LookSmart’s 180 Degrees of Vertical Search

LookSmart, the online media content and technology company that has been struggling for a place at the search table since losing its contract with MSN in 2003, has launched 161 new vertical search sites for content in 13 “clusters” such as health, home, automotive, food, cities, sports and travel.

The new verticals join 20 sites launched last spring in the LookSmart Money and Education content clusters.

LookSmart’s strategy is to develop these “clusters” of content into interesting and useful sites that will draw visitors and, of course, advertisers. The company’s hope is that advertisers will find the highly targeted sites a good place to place ads aimed at readers who are more qualified than those at general search portals.

Dave Hills, LookSmart CEO, compared the state of search today with the television industry before the rise of cable TV. “Back then, everybody thought you’d wind up with four television networks and that cable would fail,” he says. “Then grudgingly, people started admitted that maybe there was a place for a news channel, a sports channel, an entertainment channel. Nobody every envisioned that the consumer could handle—or the advertiser would buy—65 cable networks, which is functionally what you have today.”

The same conditions that made cable TV ripe for expansion in 1980 apply to online search today, Hills believes. “You’ve got a vibrant distribution system, you’ve got a lot of advertiser demand, and consumers continue to show their prowess at being able to manage many different media choices,” he said. LookSmart decided that consumers would use—and advertisers would value—a set of sites that crawled, aggregated and generated topical content relevant to their ongoing interests more consistently than they need the broad search capabilities of a Google, Yahoo! or MSN.

“When I’m researching something for the first time, I’ll go to Google or Yahoo!,” said Hills, formerly the CEO of Web content site About.com. “But over the course of time, I’m going to want what’s essential versus what’s exhaustive for subjects that I’m passionate about or have a repeated need for.”

The new sites carry the tagline “Where to Go for What You Need”, and offer users buttons that allow them to find, save and share the articles their LookSmart searches unearth. Those last two functions are the province of Furl.net, LookSmart’s proprietary content tagging service that lets users save pages and forward them to friends. By crawling these saved documents, LookSmart is able to locate what users think are the most pertinent articles on a topic and put those high up in its Web index.

LookSmart already operates FindArticles.com, which the company claims archives 10 million online articles from 900 publications. Hills said Web publishers who’ve had a good financial experience with that LookSmart product will also be willing to offer their content up for the vertical sites. Besides linking to those existing articles, the new vertical sites will generate original Web content.

Advertisers on the LookSmart network will be able to buy both paid listings by keyword, sold by auction, and three types of display ads on the new vertical.

LookSmart was a major name in Web search in the late 1990s, but its heavy reliance on paid inclusion led users to defect to the big search brands that pushed relevance over revenue. When MSN ended its relationship in preparation for rolling out its own algorithmic search product, LookSmart faced critical decisions on its future direction in a search industry that was quickly aligning into a top tier and then everybody else.

A year ago, the company hired a new CEO in Hills, an alumnus of both About.com and online marketing firm 24/7 Real Media. Since coming on board, he has placed emphasis on rehabilitating the quality of LookSmart’s distribution system and implementing the vertical search strategy.

While the company’s Q3 results, announced earlier this month, beat analysts’ expectations, Hills told an analyst teleconference that “No one in this shop is declaring victory.”

One small win might be avoiding de-listing from Nasdaq for allowing its share price to drop below $1. Later the same month, the company’s shareholders approved a five-for-one reverse stock split. That should satisfy the share price requirements for maintaining the company’s Nasdaq listing, Hills told a conference after the Q3 results. (The final Nasdaq recommendation should arrive about the time this SearchLine goes to press.)

Along with polishing up its content network, LookSmart has also begun to license its technology platforms. The New York Times now offers the Furl.net platform for users to bookmark its Times Select online content. And LookSmart’s Q3 report confirmed what had already been rumored: that it is operating as the seller of sponsored listings on the newly revamped Ask Jeeves search network.

As for how it will market its new clutch of vertical sites, Hills say LookSmart will fly somewhat below the radar with targeted press releases, some marketing into relevant vertical communities, and just good search optimization that will get the sites up high in the search results on the major broad engines where users can bump into them. In the same way, Hills hopes advertisers will be attracted by the very ubiquity of the LookSmart verticals, especially in comparison to other smaller second-tier ad networks.

In other words, there’ll probably be no prime time TV brand-building in LookSmart’s future. “You won’t see us during the Super Bowl next January,” Hills says.