If you've read my article "LOOKs Can Be Deceiving" (http://www.high-search-engine-ranking.com/LOOKs_Can_Be_Deceiving.htm), 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 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 issues raised in article. Below is a transcript of that interview.
Do answers provided by LookSmart shed much light on their decision or go any way towards resolving issues? I'll let you make up your own mind:
--------------------------- (WR) = Web Rank, (DS) = Damian Smith
Question 1 (WR) - Why did LookSmart Ltd decide to change LookSmart.com 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 leads don't convert, you won't keep paying us either. With new model, users' need for a relevant search result, advertisers' need for a qualified lead and distribution partner's need for revenue are perfectly aligned.
Question 2 (WR) - Why did LookSmart Ltd decide to force their customers to rollover into 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 first place. Plus, we're giving them 20 months to stay in directory and see for themselves how well product works. In addition, if listings are critical for relevancy, they'll stay in directory regardless of paid status.
Question 3 (WR) - Why wasn't model introduced for LookSmart.com.au? 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 product. Our sales channels in Australia will be very different from those in 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 need to increase 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 significant increase in distribution over 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 volume of traffic - and highly qualified nature of leads - we're sending to SME's.
Question 5 (WR) - Under revised LookListings submission model for LookSmart.com.au, is there a limit to number of sites and/or URL's you can submit?
(DS) Yes, you can list up to 3 URL's from 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 LookSmart.com.au, it appears 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 next week or so.
Question 7 (WR) - Will LookSmart Australia be switching to a similar PPC model in near future? If so, can you guarantee existing customers of LookSmart.com.au won't be forced to rollover like those of LookSmart.com?
(DS) Given 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 - preferred method - for larger clients, as we've been doing for over 2 years. We do hope to offer SME's opportunity to list in premium "Featured Listings" or "Sponsored Matches" placements now seen on many of our partners, most notably Yahoo! Australia & NZ. This would be on 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, 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 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 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 next few months, most end use customers - businesses who actually pay bills at end of day - have recognized that they can get better long-term service & value in US out of our new product. The pricing is only one part of change - there's also a raft of new options for customers on reporting and flexibility in controlling exposure and spend each month.