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LookSmart Sponsored Listings To Take On Google & Overture

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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.

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.

For its part, MSN 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.

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.

A longer, more detailed version of this article,
including a special look at some issues for marketers,
available to Search Engine Watch members.
Click here to learn more about becoming a member

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