1. Why did we launch the new SBL product?
Firstly, while our Submit-a-Site product had the benefits of being simple and relatively inexpensive for businesses, it lacked a lot of features our customers were seeking and only captured a tiny fraction of the value LookSmart was creating. Secondly, to deliver the traffic that many of you desire, we had to create a product that would enable distribution partners to share in the value of their traffic, while at the same time making financial sense for LookSmart.
The new product enables us to offer a range of things we couldn't do previously:
The ability for you to buy and manage traffic to meet marketing needs and fit within budgets. Now you can test the new product for as little as $65 - or for free if you were a Submit-a-Site customer - or buy thousands of quality leads per month if they generate a strong ROI.
Additional targeting - to set keywords that help targeting in addition to the targeting that is done by the search relevance technology.
Access to additional distribution channels - we can now distribute our small business customer listings through a range of channels that only accept PPC listings and will be increasing the number of new channels in coming months.
Reporting and accountability - along with the ability to buy traffic, a set of online reporting tools to help you measure what was sent, so you can assess your marketing spend against sales.
Competitive pricing - a flat $0.15 cost-per-click that is lower than the averages of many auction-priced lead generation services.
2. Why didn't LookSmart "grandfather" previous Submit-a-Site customers into the new product?
Historically, we charged our small business customers for the labor-intensive process of reviewing their site and placing it in our directory. However, we did not sell traffic and there was no guarantee that any level of traffic would follow.
We realized that traffic is the most important commodity in our industry and that we needed to move to a product that focused on selling traffic. To cover some of the cost of creating and categorizing search listings for new customers, we retained a smaller review fee of $49.
We wanted to give our existing Submit-a-Site customers clear benefits over and above what new customers would be receiving. We started with the obvious - no new fee for the site review, since they already have one. More importantly, we're offering up to $300 worth of free traffic, regardless of which Submit-a-Site product was originally purchased (they ranged from $49 to $299 historically) to let Submit-a-Site customers try our new platform without any additional costs. We believe this gives Submit-a-Site customers enough time and traffic to assess whether the new platform meets their needs for accountable, controllable, cost-effective lead generation.
To "grandfather" Submit-a-Site customers into a traffic-based product would have disadvantaged customers who are paying for their traffic, made the economics unattractive to our distribution partners and disadvantaged our business - limiting our opportunities to expand the traffic we can offer customers in the future. We wanted to put together a transition offer that fairly balanced the needs of our different customer sets, our advertisers, distribution partners and LookSmart itself. I recognize that not everyone believes we got that balance right.
3. How's it going?
As you may have seen from our recent press release, more than 8,000 customers responded to this new offering in the first month, exceeding our expectations. Sign-ups and average budgets have been higher than we anticipated and, as we continue to drive highly qualified leads, our customers keep increasing their budgets to get more of a good thing. We are also driving stronger traffic levels than we expected, because the additional targeting, stronger distribution and improvements in relevance are all adding up to stronger user click-through rates. For a major product launch with a lot of complexity, early results are encouraging, and we're addressing ways to make the product even more appealing to our customers.
4. What could we have done better?
Plenty! While our financial performance has been strong, we haven't succeeded in all our goals and objectives, or met the expectations of all our customers. A few examples:
Our reporting technology, while accurate in total, aggregates data from multiple days, making it hard to reconcile against customer logs.
While a large number of our customers are responding very enthusiastically to the new offering, another group clearly preferred Submit-a-Site and were disappointed by the change. This is particularly true for some of our SEO (search engine optimization) and agency customers.
Given the complexity of the change, we were not as good at customer service and customer communications as we wanted to be. In particular some of our communication has been very "big company." As co-founder of this company seven years ago (when we were a small business), I can understand how this approach alienated some of you. We'll try for plain English in the future. You'll also find that we'll have less "policies" and a more personal approach to resolving customer issues. We will not use words like "Upgrade" if what we're doing is not just adding features, but introducing a whole new product, as was this case.
We didn't provide materials to SEOs and agencies to help them explain the new product and the value of fixed-CPC paid inclusion to their customers.
5. What are our next priorities?
To specifically address some areas in [4], above, we will be:
Expanding distribution further so that we can meet the ever-increasing needs of our customers for qualified leads;
Enhancing the reporting systems to make it easier and more transparent for customers to match their own records and then use the reporting as a tool to optimize ROI on their marketing investment with us
Investigating ways to better serve our Submit-a-Site customers who don't feel the new product meets their needs. We are reviewing feedback and will be inviting a small group of these customers to help us identify and understand these needs better. This will include SEO/agency businesses that have unique needs around managing listings for multiple customers.
Beefing up customer service resources and reducing turn-around time. We will also try to be responsive to your specific needs and make sure all communications from LookSmart come from a real identified person, in plain English.
In closing:
Thanks for taking the time to read this update. Special thanks to the many customers who have helped us launch our new product and to those who've shared their views about it with us. Thank you also to the many customers who have given us feedback on the new product - the good, the bad and the ugly. You are helping us serve you better over time.
Finally, thank you to the forum hosts who've kindly agreed to publish this update. I'll be seeking their support again in the months to come, to tell you more about how we are progressing. We're absolutely committed to making this product your best choice for cost-effective customer acquisition.
Evan Thornley, Chairman and CEO, LookSmart Ltd ethornley@looksmart. net
