LookSmart to compete with Overture

LookSmart will compete with Overture in the regular pay-per-click text ad marked.

(October 2 2003, updated October 3) LookSmart has gone through several transformations during it's life time. It started out as a Yahoo!-like directory. The directory then became fee-based, as you had to pay to be included in the commercial section of the index.

Finally LookSmart opted for a model where the owners of the listings had to pay a fixed price per click through. This means that as regards the commercial sections LookSmart is no longer a proper editorial based directory, but rather an ordered collection of text ads.

The text ad marked is dominated by Overture and Google AdWords. However, these two services follows the auction principle, meaning that the more you pay per click through the higher your chances are for getting a high ranking in the text ad listings.

LookSmart is now going to implement the same system, targeting Overture as the main competitor. Yahoo! is going to take over Overture later this year, and LookSmart reckons that many portal owners will feel uncomfortable with the idea of buying pay per click services from a major competitor.

"The need has come along for someone to do what Overture did," says Dakota Sullivan, LookSmart's vice president to AP. "We want to be the new Switzerland in this space."

We would guess that LookSmart is mainly doing this in order to keep its profitable MSN.com account. MSN is currently including LookSmart in its regular search results, but has experimented with a new version where the main results are fetched from the Inktomi database (i.e. regular search results, not text ads).

The reason for this is apparently that MSN would like to improve the quality of search results. Hence LookSmart risks being left out in the cold. By introducing regular pay-per-click text ads LookSmart may even hope to replace Overture as MSN's text ad provider.

LookSmart has already signed contracts to distribute its pay per click "LookSmart Sponsored Listings" to Web sites like Cent, Road Runner, Mamma.com, Dogpile, Infospace and InfoSpace.

The new service will apparently not replace the commercial LookSmart directory, but is to be an addition to the old service.

Like Google Adwords, LookSmart Sponsored Listings will determine the ranking of the text ads on the basis of the price you are willing to pay and the number of click throughs the ad gets. LookSmart does this to improve the relevance of the ads presented.

LookSmart says that it will ensure that advertisers never pay more than they need to by automatically discounting your CPC to the minimum value necessary to maintain the position in search results.

LookSmart Sponsored Listings, details
LookSmart US home page.
LookSmart Looking to Trump Yahoo! Move (Yahoo!)
LookSmart Sponsored Listings To Take On Google & Overture (Search Engine Watch)

More search engine news...