LookSmart’s Deep Listings Option For Small Businesses

LookSmart has expanded its LookListings paid inclusion program so small businesses can purchase “deep listings,” previously offered only to big businesses — with big budgets.

The change, made last month, eliminates the LookListings Small Business program introduced last year. That program allowed small businesses generally to have only one listing in LookSmart’s commercial directory. In most cases, this was a home page.

A single listing is a disadvantage for those who want to be found for a variety of specific products, items or search topics. The more unique listings a site has in a search engine, the more likely it will appear in response to a greater range of searches.

LookSmart made the change both because smaller companies want greater representation, and because some larger companies don’t want to make the $2,500 monthly commitment the old LookListings program 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 around,” said Dakota Sullivan, LookSmart’s vice president of marketing. “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 pay $0.15 per click for the first 5,000 clicks per month received via LookSmart listings. Clicks over the 5,000 mark are more expensive, priced according to the listing’s business category.

An auto listing is charged $0.15 per click for the first 5,000 clicks generated in a given month, then $0.23 per click over that level. An online gambling listing would pay the highest category CPC rate of $0.75 per click over the 5,000 level.

There’s a $29 set-up fee for each listing, and a $19 fee to update a listing more than a month after purchase. Accounts have a $15 monthly minimum spend. You’ll be billed this to maintain an active LookSmart account.

Why Bother With LookSmart?

Who searches at LookSmart? Not many people, relatively speaking. That’s fine with the company. Their business model is designed around distributing listings to other search sites.

MSN Search is LookSmart’s most important partner. MSN uses LookSmart data as its main source for user queries. The deal runs through this year. If you want to be in MSN, LookSmart is one of the best options for the near future.

Long term? Obviously, it remains to be seen. As previously reported, MSN Search wants to build its own crawler to use for primary results. But MSN hasn’t ruled out LookSmart. LookSmart has said it’s negotiating with MSN regarding what next year.

LookSmart also signed a new deal with Lycos. Currently, main Lycos results come from AllTheWeb. Beginning next month, this will change. Ten LookSmart-powered results will appear before any AllTheWeb listings. This will occur for 50,000 queries LookSmart determines to be commercial in nature. It ramps up to 100,000 queries over the course of a year.

Lycos is a recent LookSmart gain, AltaVista a recent loss. You may not have realized LookSmart results were an option at AltaVista, but clicking on the service’s Directories tab brought them up. That relationship ended last month, when AltaVista went to the Open Directory.

Reason? AltaVista is now owned by Overture. Overture views LookSmart as competitive so the relationship was terminated, according to Fred Bullock, SVP of marketing in Overture’s Web search division.

Aside from MSN and Lycos, LookSmart has partnerships with ISPs like RoadRunner; powers Web search results at About.com; and distributes listings to meta search engines like Dogpile.

Paid Inclusion — Really the Future?

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

With Yahoo’s pending acquisition of Overture, LookSmart feels 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.

Is paid inclusion LookSmart’s way really the best method? Sure. LookSmart has human beings who review all the listings its carries to determine they’re relevant for a particular term. But Overture and Google do the same for their paid placement listings (without charging a $29 review fee).

If LookSmart can cut a deal with Lycos (and perhaps with others in the future) that some listing are “commercial” in nature, justifying more of its paid inclusion listings, the same could be done with paid placement listings

Google currently has 10 companies with paid placement ads for “dvd players.” Partner AOL only carries three of these. AOL could easily determine “dvd players” is so commercial it makes sense to increase the number of paid listings to 10, then provide unpaid editorial results as backup.

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

But wouldn’t this be terrible for searchers? Not necessarily. In fact, there may be some advantages. If a search really is commercial in nature, showing more ads could make sense. And if the search engine isn’t getting the relevancy right, then it pays the price when searchers abandon it.

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

Advertisers, you know what you get with paid placement. Want to be in the top spot? Generally, pay top dollar and you’ll get there. Searchers, want to know what’s paid versus editorial? Easy — all the major search engines segregate paid placement listings in clearly defined areas.

Paid inclusion, in contrast, is a mess. Search engines using paid inclusion send mixed messages. Consumers are told how comprehensive and fresh a search engine is, then advertisers are told that without paid inclusion, they may not be found or revisited regularly. Paid inclusion leaves consumers unable to determine what’s paid and what isn’t in editorial listing.

Ultimately, I believe paid inclusion will evolve into semi-targeted paid placement. Want to be found for a particular term? 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 without the hassle of monitoring bids? Try semi-targeted paid placement. We’ll crawl your site, automatically determine what pages are relevant for certain terms, 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 those of other players, or their own technology, especially when paid placement listings evolve in a year or two to do what LookSmart currently delivers.

This column was adopted from ClickZ’s sister site, SearchEngineWatch.com. A longer, more detailed version is available to paid Search Engine Watch members.

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