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Longstanding investor in Looksmart (and a 70 yr old ex-tradesman), who has a passionate interest in the problems of newspapers along with their success in all their monetisation attempts made, on the web. For the "times are indeed, a changin", I feel. [17th of Aug, 2011 - Print media... More
  • Looksmart's publishers to receive 92% in the dollar? 1 comment
    Aug 6, 2009 8:05 AM | about stocks: LOOK

    ##........................Looksmart's OWN Ad Network only (only?) had 207M paid clicks in the quarter. And has even increased it's TAC to get them. This all augers so well, really it does!! IMHO## 

    The above details are contained within my 'instablog' here, on "Looksmart's Q2 Report - Zero transparency, I'm afraid....."

    Yes ....."This all augers so well, really it does" !!  - And I will now tell you, why this is so ..

    There are much more exciting things to consider. From yet another post (on Y) Re: Where is the village idiot? "silly" Mike Mora (a poster from Sharecafe, over here in OZ, who sold his 1000 shares in LOK, @ $0.97c), had posted the following:

    #..As Lanczcaperz noted that doubling of queries didn't add crap Q2.#
     
    Helloooo?

    Are you saying that those "more than ONE BILLION daily queries" going through Looksmart's AdCenter platform and, that had produced over 2.2M paid click per day during the Q2 period, add up to nothing?
     
    The same 'enquiries' that (also) saw Looksmart's own (stand-alone) Ad Network grow it's paid clicks (Q/Q) by 23 million or, by 12.5% and by 12M or, more paid clicks or, 6.2%, Y/Y ....
     
    Yes, Looksmart's "own" Ad Network had 207M clicks @ .06rpc, in Q2. (And total revenues of approx-$12,000,000)
     
    But what of those (other) OVER 198,000,000 paid clicks (less the 207M) during the quarter? - Meaning the total number of paid clicks that had been recorded by Looksmart AdCenter, from it's private-labeled Advertising partners and other Ad Networks involved? Think about that for a moment!
     
    And TAC ?

    Of course TAC is going UP in this Q3 period and Ted West has told all, this will happen. You yourself Mike, have even boldly posted, that .... Looksmart will have Higher TAC, worsening margins as mentioned by the CEO in the CC.
     
    In the CC (yes, the Conferance Call) following Q2's Report Looksmart's CEO Ted West had answered a Q directed to him, accordingly...
     
    Q-? - Eric Martinuzzi: Okay, you've mentioned a gross margin impact from a higher TAC, historically or at least in recent history you've had TAC rates in the 62, 63% range. Where does TAC go from here?
     
    A - Edward F. West, President and Chief Executive Officer: "It goes higher and it goes higher materially."
     
    And, of course it does!

    And would you believe that TAC will be even as high, as "92% in the dollar" to go to publishers, Mike? (IMHO. But ......More on why, later)
     
    Ted West had also said: 
     
    < "We're going to manage and grow a performance segment with higher quality traffic over which we would anticipate to see – anticipate seeing increased advertiser performance and value with tools such as optimal pricing......... And to realize, improved CPCs in that segment while at the same time serving, as we have recently, the value segment of the marketplace.">  

    In a CC following a Q3 - 2007 quarter (I think it was this one) it was explained that Looksmart would recieve as low as "8% in the dollar" for facilitating the serving of Advertising in an Ad/Pub, live Marketplace. Looksmart were to 'manage', provide analytics, reports and all data on an equal to both parties basis, as members of the Looksmart OPEN Global "exchange". With all such International  'transaction' to take place with the USD as a standard, is how I understood it.
     
    You see Mike, that "higher quality traffic" Ted taked of would appear now, to (also) be all 'private-labeled' publishers who had provided the inventory for those over 2.2M paid click per day (whilst testing in beta) now getting to "join up" or, in with each other -In the 7/24 'live', RTB, AdCenter (auction based) marketplace.

    And all advertisers will be using SmartRotation, too!! I mean, they already are!!

     And from the only comment made (to the above sensational news coming from off an obscure website) comes the real question, that has been kindly answered from within the CC (follows this 'lone comment' & contained in my next post), I feel ...

