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.
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 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.
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.
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.