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Where will the PPC results be framed? What about the Directory? Ditto Goverture? Well… a few pieces of evidence are beginning to emerge.
1) Will the directory listing stay?
Well, L$’s scandalous email announcing the ‘upgrade’ did NOT say categorically that the directory would be scrapped or that the entries would be deleted. Ditto email on 12th April.
Also, BettyBlue (aka L$ - [webmasterworld.com...] ) states that: “What does this new system have to do with category listings? I think those stay the same, or you can buy more”.
2) Will sites stay in the directory if they are not PPC active?
So it does look like the directory will stay and will continue to be maintained. The next question therefore is – what happens to those sites who do not play PPC or whose traffic “has been temporarily interrupted”?
In the expiry scenario they also talk about continuing to receive clicks to your “Small Business Listing(s)” in your account by paying their ransom. Vague as ever of course – does this mean the PPC area - or the categories as well? I would say the former only. If they could hit you with the bigger stick of pulling your site from the directory, I think we all know they would say so.
The other vexed question is whether you stay in the category if you don’t ever activate your “free clicks” in the PPC scenario.
As usual L$ is vague… which suggests (only suggests)… yes. They want to frighten people by hinting this may not be the case, but if it wasn’t the case an organization like L$ again would use the big stick, ruthlessly.
The factors that support this argument are simply that the directory is too big a resource to destroy (my guess is that most sites will not activate). If they did bin it, this would reduce the value of what they offer partners like MSN, for little benefit other than spite with respect to the dissenters.
3) If the directory stays, where will it be presented on MSN?
Some interesting recent developments here. .. the apparent 15c watershed in the MSN 3 sponsored listings for instance.
Much is guesswork here, but this rather suggests that the L$ PPC MAY be used as back fill to more expensive Goverture entries in this segment. If, so the Directory may well stay as second tier… which I guess is what most folk want to hear.
The jury is still out though of course. We simply don’t know for sure. MSN may well extend the number of PPC returns on the sponsored listing area (therefore de-valuing the directory). It may after all bin the directory (which would not help L$ sell its product of source) or replace it with Wisenut or Ink. There is certainly room for more optimism here than previously, however.
The equation is the same here as it has been for some time for MSN – how much dare they reduce the relevancy of their returns for short term cash? There’s already an interesting thread on this issue: [webmasterworld.com...]
How stupid do they think people are? How quickly, and in what volume, will their users discover that Google/etc are much better if they continue to degrade?
These are all issues that they have no doubt discussed. We don’t know the results yet but I think the current balance is that the L$ directory will stay and L$ PPC will be merged into the sponsored area (on the basis that a separate second tier sponsored area would look ridiculous and would be too transparent).
Another loser here could turn out to be Goverture. They MAY be about to lose listings under 16c in value from the returns.
Overall then the MSN picture is still murky, but we are at least beginning to see the dust STARTING to settle and the new scenario emerge.
They don't need that many.
Last time I checked the other thread, the count was at almost 900 listings submitted by forum members, and it seemed as if most of the big players hadn't even spilled their numbers yet. This amounts to roughly 0.25M $ of one time fees.
If I'm not mistaken, then an e-commerce site with a good conversion rate can easily justify spending 1k $ per month for clicks through MSN. This means that LS now needs only ten such customers to get the same revenue as above per year.
The more I think about it, the more I believe that this move will save LS as a business. That doesn't mean that they'll continue to be a search engine and/or directory with any relevance to the average searcher. They'll simply turn into the advertizing front-end for MSN and get filthy rich along the way.
The more I think about it, the more I believe that this move will save LS as a business. That doesn't mean that they'll continue to be a search engine and/or directory with any relevance to the average searcher. They'll simply turn into the advertizing front-end for MSN and get filthy rich along the way.
I don't believe that L$ will be getting "filthy rich... along the way". Why is it so easy to assume that a company (L$) can create some new product which, at best, only "fits" a small percentage of their customer base (Directory listings), and that the exorbitant pricing model (as seen by many) will work 100% for them, and they'll just start rolling in cash.
The entire search industry is nothing but a bunch of sharks. MSN is not LookSmart's friend. If conditions develop, such that this new CPC product launch is "successful" for LookSmart, and each month they're "rolling in cash" then MSN will just want more of the cash: "LookSmart, we've decided that our CPC revenue share is no long acceptable at 50%, we want 75%, or we'll just drop you. Overture has told us they want our business back, and Google is knocking our door down."
