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The Search Light Newsletter - Special LookSmart Edition
Vol. 2 Issue #5


                THE SEARCH LIGHT                          

      {SPECIAL EDITION – LookSmart}

          Guiding your web site to the

            top of the search engines...


15 May 2002                        Vol. 2 Issue # 5       

Editor : Kalena Jordan, CEO, Web Rank Ltd



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    =>  Editor’s Message
    =>  Sponsorship Notice
    =>  Feature Article – LookSmart Answer Their Critics
                                     (Interview With Damian Smith)
    =>  Industry News – Announcements From LookSmart
[SCOOP!] FBI to Investigate LookSmart                            
LookSmart Critics Lash Out in Fury
Other LookSmart Articles and Resources
Feedback From Our LookSmart Article
=>  End Note
=>  Subscribe / Unsubscribe information


Dear Readers,


Well, last month’s feature article “LOOKs Can Be
Deceiving” certainly made waves – huge 10 foot
high ones at that – LOL!


In fact somebody anonymously emailed it to
LookSmart Australia CEO Damian Smith, which
resulted in him contacting me and providing the
feature article of this Special Edition: an exclusive
interview. [Please note this edition does not replace
our usual monthly newsletter due out later this


In the interview, Mr Smith attempts to address
some of the criticism LookSmart have received
since changing their Directory at
from a Paid Directory to a Pay Per Click model
and forcing their existing customers to “roll over”
in the process. 


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.


Also included in this issue are some comments
and feedback I’ve received from readers in
response to my original article, some updated
links to the latest on the LookSmart debacle
and even an insider scoop on why the FBI has
taken a sudden interest.

Happy Reading!

Kalena J



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LookSmart Answer Their Critics  
                     by Kalena Jordan

Transcript of interview with LookSmart Australia CEO, Damian Smith:

(WR) = Web Rank, (DS) = Damian Smith

Question 1 (WR) - Hi Damian. Why did LookSmart Ltd decide to change 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

Question 3 (WR) - Why wasn't the model introduced for
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, is there a limit to the number of sites and/or URL's you can

(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,
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
won't be forced to rollover like those of

(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's move,
many Australian and New Zealand customers of LookSmart Australia feel that 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

(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,, 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.


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    

Further information on's LookListings for Small Business and
LookSmart Australia's LookListings product can be found via the links below. 




The above article may be re-published as long as the following paragraph
and URL link are included at the end of the article: 

Kalena Jordan, CEO of Web Rank Ltd, was among the first
search engine optimization experts in Australasia and is
well known and respected in her field. For more of her tips
on search engine ranking and online marketing, please visit:


Following on from last month’s announcement, LookSmart has rarely
been out of the spotlight. Looksmart and their directory model have
received plenty of publicity and even generated some of their own.


Below is a summary of all the developments, with links to further resources:

Announcements From LookSmart

For starters, 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:


Then, on May 7, LookSmart announced a deal with InfoSpace to provide
search results to Excite and Webcrawler:


Finally, on May 13, possibly in response to all the negative feedback, LookSmart
released a press release announcing their new Business Listings' product
had exceeded expectations:

FBI to Investigate LookSmart [SCOOP!]

Yes, we have a very rare industry scoop for you! Sources tell me that the FBI
are interested in talking to LookSmart Ltd about their new model. Seems they
have received hundreds of complaints from LookSmart customers via their
Internet Fraud Unit (URL below). At this stage it is unclear what type of fraud
LookSmart has been accused of by their customers, but we'll keep you posted.

Rumours abound that customers plan to file a Class Action against LookSmart
regarding their new PPC model. Nothing concrete to report on that, but it won’t
be the first time they are on the receiving end of legal action. LookSmart's own 
stockholders filed a Class Action suit against the company back in July last
year (URL below).



LookSmart Critics Lash Out in Fury


It wasn’t just me getting stuck into LookSmart over the last month. A wide
range of search engine industry representatives spoke out in surprise and
anger over the way LookSmart treated their customers as a result of their
move to PPC listings. Below is a sampling:

The Look-not-so-Smart Directory
Pandia Post Newsletter No 16, May 6, 2002

LookSmart Looks Dumb Again
Jill Whalen,, April 19, 2002


LookSmart US Changes The Rules!
Make Me Top Newsletter (UK), May 2002

LookSmart Infuriates Customers With New Pricing Model

MarketPosition Monthly, May 2002

I-Search Mailing List Archives
LookSmart Coverage, Issues 420-423, April 2002


Looks Like Hoodlums
HighRankings Advisor, Issue 008, May 1, 2002


Other LookSmart Articles and Resources

The New LookSmart PPC Program
(Outline of the new program and costs involved)


The Bumpy Road To Maximum Monetization

The Search Engine Report, May 6, 2002
(Interesting look at the move towards PPC search)

(Entertaining satire on the whole LookSmart debacle)

LookSmart Changes To Cost-Per-Click Listings

The Search Engine Report, May 6, 2002
(Solid detailed review of the new model, pros versus cons)


LookSmart in the Search Engine Forums

(Various search engine forum threads about LookSmart)



Feedback From Our LookSmart Article

Below are some examples of the feedback I received from last month’s
feature article “LOOKs Can Be Deceiving”. I would’ve been happy to
publish opposing opinion, but I’ve only received one email criticizing the
article and the profanity used prevents me from listing it here.


Hi Kalena,

I just read your article about Looksmart. I checked my listing yesterday
and they have already deleted my listing.  I wish I had downloaded the
original Terms of Service from when I listed back in July of last year. I
was under the impression that the one time fee was for a permanent
listing.  This "shakedown" is not going net them one cent from my







Thanks for your "LOOKs Can Be Deceiving" article. You summed up my
feeling very well.  I wish there was a way that everyone who has been
harmed by this
could fight back.  Thanks for doing what you did. At least
it made me feel somewhat vindicated that they will get some bad press.


Christopher Roberts





Hi Kalena,


I enjoyed your article. I just shake my head at all this.


Not being in the mood to waste words tonight, let me just say that I wish

LookSmart would go to hell. They're out of second chances.


All the best,


“A well known writer in the SEO field."

[Name withheld upon request]




Dear Kalena,

I just read your "looks can be deceiving" article and agree that
Looksmart must be in trouble, or run by adolescents with no
business sense.


I do optimising for client sites, so I was doubly upset when
Looksmart did their backstabbing of me and my customers.

I had a perfectly proper and relevant site, dumped from page
one, (which I paid $299 to index less than six months ago),
because I refused to increase my account to $150 per month. 


They should change their company name to Lookstupid,
because they will not find many webmasters who recommend
clients to go with them now.


Goodbye Looksmart...


Roger Hughes in Florida



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