LookSmart Answer Their Critics
If you've read my article
"LOOKs Can Be Deceiving"
(http://www.high-search-engine-ranking.com/LOOKs_Can_Be_Deceiving.htm),
you'll already know how I feel about LookSmart's recent decision to
change their US-based directory model at www.looksmart.com from
Paid Submission to Pay Per Click.
One person who was very interested in the article was CEO of
LookSmart Australia, Damian Smith. After he read it, Mr Smith
contacted me and agreed to an exclusive interview to address some
of the issues raised in the article. Below is a transcript of that
interview.
Do the answers provided by LookSmart shed much light on their
decision or go any way towards resolving the issues? I'll let you
make up your own mind:
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(WR) = Web Rank, (DS) = Damian Smith
Question 1 (WR) - Why did LookSmart Ltd decide to change
LookSmart.com from a Paid Directory to a Pay Per Click model?
(DS) Our customers told us to. For 24 months, since we launched our
first Submit product, customers wanted to know what they were
getting for their US$299. They wanted a guarantee. We couldn't give
them one, since results are served according to relevancy.
Now, you only get charged when you get a lead to your site. Strict
accountability. If we don't deliver traffic, we don't get paid. If
the leads don't convert, you won't keep paying us either. With the
new model, the users' need for a relevant search result, the
advertisers' need for a qualified lead and the distribution
partner's need for revenue are perfectly aligned.
Question 2 (WR) - Why did LookSmart Ltd decide to force their
customers to rollover into the new model instead of grand fathering
their listings?
(DS) We're giving our legacy customers US$300 in value-that's more
than they ever paid in the first place. Plus, we're giving them 20
months to stay in the directory and see for themselves how well the
product works. In addition, if listings are critical for relevancy,
they'll stay in the directory regardless of paid status.
Question 3 (WR) - Why wasn't the model introduced for
LookSmart.com.au? Did local consumer protection laws or other legal
issues prevent this?
(DS) We've decided not to move our directory in Australia to a
pay-per-click model for SME's purely for business reasons - most
notably making it easier for our sales channels to sell the
product. Our sales channels in Australia will be very different
from those in the US - most notably, because of our relationship
with Pacific Access, their salesforce (sic) will be selling our SME
product alongside Yellow Pages Online and their other products. We
expect this to be our dominant sales channel within a short period
of time. Because these products tend to be fixed or annual fees, we
believed there would be difficult issues for sales people in trying
to sell products on very different bases. We certainly don't
believe there are any legal issues involved in a move to a
different pricing basis.
Question 4 (WR) - If there was no move to a PPC model, why did
LookSmart Australia see the need to increase the paid submission
fee and introduce an annual fee here?
(DS) We've always intended to move to an annual fee, and think
that's a perfectly reasonable basis for directory inclusion - just
like a Yellow Pages model, where businesses pay annually for
inclusion. The fee increase reflects the significant increase in
distribution over the past 12 months - most notably OptusNet and
GOeureka, which are now exclusively powered by LookSmart. AUD$400
per annum (pre GST) is excellent value given the volume of traffic
- and the highly qualified nature of the leads - we're sending to
SME's.
Question 5 (WR) - Under the revised LookListings submission model
for LookSmart.com.au, is there a limit to the number of sites
and/or URL's you can submit?
(DS) Yes, you can list up to 3 URL's from the same domain via this
process. For sites who want to list more than 3 URL's from same
domain, we ask them to contact our Sales team directly, where a
tailored cost-per-click campaign can be developed specifically for
that client.
Question 6 (WR) - Looking at your new LookListings TOS for
LookSmart.com.au, it appears the only way to request a change or
update a listing is by re-submitting and paying an additional AUD
440 for a complete review. How do you expect small businesses to
afford this?
(DS) You've raised a fair point, and we're introducing a new
product shortly to allow small businesses to update their listing
for a much modest fee. We should have full details on this product
in the next week or so.
Question 7 (WR) - Will LookSmart Australia be switching to a
similar PPC model in the near future? If so, can you guarantee
existing customers of LookSmart.com.au won't be forced to rollover
like those of LookSmart.com?
(DS) Given the issue our sales channels in Australia - see question
3 above - we won't be moving to a CPC model for SME's. We will
continue to offer CPC - the preferred method - for larger clients,
as we've been doing for over 2 years. We do hope to offer SME's the
opportunity to list in the premium "Featured Listings" or
"Sponsored Matches" placements now seen on many of our partners,
most notably Yahoo! Australia & NZ. This would be on the same
CPC basis as other clients, but would obviously be entirely
discretionary for those SME's to decide whether they wanted to list
this way. Again, the Yellow Pages analogy is worth considering - a
fee for inclusion, and then opportunities to pay for prominence on
relevant keywords.
Question 8 (WR) - Because of
the recent outrage caused by LookSmart.com's move, many Australian
and New Zealand customers of LookSmart Australia feel that
LookSmart.com.au is tarred with the same brush and are hesitant to
remain as customers. What do you say to them?
(DS) Look, while there are some SEO's that are complaining, and we
hope to work with them and address their complaints in a sensible
and balanced fashion, we believe that over the next few months,
most end use customers - the businesses who actually pay the bills
at the end of the day - have recognized that they can get better
long-term service & value in the US out of our new product. The
pricing is only one part of the change - there's also a raft of new
options for customers on reporting and flexibility in controlling
exposure and spend each month.
