Despite the industry slowdown, LookSmart is doing nicely. The company refocused on its core business of providing search directories for leading portals and ISPs and was monetizing search services early on. Last year’s $19.5 million Q4 revenue was up slightly from the previous quarter.
LookSmart’s directory has three revenue streams: licensing the directory, advertising, and e-commerce. Since 2000, monetizing listings with programs such as LookListings and SitePromote has been a priority. “We believe 90 percent of the value in search lies in the center of the page, not the banners and buttons around the sides,” said Dakota Sullivan, VP of marketing, “In Q4 last year, our listings revenue grew 33 percent.”
Learning the Ropes
LookSmart is alone in providing both paid-placement and paid-inclusion listing services for large and small advertisers. “Most small businesses don’t really understand that these two distinct paid-listing models yield clearly differentiated benefits,” said Sullivan. Using both models in combination provides advantages.
For example, a business can purchase a handful of core keywords from Overture, then put a large number of URLs into LookSmart and Inktomi for inclusion. It’s a cost-effective approach to generating a volume of leads.
LookSmart’s paid-inclusion programs include Directory Listings for large and medium-sized businesses and LookSmart Small Business for small and medium-sized enterprises (SMEs). Marketers purchasing these services show up in results on MSN, AltaVista, Netscape, Juno, and Prodigy and on over 300 ISPs.
Paid-placements are called Featured Listings. LookSmart recently launched SitePromote, offering small businesses a slot in the Featured Listings section of the search page for $29.95 per month. “We are now the third-largest paid-placement player, after Overture and FindWhat. Featured Listings are distributed to many of the above mentioned ISPs, plus LookSmart.com, Ask Jeeves, and meta-search engines such as MetaCrawler, Mamma.com, Search.com, and DogPile,” said Sullivan.
“MSN now uses Overture for three listings at the top of the page — LookSmart for the directory layer, and Inktomi as fall-through,” said Sullivan. He believes this triumvirate will ultimately control a majority of the listings business.
LookSmart sees a need to maintain balance between user and advertiser needs. It strives to deliver relevance with strong monetization for distribution partners.
Last year, LookSmart acquired Zeal. The community search engine’s volunteer editors add numerous sites to LookSmart’s directory. “It’s the fastest growing community directory and was a runner-up in the 2001 Search Engine Watch Awards for [Most Webmaster Friendly Search Engine],” said Sullivan. “Zeal adds a goldmine of granular, noncommercial content to the LookSmart search directory experience. We provide this to our distribution partners, such as MSN, who in turn provide it to users. Ultimately, it reaches 77 percent of Web users across our network.”
Through Zeal submissions, sites can be listed free in LookSmart, especially noncommercial and content sites. You must “Become a Zealot” to submit, which requires passing the Member Quiz and the Zealot Quiz.
The Directory Distinction
Directories don’t index documents mechanically. Human editors ensure pages cataloged are appropriate and relevant. LookSmart increased its editorial staff for scaling up new directories.
Today, with most global directories at market scale, LookSmart has about 150 editors in over 30 countries. Editors review submitted material and material they search for themselves. “To facilitate the Herculean task of reviewing the millions of sites it takes to keep our 3 million URL database growing, editors rely on spidering and categorizing technologies,” said Sullivan.
Present and Future Search
Most people believe search behavior has changed. Sullivan is no exception. “In 1996, if you attempted to do a search for ‘ball valves’ on Yahoo you’d get, well, I don’t know what you would have gotten, but it wouldn’t be ball valves. Today, people routinely search and find name-brand consumer and industrial products, in addition to the same noncommercial searches they’ve always done.”
LookSmart reports 40 percent of its searches are for commercial products and services. Responses are increasingly more relevant as deeper content is accessed. “People will come to rely on search engines and directories for a wider range of information,” opined Sullivan.
“Search is becoming the white and yellow pages of the Internet,” said Sullivan. “You’ll also be able to search for images, music, and all kinds of files. Just as maps are more crucial to travelers today than they were in 1930, search will continue to become more important and useful as the Web grows and becomes increasingly complex.”