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© 2000

Looksmart Extends its Reach with New Portal Parterships
By Andrew Goodman - August 8, 2000

From its inception, Looksmart defined itself as a competitor to Yahoo!. It didn't seek to compete with everything Yahoo! had become, however. Rather, it took aim at a central aspect of Yahoo!'s product offering - the Internet directory - and sought to improve on it, or at least offer a credible second-to-market competitor. Every Coke can withstand one Pepsi.

Looksmart Succeeds Where Many Have Failed

Looksmart wasn't exactly the second company ever to come up with the idea of a helpful categorized guide to Internet sites, of course. Even those "Cool Site of the Day" things we all used to look at in 1995 did basically the same thing - tell users where the good stuff is. But most big-league attempts to play me-too in the Internet directory space owned by Yahoo! had fizzled. (Whatever happened to  Magellan after it was acquired by Excite? Pathfinder? Point Communications ? Some of these sites are, ahem, a little light on contact information today.)

Two things seem to set Looksmart apart from others which had tried and failed. One was its commitment to hiring the required editorial talent to build a high quality directory. It's interesting to speculate that the presence of Looksmart - and its availability as a quality directory at the disposal of companies needing just that to power their portals - made it even easier for companies like ExciteAtHome to ignore or abandon completely their own in-house directory projects. A second differentiator was that Looksmart built its model in part around the premise that its editorial staff could be used to build directories for the many major web properties needing such services.

Top Portals Have "Looksmart Inside"

At first, Looksmart had a dual strategy of trying to drive traffic to the main Looksmart site, and also building directories for portal partners such as Increasingly, however, Looksmart discovered that the Internet economy was not so friendly to "big consumer sites." It has now intensified its "infrastructure focus." A visit to the main Looksmart site shows it looking more like a corporate site, with information for partners and advertisers featured as prominently as the directory itself. Like Inktomi and many others, Looksmart now believes that its mission is to power the directory offerings of others, be these major portals, international ISP's, or major topical sites or news providers. One Looksmart official has commented that its business model is something like "build once, sell many times." One industry executive commented recently that Looksmart is "basically a labor pool for hire - they hire their editors out to companies wanting to outsource that function."

Whatever it is, it's working. Looksmart has a growing client list and is now the official provider directory services for a wide range of major portals, notably various versions of MSN around the globe, ExciteAtHome, Go2Net, and iWon.  These business relationships, according to Scott Stanford, Looksmart's VP of e-commerce, vary considerably from client to client. Time-Warner chose Looksmart to sell their search based advertising at sites like, noted Stanford, because Looksmart could sell the advertising for high rates. This general proposition - of offering a directory to clients for a price which is "better than free" due to the superior monetization of search traffic - is now being shopped by Looksmart to other prospective partners.

AltaVista Chooses Looksmart, Drops Open Directory

One recent convert was AltaVista, which previously used a combination of Looksmart and the Open Directory for its category search. Last week, AltaVista announced that it would make Looksmart its exclusive provider of category search, in a deal that was interpreted in some circles as "Looksmart paying portals to use it." A better way of putting it is that Looksmart has revenue-sharing deals (undisclosed) with a variety of partners, AltaVista being a recent one.

The fact that it is embedded in the editorial content of a blue-chip list of portal clients around the world means that Looksmart has begun talking about the "reach benefit" of being listed in the Looksmart directory. A listing in Looksmart, they emphasize, puts your site's listing into all of the categorized search properties which use the Looksmart directory - a total audience reach of 58 million. In the US, the company boasts, the Looksmart Directory reaches 77 percent of US Internet users.

It's no coincidence that this benefit is being touted as Looksmart formally puts an end to the free site submission process (save for charities and nonprofits). Looksmart Express Submit is a $199 service which guarantees that an editor will review a site for inclusion within 48 hours. Applications can be made for the service through the Looksmart site or through some of its major partners, such as MSN. Regardless of where one applies for the service, a listing in the directory would appear in all Looksmart-powered directories.

Free Lunch Ending as Paid Placement Takes Hold

So is this just a pay-for-placement service? Looksmart says it isn't; that editorial policies still apply. However, when pressed, Looksmart officials allow that most any reasonable (i.e. paying) request for a listing will make it into the directory. Porn or hate sites are filtered out, but beyond those criteria, if you've paid your $199, your chances of listing would seem to be close to 100%. As an example, I attempted to describe a small (miniscule, actually) knitted-sweater shop with hardly any sales and virtually no compelling content on its web site. Stanford didn't bat an eye, suggesting that a site for a cottage-industry storefront such as "your mother's knitted sweater site" would be just the kind of site Looksmart would "love to have." After all, someone may be looking for just such a (fleecy) animal, and if there is a category for it, buyer and seller alike are satisfied -- as is, no doubt, the advertiser who places a relevant message in a highly granular subcategory of the directory.

The policy change was instituted in part to "take the noise out of the site submission process," according to Stanford. Free of the huge volume of free and "spam" submissions, editors will be able to spend time placing paying customers into categories. But in addition, Looksmart's 200 professional editors will continue to spend the majority of their time doing what they do best - scouring the web for great content in the areas they cover.

Although exact figures weren't available, Stanford wanted to point out that Looksmart has a larger and better-trained pool of editors than Yahoo!. Because of this image of professionalism and due to the high quality of its granular content, Looksmart believes it will soon find more major customers for its "better than free" directory infrastructure services.

As more portals are powered by Looksmart, the average surfer will be exposed to more and more of its editors' handiwork. While Yahoo! may be the king of portals, the "Pepsi" of Internet directory services has quietly extended its reach by embedding its category search into major portals around the globe.

Now if Looksmart can convince AOL to ink a deal, that would be the biggest coup of all.


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