November 10, 2003

LookSmart is waiving its $29 account set up fee for the holiday season. One of the top web directories, it has had a hard time finding its identity.

LookSmart has been criticized many times for its changing business plans. In the past few years LookSmart has changed its business model from 1 time fee to annual fee to flat rate cost per click to category cost per click, and now they are unleashing a full bid for placement keyword auction model.

For the holiday season LookSmart might be a great buy with prices which are frequently cheaper than Overture or Google AdWords. Only recently did LookSmart change its revenue model to pay per click. LookSmart is in desperate need to increase revenue and click price. MSN provides about 65% of LookSmart revenue and is set to drop their service in January. Despite increased prices and increased web traffic the holiday season brings, few think that Looksmart's merry Christmas will lead to a happy new year.

For LookSmart to provide relevant results with search partners they must realize that it takes much more than price per click to equal relevancy. As long as they keep mixing LookSmart listings in with regular search results they are promoting a broken business model.

Source: LookSmart

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