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 Looksmart.com 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 Looksmart.com
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 Overture.com, 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". But wasn't this new
scheme meant to benefit SMALL business?
- 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 incredibly.
- 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.com 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 are the personal opinion of the author and do not
necessarily reflect the views of Web Rank as a whole. In
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About the author:
Article by Kalena Jordan, CEO of Web Rank. Kalena was one of the
first search engine optimization experts in Australia & New
Zealand and is well known and respected in her field. For more
of her articles on search engine ranking and online marketing,
please visit http://www.high-search-engine-ranking.com
