LookSmart Looking Up

LookSmart has announced its largest ever listing deal with Amazon.com and the ASX is still celebrating, with shares up 20 per cent today. But just last week things weren’t so rosy for the directory business, with LookSmart’s CEO announcing a downgraded revenue forecast and major staff cuts.

LookSmart said revenues would be reduced by up to six million dollars on previous forecasts, blaming the fallout on reduced market interest in untarget advertising.

“Untargeted advertising is declining while highly targeted online direct marketing is growing rapidly. However in the fourth quarter, the parts of our business that were weakening did so faster and to a greater degree than expected,” said Evan Thornley, chairman and CEO of LookSmart.

The company’s listings business grew 40 percent from the third quarter, while banner ads dropped off. LookSmart is earning much stronger results with its targeted marketing business, with the subsite listing offering adopted by Amazon taking $10 million in its first three quarters.

In a bid to pick up the slack from declining general ad sales, LookSmart fired 31 percent of its staff, equating to 172 employees across its US and Australian offices. The company also clamped down on non-payroll expenses estimating total annual savings from the cuts at around $44 million.

LookSmart did not disclose the value of its Amazon deal, which will see the e-tailer promote thousands of product categories through LookSmart directory links and keyword searches. Under the agreement, LookSmart will create Subsite Listings that will enable searchers to find and connect directly to commerce areas within Amazon’s Web site.