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I am assuming that most sites won't pay Looksmart. Some will, but I think that the majority will stay well away; it is just too expensive. I am also assuming that Looksmart will do what they threatened and remove sites where the account is out of budget, which they don't appear to be doing at the moment (We are still getting clicks).
Let's take a popular subject such as "search engines". After the first day or two, you can kiss goodbye to MSN's top ten listings, including sites such as Search Engine Watch, Inktomi, Yahoo, Searchability and Search Engine Guide. I can't see any of these paying LS $0.15 a click.
In fact, I think that on popular terms, we are going to see a new set of listings every day as more and more sites eat up their monthly budget in a few hours. Eventually we are going to start seeing any Looksmart sites that are loosely related to "search" or "engines" somehow. And once these are used up?
So what will be the result? Firstly, I think that we will see a general decline in the quality of results towards the middle of the month. Assuming that Looksmart will lose 10 sites per day for any given popular search phrase, they can remove the top 140 sites in just 2 weeks.
However, once all of the Looksmart listings have been chewed up, the Inktomi listings are going to become more and more prominent.
So, if I am seeing this accurately (not likely:)), MSN will go through three stages each month:
-> Looksmart main listings
-> Looksmart dross listings
-> Inktomi listings