Lookin' Smart and Stayin' Alive

Despite a bad year for the industry, LookSmart is surviving and staying alive, with revenues up slightly in the third quarter of last year. That's because it regrouped in 1999, concentrating on selling search directory services to leading portals and ISPs and paid-inclusion services to Web sites seeking more targeted traffic.

LookSmart's three major sources of revenue are in directory licensing fees, advertising, and e-commerce. It monetized with paid-inclusion programs early on. LookSmart VP Marketing Dakota Sullivan believes "90 percent of the value in search lies in the center of the page, not the banners and buttons around the sides. Our listing revenues are growing steadily and increased 33 percent in Q4 last year."

LookSmart launched in Australia but is currently headquartered in San Francisco with offices in the U.S., Canada, Australia, and the U.K. It was ranked #1 in reach (77.8 percent) by MediaMetrix Digital Audience Reports/Ad Network, showing 80 million unique visitors across the LookSmart network.

The Paid Listing Advantage

"Many small businesses don't understand the difference between paid-placement and paid-inclusion," said Sullivan. "They're two different options providing unique benefits and should be combined for maximum effectiveness," he continued.

In other words, it's important to know how to use both programs to your advantage. A business with marketing savvy can buy a few core keywords at Overture, then turn around and buy a larger number of paid-inclusions from LookSmart and Inktomi, resulting in large quantities of leads at good pricing. LookSmart is the only company providing both paid-placement and paid-inclusion programs for advertisers big and small.

Early to Monetize

LookSmart started monetizing its listing services right after Yahoo!, offering paid-inclusion programs like Directory Listings for large and medium sized firms, and LookSmart Small Business Listings for SMEs. I remember when it started advertising traffic and leads over a year ago —sounded just like an SEO pitch. "We are the world's largest and most widely distributed search directory," said Sullivan, "so marketers who purchase paid-inclusion listings appear in searches on AltaVista, MSN, Netscape, and Prodigy, as well as Juno and over 300 ISPs."

LookSmart recently launched SitePromote, a paid-placement option that gives small businesses the opportunity to appear in the Featured Listings section of the search page. This gives them additional traffic for $29.95 per month. "We are growing this business rapidly," said Sullivan. "Our Featured Listings are distributed to many of the above ISPs in addition to Ask Jeeves, LookSmart.com, and meta-search engines like DogPile, Mamma, MetaCrawler and Search.com."

LookSmart considers itself complimentary to other major players. For instance, MSN uses Overture for its top listings (featured/sponsored sites), then LookSmart as a directory source and Inktomi as fall-through for its Web directory site listings. "These three companies will ultimately control a majority of the listings business," opined Sullivan.

"We offer tracking and reporting, and we're in advanced development with a best-of-breed business intelligence platform," he continued. LookSmart just acquired WiseNut, a Google-like search engine that will boost relevancy and expand its database.

Striving for Balance

LookSmart strives to maintain a balance between user and advertiser needs, putting user relevancy first, as well as strong monetization for its distribution partners. "We believe relevancy and monetization can only be achieved through a combination of professionally edited commercial and non-commercial content," said Sullivan.

Last year, LookSmart purchased Zeal, a community search engine of volunteer editors adding a large number of Web sites to the LookSmart directory. "It's the fastest growing community directory and was a runner up in the 2001 Search Engine Watch Awards for easiest directory to use," said Sullivan. "Zeal adds a plethora of granular, non-commercial content to the LookSmart directory, improving user experience. We provide this to our distribution partners, such as MSN, who in turn provide it to their users. Ultimately, it reaches 77 percent of Web users across our network."

You can get listed free in LookSmart by going through Zeal. "Sites should submit to Zeal -- especially non-commercial and content sites," said Sullivan." We provide express site submission services through MSN and through LookSmart.com." You must "Become a Zealot" to submit, though, which requires passing the Member Quiz and the Zealot Quiz.

Directories Don't Crawl

Directories do not index Web sites with spider technology like search engines, they rely on human editors to ensure that submissions are suitable and relevant. LookSmart increased its editorial staff while scaling up new directories. "Over the past two years, we were building the French, German and Japanese directories, adding many content specialists in those languages," said Sullivan.

Today, with most of its global directories at market scale, LookSmart has about 150 editors worldwide in over 30 languages and countries. The editors review both submitted material and material that is searched for. "To facilitate the massive task of reviewing millions of sites to keep our 3-million URL database growing, the editors rely on a platform of best-of-breed spidering and categorizing technologies," said Sullivan.

Search Then and Now

Many of us believe search behavior has changed since the Web was spun, and Sullivan is no exception. "If you tried a search for 'intake manifolds' in 1996 on Yahoo!, you'd probably have gotten anything but. Today, however, users routinely search for name-brand consumer and industrial products, finding them immediately," said Sullivan.

Today, 40 percent of LookSmart's searches are for commercial products and services. Content served in response to these queries is increasingly more relevant as the deep Web is indexed and cataloged by search engines and directories. "People will come to rely on search portals for an increasingly wider range of information," predicted Sullivan.

As search becomes the yellow and white pages of the Internet, you'll be able to find a lot more than text files — think images, music files, videos and more. "Search is the roadmap to the Internet, and just as maps are more important to travelers today than they were 75 years ago, search will become more important and useful as the Web develops and becomes increasingly complex," concluded Sullivan.

March 29, 2002