There is no market position that I can see where L$ will have any real power to maintain that position. There will always be multiple parties ready to push it out the way and eat its lunch: (1) its own portal partners will want more and more revenue share, (2) its competitors will always be out-innovating LookSmart in product and marketing technology. LookSmart is a 3rd-rate Johnny-come-lately to the CPC marketplace.
Overture has a hell of lot more experience in CPC innovation that L$. Google Adwords Select may be new, but there's an incredible brain trust of marketing technology and engineering over at Google. LookSmart doesn't stand a chance against those two competitors in product technology.
Actually, what I think may happen as portals continue to "shake out" (in the marketplace), they will continue to "shake down" all of their partners, affiliates, syndicators, et al. MSN may well combine the most lucrative CPC results from multiple sources (Overture, Google AWS, LS) and screw them all.
MSN is not LookSmart's friend. They just want more money, like every portal. They'll take as much as they can get from wherever they can get it. I wouldn't even be surprised if MSN launched their own CPC product, and AOL their own (so AOL and CNN/TW properties would use AOL's CPC product). And so on.
These portal companies are just media companies. If they have the network and the reach, then they have all the power. The tiny little vendor LookSmart will have zero power in this arena.
What's even funnier is that since LookSmart has decided to screw its entire Directory customer base and coerce them into a new CPC solution, if competitive pressures cause L$ to fail to succeed in the CPC arena, what will LookSmart have left? They've just screwed 95% of the existing customers who will now hate them. Who will be standing in LookSmart's corner. Nobody. Ha ha ha!
For LookSmart to succeed in this audacious, coercive product launch, somebody needs to be their friend. Somebody needs to stick with them for long enough to make this work. And I don't think that somebody will be its customers, who will just go elsewhere after being to poorly treated by L$ in this launch. (If I have to give $0.15 to somebody for those clicks, it sure as hell ain't gonna be LookSmart).
And L$ will have such miniscule click-budgets (authorized funds on deposit at any time from its CPC customers) for months and months to come (9 months? 18 months?), that MSN won't be enjoying much revenue share from LookSmart CPC, because ... theory or not ... the money just ain't on the table, the customers haven't budgeted it with L$. I'll be astounded if in six months, L$ is selling a hundred million paid clicks every month, or $15 million in CPC revenue (shareable to the syndication partners). I think it won't be 20% of that. In the meantime, MSN will have gone back to Overture because Overture has lots of real CPC money to share each month.
I said elsewhere: "Just because LookSmart opened a bakery, and baked a hundred million clicks this month, doesn't mean that 50,000 customers are gonna to walk in the door and buy 2,000 clicks each." A lot clicks are going to "go stale" sitting on the shelf (unpaid, unbudgeted), and you don't think MSN is gonna distribute those 85,000,000 free CPC listings which went unsold do you? LookSmart's going to have an awfully big problem soon. LookSmart will learn that "Just because you build it" doesn't guarantee that "They will come."
The entire search industry is nothing but a bunch of sharks. Competing portals and competing CPC syndicators, combined with LookSmart's arrogance, ineptitude and 3rd-rate technology will cause this new product launch to fail.
But even if the stars shine on LookSmart, and enough things go their way for a while, if LookSmart ever starts "rolling in money" somebody ten times their size (or a hundred times, or a thousand times)is just going to come over, knock them down, and take it. :)
And I'll enjoy a deep, satisfied laughter when that happens. In the meantime, they won't be enjoying any of my money.
** This is only my opinion **
I wouldn't activate your CPC ... you have until July 11 to decide.
I wouldn't sign up any new listings, let them starve.
I have an amusing site www.actdumb.com [actdumb.com][/B] where there's more about this L$ mess.
MSN will keep testing cpc models to see what works best.
When they know they will then buy the company. ( or beg steal or borrow)
And there was I thinking that they would have some regard for the quality of their directory... silly me!
The equation is the same here as it has been for some time for MSN: how much dare they reduce the relevancy of their returns for short term cash? There?s already an interesting thread on this issue: ...www.webmasterworld.com/forum33/773.htm
the link is a Ack! 404! it's: [webmasterworld.com...] ? Strong post by the way, agree 100% (maybe 99).
Another loser here could turn out to be Goverture. They MAY be about to lose listings under 16c in value from the returns.
tlacaelel:
I wouldn't even be surprised if M$N launched their own CPC product...I think it's already done in a select club way with FEATURED SITES on top of Overture's SPONSORED SITES, see [webmasterworld.com...]