Obviously, not every customer will always be happy. That's part of
life, and you should accept that any company may have customers for
whom it cannot deliver profitable service - and in that case, no
one should expect the parties to "have" to do business with each
other. That's a pretty reasonable stance for a company to take, I
would have thought.
LookSmart Australia shares a business model with LookSmart in the
US. We have different products to give life to that business model,
as you'd expect from any sensible global business in this day and
age. The data suggests very clearly that listing in LookSmart
Australia is a "must-have" part of a marketing spend for SME's
online who are interested in Australian traffic. People can read
about what we're offering, call and ask us questions, and if they
believe they can obtain value from our services, then they can buy
our listings products. If not, then that's their right also.
Question 9 (WR) - How sustainable is it to operate completely
different business models in various countries in a global market?
How do you expect SEO's and resellers to explain the different
LookSmart search models and recommend competing services?
(DS) We have a single worldwide business model - but not
surprisingly, we have different products and channels to deliver
those products in different markets. It'd be a funny sort of
company that had exactly the same product in every market. I can
promise you won't see a toasted ham, cheese & tomato sandwich
on the menu at McDonalds in Iowa, but you will in Australia! While
we have a single world-wide business model - search-targeted
marketing - it shouldn't surprise people that the actual products
and channels to sell those products vary market to market. It's
pretty reasonable business practice to adapt your products to the
local market.
Question 10 (WR) - For a long time now, LookSmart Australia has
claimed to reach 66% of the Australian search market via
partnerships with OptusNet, NineMSN, News Interactive, F2 and
GoEureka. Given the changes to the industry and the rocketing
popularity of Google with Australian users, is this figure still
accurate?
(DS) Very much so - in fact, we've just rechecked the figure with
AC Nielsen, who are, along with Red Sheriff, the authoritative
sources on this subject. Their unduplicated reach figure for our
network is over 66%. It's pretty simple. If you want Australian
traffic, inclusion in the LookSmart directory is a pretty vital
part of a small business marketing spend.
Question 11 (WR) - Given all the negative feedback they're
currently receiving from existing customers, do you think LookSmart
Ltd should have handled the model merge differently?
(DS) Despite what some people might believe, LookSmart is receiving
very little negative feedback. As of today, we've received
thousands of new orders, with far fewer customer service issues
than anticipated. We messaged the change in advance, and have
provided information through email, on site and through customer
service to help customers transition. Obviously, you can build
& improve on any product implementation, and we intend to do
that.
Question 12 (WR) - LookSmart Australia recently announced a deal
with Yahoo! Australia & NZ to provide "pay-per-position" search
results to Yahoo users. What are the benefits of the deal for
LookSmart Australia customers and is the deal with Yahoo LookSmart
Australia's way of breaking into the Pay Per Click market here?
(DS) LookSmart's deal with Yahoo! Australia & NZ is part of our
new "looklistings" distribution network in Australia. Across a
number of properties - which at the moment include Yahoo! Australia
& NZ, Goeureka, OptusNet and LookSmart Australia - we now
provide the top 3 search listings on a CPC basis for highly
relevant listings. Only highly relevant results will make it in
there - we're not going to sell the keyword "home loans" to someone
selling tickets to sporting events, for example! The commitment to
relevance is a big part of the reason those major distribution
partners have signed up with us. I can promise you that if Yahoo!
Australia & NZ believes we're providing poor results, they'll
let us know, pretty damn quick.
For Australian customers, the product has a very simple benefit -
highly relevant, guaranteed prominence listings on the major search
properties in Australia, attracting LOCAL traffic only. Sure
there's Australians typing in "home loans" on Google - but there's
millions more Americans doing the same thing, whereas on our
network partners, it's all local traffic. Relevance comes from
local traffic, as much as from the work of our team and the search
algorithm. We believe the ROI on our product will beat the
rest.
LookSmart has always been in the "pay per click" market in
Australia - most of our larger clients pay on this basis rather
than on a fixed annual fee. Those clients - such as ebay,
Seek.com.au, Wizard Home Loans etc - have been on the CPC basis for
some time, and will continue to do so. It's the preferred method of
paying for listings for larger clients, and works very well in
terms of tracking leads and calculating ROI across a very large
number of listings.
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Web Rank would like to thank Damian Smith for taking the time to
respond to our questions. If you have additional questions for
LookSmart as a result of reading this interview, Damian suggested
emailing him directly at mailto:dsmith@looksmart.net
Further information on LookSmart.com's LookListings for Small
Business can be found here: http://listings.looksmart.com/. More
information on LookSmart Australia's LookListings product can be
found here: https://www.looklistings.com.au/.
For those who missed it, LookSmart Ltd announced their Q1 Results
at the end of April. Details can be found here:
http://news.cnet.com/investor/news/newsitem/0-9900-1028-9812520-0.html.
The market's response to the announcement can be witnessed here:
http://www.shareholder.com/looksmart/chart.cfm?Period=1&Bench1=
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Copyright Kalena Jordan
About the Author
Article by Kalena Jordan, CEO of Web Rank. Kalena was one of the
first search engine optimization experts in Australia & New
Zealand and is well known and respected in her field. For more of
her articles on search engine ranking and online marketing, please
visit http://www.high-search-engine-ranking.com
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