LookSmart Still Isn’t Dead; Finds New Role “Mining Diamonds from the Dirt” in the World of Second-Tier Search Engines

10/4/10Follow @wroush

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LookSmart’s algorithms have to make their determinations in microseconds. LookSmart now processes two billion search queries a day—placing ads from aggregators like Kontera, Oversee.net, Affinity, Advertise.com, Bravenet Media, and LeadImpact across dozens of search sites—and recently completed its first profitable quarter in six years.

It’s a remarkable turnaround for a company that’s been through several near-death experiences. Brown, who came to LookSmart after long stints at Yahoo’s search marketing division and Emeryville, CA-based digital marketing startup Tribal Fusion, says there’s been an almost total turnover in the company’s executive leadership over the past 18 months. Longtime board member Jean-Yves Dexmier, who became CEO of the company last December, “has brought a new energy, a new strategy and direction to the company,” says Brown.

Brown, who is listed as the number-three executive on LookSmart’s website after Dexmier and chief financial officer Steve Markowski, says he had been pushing for just such a shakeup since arriving at LookSmart. “I was pleased that [Dexmier] joined the company, because his strategy mirrored my drive and what I thought the company should be doing,” Brown says.

Brown says he it became clear to him shortly after joining LookSmart that there wasn’t any more room in the top tier—Google, Microsoft, and Yahoo have the market for premium keyword-based text ads locked up. He saw an opportunity, however, for the first player that could bring greater safety and security to the Tier 2 market, which has long been “buyer beware” environment, in his words.

“The knock on Tier 2 has always been, ‘There’s a bunch of junk in there. Spiders and bots and God knows what’s going on in there—it’s ugly, I’m afraid of it,’” Brown says.

To weed out the disreputable search providers while still distributing its clients’ ads as broadly as possible, LookSmart has partnered with companies that make click-fraud detection software, such as Anchor Intelligence and Click Forensics. It has also built quite a bit of its own in-house traffic quality management software.

The job of those systems, Brown says, is to play a continuous game of “whack-a-mole,” catching anomalous spikes in click-throughs on clients’ ads before they get out of hand. “We have what we call a ‘surge suppressor’ that catches these patterns early, before they go crazy,” Brown says. “We say, ‘We need to stop that source right now and have a human go … Next Page »

Wade Roush is Chief Correspondent and Editor At Large at Xconomy. You can subscribe to his Google Group or e-mail him at wroush@xconomy.com. Follow @wroush

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