LookSmart Inks Search Deal with Lycos

LookSmart on Wednesday announced a multiyear search agreement with Terra Lycos to provide Web search and paid inclusion on the Lycos portal.

Under terms of the deal, LookSmart will provide search results for commercial terms beginning in the third quarter. Lycos will also have the option to sell LookSmart’s paid inclusion product, LookListings, through its InSite search-marketing program. InSite offers advertisers a suite of search marketing tools, including both paid inclusion and paid placement.

Financial terms and the length of the agreement were not disclosed.

The Lycos deal comes as LookSmart girds for increased competition in the paid inclusion space. In the coming weeks, paid search giant Overture Services plans to unveil its own paid inclusion product, which will compete head-to-head with LookListings in the emerging space. Yesterday, LookSmart announced the combination of its small and large business paid inclusion products into a single offering, LookListings, in a move to give smaller advertisers more options.

Paid inclusion differs from the wildly successful paid listings market. With paid inclusion, an advertiser pays to have certain Web pages included in a Web search crawl. Unlike paid search, it does not guarantee placement on the results page, but paid inclusion listings appear in the main search results. It’s beneficial mostly for marketers with large Web sites or sites that change frequently, because some pages might be missed by a search engine’s regular Web crawl.

LookSmart has been a pioneer in the emerging sector, which will be worth $200 million this year, according to investment bank First Albany. The company has distribution agreements with MSN, About.com and CNET Networks.

The most recent deal allows LookSmart to capitalize on the Web search technology it acquired in April 2002, when it bought WiseNut for $9.3 million in stock. The company inked a similar deal in March with high-speed cable Internet provider Road Runner that included Web search.

Competition is fierce in the search sector. Overture is reportedly poised to supplant Google as the Web search provider at Freeserve, a deal that would mark its first win against its rival since acquiring algorithmic search capabilities through its twin acquisitions of Alta Vista and the Web search unit of FAST.

Likewise, LookSmart has felt the heat of competition. In May, it warned that its annual financial results would be hurt by increased spending on product development to stay ahead in the paid inclusion market.

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