July 9, 2003

Paid inclusion leader LookSmart (Quote, Company Info) announced on Tuesday that it would combine its separate products for small and large businesses into a single offering called LookListings.

LookListings will give small advertisers more options for building their paid inclusion programs, allowing them to add search listings for multiple Web pages. Previously, small businesses could only list their site's homepage, and couldn't link directly to product pages. "The marketplace has changed," said Dakota Sullivan, LookSmart's vice president of marketing. "Today, there's a lot of demand even from very small Web sites to list multiple pages."

The move comes as LookSmart awaits company in the paid inclusion market. Paid search heavyweight Overture Services has plans to launch its own paid inclusion product shortly, which will compete directly with LookListings. In addition to opening up multiple Web page listings to all advertisers, LookSmart said the new program would give small advertisers access to its reporting center, where they can gauge the performance of their campaigns.

LookListings also overhauls the pricing model. Previously, small advertisers were charged 15 cents per click for 5,000 clicks. Large advertisers would negotiate their click rates. Now, all advertisers can have 5,000 clicks at 15 cents each month. Beyond that, the cost per click is now set according to category. For example, for each click online gaming sites pay 75 cents and book sites 23 cents. "We believe that a category-based model give complete transparency and futher levels the playing field," Sullivan said, adding that the category prices still reflected a 20 to 25 percent discount on comparable keyword listings on Overture or Google.

LookSmart provides paid inclusion for MSN, About.com, and CNET Networks, among others. Like its brethren in paid search, LookSmart has assiduously courted small businesses. Last quarter, the company reported that its small business segment grew 13 percent to 38,000 advertisers.

With paid inclusion, an advertiser pays to have certain Web pages included in a Web search crawl. Unlike paid search, it does not guarantee placement on the results page, but paid inclusion listings appear in the main search results. The market for paid inclusion is small but growing quickly. Investment bank First Albany pegs the paid inclusion market at $200 million today. LookSmart has guessed the market could grow to be worth as much as $3 billion in 2007.

In May, LookSmart warned that its annual financial results would be hurt by increased competition in the paid inclusion sector. The company said the earnings hit was necessary in order to invest in product development.

Source: Silicon Valley Internet.com

        

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