LookSmart buys the Wisenut search engine

(March 12 2002) LookSmart, the company behind the LookSmart directory, has bought Wisenut, one of the new Google rivals on the search engine scene.

On Wisenut and LookSmart

As a search engine WiseNut uses automatic robots to surf the Web and build up a database of pages and sites.

It is known for its advanced ranking system, which is a bit like Google's (see our article "Wisenut -- the new Google").

LookSmart, on the other hand, is a Web directory where human editors hand pick sites for inclusion. Rankings are partly based on a secret algorithm and partly on who is willing to pay to get to the top.

The non-commercial part of the LookSmart directory is produced by the volunteer based Zeal community, while the paid listings are edited by LookSmart itself.

The strategy of LookSmart

It is interesting to note that LookSmart calls itself "a global leader in search targeted marketing", indicating that the main focus is on marketing, not searching.

Nevertheless, LookSmart argues that LookSmart's customers, i.e. those who pay to get listed in the directory, should benefit from a "higher return on marketing investment because more relevant search results drive more qualified leads."

In normal speech this means that LookSmart feels that the quality of the present search results is not good enough, and that they will add Wisenut search engine listings to the results to encourage visitors to come back.

The tremendous success of Google proves that this is a wise strategy. The majority of searchers are looking for relevant results. If you cannot give them quality listings, they will not click on the paid entries either, and without traffic you cannot survive selling paid inclusion in this market.

Still, LookSmart is not a major portal in its own right. Its main business lays in providing directory results to other search sites and portals, and these customers do not necessarily have to use Wisenut in combination LookSmart directory data.

It seems clear, however, that LookSmart intends to compete with Inktomi, Fast and Google in providing search engine results as well , especially to large portals like AOL and MSN.

MSN is already using LookSmart directory data, but like AOL it sticks to Inktomi for search engine results.

"As we integrate WiseNut's search technology over the next few quarters, LookSmart will be able to offer our portal and ISP partners a full service solution that includes a scalable billion document index infrastructure, next generation search relevance and strong listings revenue," says Evan Thornley, chairman and CEO of LookSmart.

"By acquiring WiseNut, LookSmart becomes the first company to have both high quality scalable search technology and strong listings revenue generation. We believe this will position us to compete with companies that have only one of these capabilities."

For "companies" read Inktomi, Google and Fast, who do not have their own directories, and the Yahoo! directory who has no search engine.

Will the search portals take the bait? Only if it is profitable for them. Portals like AOL and MSN love to keep the search result providers on their toes, to make sure that they really compete for the money.

Hence it makes sense to use LookSmart directory data, but to get search engine listings from another company. After all, the major portals have the expertise needed to integrate results.

Smaller portals, however, will probably feel more tempted to take such an "out of the box/plug and play" solution. Moreover, Wisenut is a decent search engine, and LookSmart/Wisenut can definitely compete quality wise.

Search engine innovation

The Teoma search engine was recently acquired by Ask Jeeves.

Some lament the fact that both Teoma and Wisenut have been bought by well established search companies. They looked forward to another Google-like search engine that could bring innovation and quality into a market obsessed with paid inclusion and pay-per-click.

However, it seems to us that Teoma and Wisenut never really tried to become the new Google, i.e. an independent search site providing search results to the masses. Instead they were consciously building their technology and competences in order to sell them to the highest bidder.

This has increasingly become a normal way of developing new processes, products and services, especially in areas like information and communication technology and the pharmaceutical industry.

Small start-ups -- often university spin offs -- acquire high risk venture capital to develop a new technology. Venture capitalists are experts who are willing to do this, as they limit the risk by investing in a wide number of companies, accepting failure in most of the cases, and profiting from the success of a few. However, they do expect to be paid if the product becomes a success.

The large multinational companies, on the other hand, are more risk averse. Instead of taking the chances developing the new technology themselves, they wait for the best opportunity to acquire someone else's invention.

From a searcher's perspective this is all very well, provided that the buyers are able to implement the new technology in a sensible way -- i.e. provide good search results -- and that they continue to develop the technology further.

The failure of Excite may partly be explained by a lack of will to improve the search engine, and AltaVista is also struggling because it find it so hard to fine-tune the search results.

It remains to be seen if LookSmart and Ask Jeeves will become worthy competitors to Google and Fast, but they have indeed taken long steps forward.

LookSmart press release.

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