LookSmart Cuts Staff But Gains Big Amazon Deal

LookSmart cut its staff by nearly one-third last month, but this was due primarily to the continuing refocus at LookSmart on selling listings that are distributed to partners, rather than trying to sell advertising on its own site.

In fact, just after the layoffs, LookSmart announced its biggest "Subsite Listings" sale to date, to Amazon. The deal allows content from Amazon to be deeply categorized in the LookSmart directory. That means Amazon will likely appear in response to a wider range of queries, so its traffic from LookSmart partners such as MSN Search should increase.

In return, Amazon -- like other Subsite advertisers at LookSmart -- will pay LookSmart a per click fee. LookSmart did not release how much the Amazon deal is worth, only that it is the largest such deal to date. In its last three quarters, listing services have generated $10 million for LookSmart.

Overall, it would be foolish to see the recent layoffs as a sign of LookSmart being on the ropes. Such thinking simply doesn't take into account the completely new paid inclusion business model that LookSmart is following, which should be successful, given that its search partners are looking for cash.

My favorite quote on LookSmart's prospects has come out of an earnings update by Merrill Lynch's Henry Blodget: "As expected, whacks guidance and 30 percent of employees. Still a real company, though (believe it or not), with plenty of cash. New bar set so low management ought to be able to get out of bed in morning and fall over it."

LookSmart
http://www.looksmart.com/

LookSmart inks directory deal with Amazon
News.com, Jan. 17, 2001
http://news.cnet.com/news/0-1005-200-4510989.html

More details on the Amazon deal.

LookSmart Looking Up
InternetNews.com, Jan. 17, 2001
http://www.internetnews.com/IAR/article/0,,12_562131,00.html

Details on the Amazon deal and revenues at LookSmart in general.

LookSmart Pains On 4Q Revision
SiliconValley.Internet.com, Jan. 11, 2001
http://siliconvalley.internet.com/news/article/0,2198,3531_558671,00.html

LookSmart is cutting its staff by a third, due to dropping ad revenues, and it is consolidating operations to focus more tightly around a different type of "ad" product -- selling listings within its directory.

LookSmart Submit Page
http://submit.looksmart.com/

Updated materials that outline LookSmart's various listing programs.

Pay For Placement
http://searchenginewatch.com/resources/paid-listings.html

Past articles about LookSmart's Subsite program can be found in the paid inclusion section of this page.