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LOOKs Can Be Deceiving

By Kalena Jordan   21st April 2002

You may have heard that Looksmart Ltd have made some changes to their business model lately. In fact, Looksmart have made the profit-driven decision to move from a Paid Submission based directory to a Pay Per Click based directory.


The first warning shot was fired on April 3rd, with an email to existing Looksmart
customers announcing the impending launch of Small Business Listings:


“Based on feedback from customers like you, we’ve merged and enhanced the
benefits of our ‘Submit’ and ‘Site Promote’ products into one product called
Small Business Listings.”


Hmm… we thought, smells like pay per click. Discussion boards and forums
worldwide were rife with rumours, complaints and concerns. Feedback? What
feedback? Nobody put their hand up to say they had asked for a PPC model.


Next came machine gun fire in the form of an email sent to existing Looksmart
customers on April 12th:





“LookSmart has launched Small Business Listings, our first pay-per-click
product for small businesses. This new, improved product replaces both
Submit and Site Promote… Your account has already been updated and
is ready for you to log in. We've waived the $49 per listing set-up fee. We'll
give you $300 in free clicks per listing. Each month for the next 20 months
you'll receive a $15 credit per listing in your account – starting today.”


[I should take a moment to point out that currently, these changes apply to only, not regional directory versions]. Meanwhile, new customers were asked to pay a $49 “set-up” fee and an initial account deposit of at least $150 towards future clicks. Existing Express Submit customers who paid the $199 or $299 one-time submission fee discovered they were only entitled to a maximum of 100 clicks per month instead of the unlimited number of clicks they were receiving under the old model. Ouch. What’s more, Looksmart demanded that these customers log-in and “activate” their accounts by July 11th (by entering their credit card details) in order to receive their “free” clicks.


All types of conflicting assumptions and questions began appearing on the
forums and discussion boards. “What happens if I don’t activate my account?”,
“Will existing listings stay the same if you do nothing?”, “Will my site be
dropped if I don’t activate”, “What happens to my Looksmart listings on
MSN?”. So confusing and misleading was the announcement from
Looksmart that some people thought they were getting a huge bargain
while others believed they were getting ripped off big time. To make
matters worse, the Terms of Service and FAQ’s for the new Small
Business Listings on the Looksmart site seemed to show conflicting
information that changed each day we looked.


But it took a couple of days for the true deception to sink in. Once people
began to log in and activate their accounts, it wasn’t long before they
started receiving “Listing Traffic Interruption” emails from Looksmart
announcing their sites had already received the 100 “free” clicks allocated

as part of the new deal and would consequently receive no more traffic
for that month, unless they increased their monthly budget (in other words,
agree to pay $0.15 per click for all additional visitors that month). One of my
colleagues received this email within 8 hours of activating his account,
which meant that he was previously receiving more than 300 clicks per
DAY, let alone the oh so generous 100 clicks per month that Looksmart
were offering him as part of the new deal. He worked out that he would
need to add an additional $1,300 to his account each month, just to
maintain the level of traffic Looksmart were providing him under the
old system! Upgrade? I think not!


Here are some interesting tid-bits I’ve discovered about the new model:


-         Unlike regular Pay Per Click models such as,
Looksmart are not giving customers control over their bid amounts
and also providing no way to regularly update their listing description
without paying $49 each time for the privilege.

-         Sites previously receiving an unlimited number of clicks per year
via the old system are now restricted to 1,200 clicks per year, unless
they fork over more money.


-         The new system has a $15 per month minimum spend requirement.
This means that if a listing fails to generate $15 worth of click
revenue for LookSmart in a particular month, the site will still be
billed for that entire amount

-         Wording used in Looksmart’s announcement emails seems to
deliberately mislead customers into believing their directory listings
are going to disappear if they do nothing. The fact is that the listings
may or may not be removed – depending on how “essential” the site
is deemed to be by Looksmart Editors.

-         Sites previously ranking well via their existing listings will, in all
likelihood, lose these rankings whether they activate their PPC
account or not, because preference will now be given to those
who buy “relevancy keywords” as part of their listing.

-         By their own admission, Looksmart is unlikely to delist big brand
sites, even if they refuse to pay for the new scheme, because they
are “critical to relevance”.

-         Looksmart claim the new program creates a lower cost of entry
for small business whereas the start up costs actually come in
at $50 more than the old Basic Submit model used by those with
smaller budgets, not to mention the additional click costs.

-         Apparently, LookSmart have been trying to force companies whose
sites were included in the directory for free to convert to their paid
programs. Looksmart’s attitude to these sites is “having a free ride
doesn’t help the business model” and if they don’t convert, they
are likely to be removed.

-         Under the old submission programs, a single web site could submit
up to five different URLs. The new program institutes a one URL
per site limit, dramatically reducing the ability to target and direct
traffic to the most relevant areas of your site.

-         Many people who have activated their accounts and already received
notification that their “free” clicks are used up are checking their logs
and finding discrepancies between the number of clicks Looksmart
say they have provided and the number of actual clicks to their site.

-         Looksmart had the audacity to call this new model an “upgrade”
for existing clients, when in fact it reduces the value of their listing

-         According to industry leader Danny Sullivan, in the past few days,
LookSmart has been automatically migrating accounts to the new
system regardless of whether customers give their permission by
manually “activating”.

Being an SEO, I have multiple Looksmart accounts for my own sites and
those of my clients. I’ve already received six “Listing Traffic Interruption”
emails. But I won’t be giving them another cent. Why? Because Looksmart
no longer offers me or my clients value for money, for one thing. But more
importantly, the deceptive nature of their announcement and their decision
to force existing customers to roll-over into the new system instead of
“grandfathering” their listings demonstrates to me a complete lack of
understanding of their own market.


To put profits before customers might bring some short-term shareholder
joy, but it will also guarantee a growing exodus of disappointed clients and
users as they find more cost-effective and relevant search alternatives. In
my book that’s search engine suicide.


Search engines and directories have done some pretty shifty things over
the years, but never before have I seen such arrogance or disdain for
customers as Looksmart have shown in the past two weeks. A post at the
Web Master World search engine forums sums it up nicely:


“L$ is like the mob and they just busted my kneecaps…”


In fact this whole episode reeks of desperation, profiteering and deception
on such a grand scale, you have to wonder if they are in serious financial
muck. Whatever their motivations, it looks like they’ve already pressed the
self-destruct button.


Disclaimer - The views expressed in this article do not necessarily reflect the views of Web Rank as a whole. In providing this information, we make every effort to ensure it is correct and up to date. However, because of the widespread nature of our information sources, no guarantee is given for the accuracy of content throughout this article. Web Rank disclaim all liability in the event of inaccuracies found.



UPDATE 3rd May 2002 - Last week I received an email from LookSmart Australia CEO Damian Smith in response to the article above. This resulted in my being granted an exclusive interview with him where he addresses LookSmart's critics. To read the interview transcript, Click Here.

The above article may be re-published as long as the content remains unchanged and the following paragraph is included at the end of the article, including the URL links:

Article by Kalena Jordan, one of the first search engine optimization experts in Australia and New Zealand, who is well known and respected in the industry, particularly in the U.S. As well as running her own SEO business Web Rank, Kalena manages Search Engine College, an online training institution offering instructor-led short courses and downloadable self-study courses in Search Engine Optimization and Search Engine Marketing subjects.


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