By Kalena Jordan
If you've read my article "LOOKs
Can Be Deceiving", 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
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:
(WR) = Web Rank, (DS) =
1 (WR) - Why
did LookSmart Ltd decide to change LookSmart.com from a Paid Directory to
a Pay Per Click model?
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.
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.
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.
(WR) - Why
did LookSmart Ltd decide to force their customers to rollover into the new
model instead of grand fathering their listings?
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.
addition, if listings are critical for relevancy, they’ll stay in the
directory regardless of paid status.
3 (WR) - Why
wasn't the model introduced for LookSmart.com.au? Did local consumer
protection laws or other legal issues prevent this?
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.
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.
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?
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
- 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?
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.
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?
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.
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?
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.
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.
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?
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.
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
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.
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?
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.
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?
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.
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?
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.
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
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
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.
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
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 email@example.com.
information on LookSmart.com's LookListings for Small Business can be found here.
More information on LookSmart.com.au's LookListings product can be found here.
those who missed it, LookSmart Ltd announced their Q1 Results at the end of
April. Details can be found here.
The market's response to the announcement can be witnessed 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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