LookingConfident's  Instablog

I'd like to think it can ...And maybe, it just might do so .....

Without being at all critical, shareholder Texas16qld says in a post over on Yahoo Finance [ Re: will this flow onto LOOK ]......

##... I suggest you listen to the previous quarterly CC.

Looksmart have already stated that revenues will be significantly lower. But traffic should be (according to Ted West, and confirmed by alexa.com) a lot higher, due to the fact Looksmart are getting many new clients to try their platform at a low price....##

Yes, but I have read it all a little different than that Tex ...

And with what I have re-read of my notes taken, it doesn't point to "revenues" as being significantly lower in Q3, at all.

Sure, with higher TAC (to be paid out by looksmart, to 'attract' that higher quality traffic), there is no doubt that the "gross margins" retained on that traffic, will naturally be lower. But over-all revenues?

Increased traffic will make up for the lower margins Looksmart will end up receiving for it's delivering to advertisers of quality conversions, that are at a lower cost per conversion. Is MHO.

And as a result (Looksmart's CEO Ted West himself, actually says in that CC following Q2), that it's....

<'Optimal Pricing at campaigns has consistently increased consumer conversion, delivered conversions at a lower cost per conversion and has earned LookSmart an increase in it's advertiser budgets'.>

(Or, what is in reality, an increase in it's 'volume' for both "queries" and "paid clicks". no? - Remembering also, that he also advised that .<"During the second quarter, the platform processed well over 1 billion search queries and delivered over 2.2 million paid clicks, "per day".>)

Looksmart's 'commitment to improve it's network quality and advertiser value with it's "Optimal Pricing"[does]have direct implications for our near-term financial performance, specifically in relationship to "gross margins", is what CEO Ted West actually says.

So it's a fair to then assume that any increased traffic can only point to more of this "lower gross margin" type, advertiser involvements. Ted West said:

<"During the second quarter, we began to proactively raise our traffic acquisition costs on the advertising network in order to attract more high quality traffic and to increase higher value paid clicks delivered to our advertisers.[Better ROI's]- This action is consistent with our long-term objective to improve advertiser return on investment performance[ROI]and value on our search advertising networks">

< 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. Now that optimal pricing is in place on the AdCenter and following the successful beta launch, it will be rolled out across our search advertiser base in the coming quarters. We believe that improves traffic quality together with optimal pricing, will be critical to growing our existing advertiser budgets, to expanding our advertiser base and to attracting a greater volume of higher performing publisher search traffic over time.

That being said, our As we purposefully upgrade our network traffic quality in order to meet advertiser performance return on investment requirements, we expect to see a corcommitment to improve network quality and advertiser value with optimal pricing has direct implications for our near-term financial performance, specifically in relationship to gross margins. responding increase in traffic acquisition cost.

Gross margin compression in our core advertising networks business will result directly from this practice. Despite anticipated near-term margin compression, we firmly believe that by improving network traffic quality and providing advertisers with the tools to set prices in order to optimize their returns, we will strengthen LookSmart's market and competitive position.>

I hope this clears up a few things for others, in regards to the thought of revenues being lower, for Q3. It's a matter of exactly how much of that increased traffic (as has been witnessed on Alexa), relates to all of the above. Alexa, in 'real terms' has shown traffic to Looksmart.com (AdCenter) to have increased fivefold, in the Q3 period. (Over Q2 traffic)

http://www.alexa.com/siteinfo/Looksmart.com

If Looksmart were to have only "doubled it's traffic" (in Q3) and has paid out as much as double in TAC, (with an increase in that higher ROI [quality] traffic being offered), Q2 revenues (of $12M for it's advertising network) could then reasonably be imagined, to have "doubled", also. No?

And with Looksmart's own "expense management" being a constant (regardless of whatever the volume of traffic is, during Q3), what would an approximate "five times" increase in traffic result in, in terms of revenues?

Yes, it remains to be seen.

Cheers!!

LC

Disclosure: Shareholder