasses," you'll see there are 17 in total. That's all that MSN has found when looking through the LookSmart database. Yet at LookSmart itself, there are over 55 matches found. What's going on?

At MSN, a close look finds that all the listings selected contain both words of our search within the title and/or the description -- not necessarily in the exact order, but certainly both appearing somewhere. In contrast, some of the LookSmart matches for the query contained only one of the words or occasionally even neither of them!

How could LookSmart itself find matches that don't use either word? When listings are created, LookSmart also allows the submission of what it calls "relevancy keywords," ten terms you want associated with the listing but which perhaps don't appear in the listings title and description. This may help you with LookSmart, but MSN makes no use of the data.

In short, the ages-old advice for getting LookSmart listings to do well at MSN remains. Have the listing contain all the key term you want to be found for, preferably in the title, certainly in the description and generally in the exact order of the target query, if possible.

FYI, I have planned visits to LookSmart, MSN and Infospace (which owns Dogpile) next month, so I'll try to bring some further clarification on these distribution issues, in the future.

Paid Inclusion Really The Future?

Over the past year, LookSmart has banked heavily on paid inclusion and greater monetization of search results being the wave of the future. It gambled that it could convert many of its listings to recurring cost-per-click income, and greater revenues show that it was a gamble that largely has paid off -- despite bad press from the inept way it was forced upon existing customers last year.

With Yahoo's pending acquisition of Overture, LookSmart feels that it may have new opportunities to grow its paid inclusion distribution.

"Our reaction to the news, frankly, is to keep our heads down and keep working. The fact that we're now the only independent paid inclusion provider is very positive. Yahoo owning Inktomi, AltaVista and [AllTheWeb” may create uncertainty and confusion around their product offerings and distribution and that, frankly, is a great opportunity for us to expand our own business. We're convinced that paid inclusion creates tremendous value for advertisers, and any chance we have to extend our leadership in paid inclusion is a good thing," Sullivan said.

But is paid inclusion as LookSmart does really the best method? Sure -- LookSmart has human beings that review all the listings its carries to determine they are relevant for a particular term. But so do Overture and Google, for their paid placement listings (and without charging a $29 review fee).

If LookSmart can cut a deal with Lycos (and perhaps others in the future) that some queries are "commercial" in nature and so should have more of its paid inclusion listings, then the same could be done with paid placement listings

For example, Google currently has 10 companies all with paid placement ads for "dvd players," yet partner AOL only carries three of them. AOL could easily decide that "dvd players" is so commercial in nature that it makes sense to increase the number of paid listings its carries to 10 -- then provide unpaid editorial results as backup to this.

Similarly, Yahoo carries six paid placements on its page -- four at top and two at the bottom -- while the bulk of the page for a search on "dvd players" comes from unpaid, unmonetized listings from Google. If it wants to better monetize its page, it can just increase the number of Overture listings it carries.

Ah -- but wouldn't this all be terrible for searchers? Not necessarily. In fact, there might be some advantages. If a search really is commercial in nature, then showing more ads for it could indeed make sense. And if the search engine isn't getting the relevancy right, then it will pay the price when searchers abandon it.

Ultimately, I think the best reason to increase monetization through paid placement, rather than paid inclusion, is that it provides better clarity to advertisers and searchers.

For advertisers, you know what you get with paid placement. Want to be in the top spot? Generally, pay the most money, and you'll get there. As for searchers, want to know what's sold versus editorial? Easy -- all the major search engines segregate their paid placement listings into clearly defined areas.

In contrast, paid inclusion is a mess. Search engines using paid inclusion send out mixed messages. Consumers are told how comprehensive and fresh a search engine is, but then advertisers are told that without paid inclusion, they may not get found or revisited on a regular basis. Paid inclusion leaves consumers unable to determine what's paid and what's not within a search engine's editorial listing.

Ultimately, I think paid inclusion will evolve into semi-targeted paid placement. Want to be found for a particular term? Then pay a high fee, perhaps in an auction system, and you'll get that top billing through targeted paid placement. Want to be found for a variety of terms, but don't want the hassle of monitoring bids? Then try our semi-targeted paid placement -- where we'll crawl your site, determine what pages are relevant for certain terms automatically, then agree to send you clicks for an overall flat rate. You'll show up whenever there's not anyone with guaranteed targeted listings ahead of you.

Given this, LookSmart has part of the equation right. You can buy semi-targeted leads from LookSmart at cheap prices. The real question will be whether LookSmart's "independent" status is unique enough for portals to want use its listings in addition to other players or their own technology, especially when paid placement listings will probably have evolved in a year or two to do what LookSmart is currently delivering.


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