Maybe M$N's algo for "web directory" will give a premium to L$ PPC and throw in a few token unpaid listings from L$'s "reviewed web sites" followed by who cares: ink or somebody else? Because a comparative search with the same terms on m$n & L$ does not have the same ranking. Will M$N copy the Dogpile model peppered with a few smokescreen relevant results?
M$N probably calculated that they get more new users with their OS & internet access shepherding than the amount of surfers they loose to educated switch to other more relevant search engines, so there is probably no limit to their march toward profit & irrelevancy...
People want a search to find what they asked it to ... and sooner or later, they learn how. Learn this obvious truth before it's too late (as several ex ODP editors have discovered!)
The second sad truth is that new users, as a proportion of total users, is shrinking and will inevitably continue to do so.
All credit to L$ in creaming off the cash while they can. The Golden Goose is going to die anyway ... taking a risk on hurrying the process a little is a no-brainer.
Expect the multiplication of "new markets" in Overture & friends. There is also a big chunk of casual surfers who will stay on these pay for play SE's.
The M$ OS is here to stay and IE & Hotmail are sucking a big chunk of new pc users is the tentacules of msn.
And of course, I'm not suggesting for one minute that the likes of MSN won't find other income streams - of course they will ... but they have more irons in the fire than L$!!
In addition, if MSN is not syndicating Overture terms for less taht .15, that would indicate that MSN may be turning the screws on monetized search as much or more than L$. Afterall without MSN there is really not compelling reason to bother with LookSmart.
I can't find the press release at the moment, but I belive it was in 99' M$N signed a 5 year deal with LookSmart so MSN is liekly to continue with LookSmart for a while longer.
What you never read about, what never gets any big press releases or PR hype, is six months later when the two "Partner" companies are thoroughly disgusted and contemptuous of each other, and they part ways ... quietly winding down or walking away from their joint activities with just a single brief propoganda release about "changing market conditions" and separting "to pursue individual strategies" but that "they will continue cooperating in areas which are mutually beneficial". Uh huh, heard that before.
The top executives that hatch all of these alliances are interested in only one thing: enhancing profitability. Usually when they succeed in pulling off strategic partnership agreements it's because both companies managed to "snow" the other one into believing they are better than they really are. Months later, when the big bucks aren't rolling in as expected, when the "team effort" (resistance, in-fighting, ineptitude) at both companies fails to impress, things sour quickly.
Besides, Microsoft writes powerful contracts. It doesn't matter if LookSmart might have some "5-year agreement" with MSN. If Microsoft wants out, wants to go elsewhere, they will do so immediately and without hesitation. And I haven't seen any announcement anywhere that MSN is actually committed to LookSmart's new CPC product. Does anyone know of any public statements from LookSmart or Microsoft about any agreements, new or old, that would commit MSN to carry L$'s new product? I doubt it.
Finally, many assume that just because L$ has declared that all keywords, all phrases, all clicks from everything are worth $0.15, that it will drive up CPC minimums to $0.15 and that CPC synidicators that don't match it will get dropped by their partners. Just because L$ has dreams of $0.15 for every click doesn't mean that they're going to succeed in syndicating a hundred million paid clicks every month ($15 million). All those clicks look wonderful on a spreadsheet, enough to get the CEO & CFO all excited. But L$ will only have as many clicks deliverable (revenue shareable) for MSN and other partners, as LookSmart customers sign up and authorize budget. And that is not going to be many at all.
LookSmart ignorantly believes their own "value proposition" at 15 cents for CPC. But there are already many meaningful analyses in this forum and others that refute the quality of L$'s model of descriptions and keywords as an efficient source of good traffic. You'll pay for a lot of garbage traffic, driving your effective CPC up significantly. And don't forget about all those wonderful $49 change fees. That should amortize impressively into your CPC cost as well.
If MSN has really dropped Overture, or at least for clicks under $0.15, presumably to make way for L$ CPC, then they have a big surprise coming soon. I'll bet the MSN is going to be really disgusted in no time when they see that L$ can talk all they want, but just doesn't have the money on the table. Not even 5 or 10% of the click budgets authorized at Goverture.
In December 1998, we entered into a five-year licensing agreement with Microsoft...either party may terminate the agreement for any reason on six months’ notice...After the agreement is terminated, Microsoft has the right to continue to use the content we delivered during the term of the agreement. Microsoft also has the right to sublicense these rights to others, both during and for up to two years after the term of the agreement.
SEC filing [sec.gov]
As one MD put it to me "Neither of us expect it to last full term, if it does, great - if it doesn't, both sides have protection written in. We do, anyway." (not this deal, I must add!)