    Edward says [and NOT Edward West, surely?] that he thinks the announcement, is: .........."Somewhat moot, given the destination is more responsible for driving conversion than the ads themselves".

    Continued .....

    Disclosure: Happy to be Long LOOK...


     

    Stocks: LOOK
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    Author’s reply » ## ...Edward says [and NOT Edward West, surely?] that he thinks the announcement, is: .........."Somewhat moot, given the destination is more responsible for driving conversion than the ads themselves".##

     

    With all due respect to Edward, he may just need to check at Alexa.com for data on the "ClickStream" in-and-outs or, the goings to and away from Looksmart.com, where the Looksmart AdCenter platform, is housed....

     

    www.alexa.com/siteinfo...

     

    And historically, Looksmart have publisher partners over the past few years that include The NY Times, Facebook, Viacom, CBS, REED Interactive, for starters....

     

    As you can clearly see (& typically), there has been no big announcement by Looksmart ...... And here's Ted West's own way of telling (announcing) about it all, from within the CC:

     

    <..........."we've introduced optimal pricing in the second quarter, a feature set on our AdCenter platform that gives advertisers the capabilities to segment their ad spend across our network and to bid across the traffic segments to maximize their return on investment. In beta testings of optimal pricing with several existing advertisers during the second quarter, optimal pricing at campaigns has consistently increased consumer conversion, delivered conversions at a lower cost per conversion and as a result earned LookSmart increased advertiser budget.

     

    I would like to point out that we believe the optimal pricing feature set is unique to the non-proprietary keyword search segment when delivered at our scale of operation". >

     

    <............"We have improved keyword-targeting capabilities, enhanced network traffic quality and provided advertisers with the tools to manage their campaigns in order to achieve optimal pricing and to maximize their return on investment.

     

    Specifically, during the second quarter, we introduced SmartRotation and beta tested optimal pricing to improve the AdCenter's performance for advertisers.

     

    We believe that these performance features are comparable to those from each of the leading propriety search advertising platforms, but also that they are unique at scale among competing non-propriety search advertising networks.

     

    We fully understand that to replicate these performance features of scale would represent a significant engineering undertaking for any keyword search advertising provider".>

     

    And that (alone) makes Looksmart so "unique" in this segment of the Market. Almost unchallenge-able. yes, the Co is just about inpregnable!

     

    To be totally independent (of publishers - in having them at arms-length in an auction environment) and in being totally transparent (and trusted by both parties), is already exemplified by the ramp-up of some "over one billion daily enquiries" that has produced over 2.2 million daily paid clicks.

     

    THE "KICKER"?

     

    So how much is the market worth that Looksmart is working in?

     

    I'd say that Ted West has been very conservative here. When taking into account the International aspect of this business......

     

    Ted West says .. "Based on industry estimates, LookSmart competes in the $1.5 billion non-proprietary keyword search advertising segment, providing search advertisers and publishers value across our search advertising network...... Those who compete with LookSmart in the non-proprietary segment share a relatively stable 20% of the overall keyword search ad market".

     

    Is he saying that Looksmart can get to access that other 80%, I ask? I think he is. And what is virtually or, effectively now becomes ..........a GP of, "8% in the dollar"?

     

    That's a 'cool' $120 million in revenues per year or, $30 million per quarter. And with opex at less than $7M per quarter in Q2 (and a little over 17M in shares, as issued - plus of course, some 3.5M options that will quickly be 'in the money'), I can see 'dividends' being paid on a regular quarterly basis here, one day soon....

     

    Is it any wonder that I had changed my "short term" rating back to a buy?

     

    I mean, Looksmart has near on $30M in cash and a market cap of just $24M .. And a minus $6M Enterprise Value (in reality), for a Co that (with no TAC (as such, to pay) will have in the 1st instance, a potential annual profit of ($120M less roughly $30M opex), yes... around $90 million!!

     

    Cheers to all shareholders! There ARE much better days ahead, that we can be assured of, and I do hope that you'd all agree.

     

    And LOOK closed yesterday @ $1.40pps? - Whaaaaaaat?

     

    LC

     

    6 Aug 2009, 08:21 AM Reply Like
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