Lycos UK pins its hopes on advertising and mobile services

Originally published on EuropeMedia.net, 29/01/2002.

In the continuation of a series of interviews with leading UK search engines, Duncan Parry talks to search engine and portal Lycos UK about the company’s future plans.

Given the reported downturn in online advertising, can you say if Lycos has experienced any decrease in advertising revenue; and how are your future plans affected by the current economic situation?

Lycos: We have really seen two trends emerge over the last year with regards to online advertising. The first was the much-publicised demise of a market that was previously dominated by dotcoms advertising online and this resulted in a decline in revenues. However, we are now beginning to see a growing acceptance, by traditional bricks and mortar companies, of new media advertising as part of the overall marketing mix. This acceptance will continue to grow as users start to spend more time online than watching TV, reading print and listening to the radio.

Is Lycos looking to focus on advertising as its only revenue stream, or how else does it intend to earn?

Lycos: Advertising is at the core of our revenue generation. We look to aggregating as much of our traffic as possible, and then monetarising that traffic through advertising. We do apply a very broad definition to advertising and see it encompassing everything from banners, and e-commerce to brand adverts and direct marketing. However, we also supplement our revenues with other streams, including our mobile platform and subscription-based services.

Presently, the UK online advertising market represents only 1.5 per cent of total ad spending, while in the US it is over 3 per cent. This means that there is still potential for the market to double in growth and we will see online media become much more important to those looking to develop an advertising strategy.

Lycos has a human maintained directory of UK relevant links. BTLookSmart offers a similar service and provides it for other sites to incorporate into their content. Has Lycos any plans to move in this direction as a source of revenue?

Lycos: We already operate in this area via targeted advertising placed on the search results pages. We will soon be expanding this with the launch of paid for submissions where sites can pay to be included in the directory. This will be subject to them meeting our quality standards.

Lycos boasts search options for images, sounds, MP3s, and keyword searches. What is next for the search technology?

Lycos: Our search service will continue to focus on the same three core areas it was built on: speed, simplicity and relevance. We believe that the market will become more fragmented however, and this means that we will see search engines begin to specialize in specific areas. It was this strategy that lay behind the introduction of HotBot, our scientific research search engine and Lycos search, which can be used for more general and e-commerce driven requests.

SMS is a popular service on Lycos UK. How does Lycos intend to earn revenue from providing free SMS services?

Lycos: Lycos' SMS is one of the most popular areas of the portal. We are constantly looking at new ways to further develop the service and this has resulted in Reply2me being launched this year. It does cost us for each message that is sent using the service, but this is covered by the tag line attached to each message. This works really well when the context and content are specific. However, we also generate revenue by selling phones on the site, as well as logos and ring tones. Our recently launched reply feature also enables us to revenue share with the operators. This is how we see it continuing in the near future.

Lycos offers mobile phone services including ring tones and logos. What is Lycos' future plans for WAP and 3G? Will you be looking to offer search services and a portal for mobile internet devices?

Lycos: Lycos believes in delivering services to the consumer that are relevant to them in the here and now. Whilst developments in future technologies, especially in mobile, will be very important in the near-term, these are not proven yet.

WAP has not been proven to be "killer app" for mobile internet as some predicted, with only a small number of UK WAP users compared to early expectations. What is Lycos' future plans for the next generation of mobile internet services?

Lycos: MMS (multi-media messaging) will be an interesting development in mobile messaging. Users will be able to send color graphics, sounds (including MP3 files) and text all in one message. This opens the market further for new uses of messaging.

Some analysts have speculated that localisation services (e.g. locating the nearest Pizza take-away via a 3G mobile and the local postcode) will be a popular use of mobile internet search services. Is Lycos looking to develop these sort of services?

Lycos: We have considered introducing location based services but the market is not yet fully developed. In the future this may become a revenue source for us but our focus is still on what works today.

Lycos' portal approach to search and related services includes strong e-commerce partnerships. Will Lycos seek to extend these to m-commerce in future, or is it a case of waiting to see if 3G phones take off over the next few years, then entering into partnerships for m-commerce?

Lycos: As discussed earlier, we believe that it is important to provide services that our customers will benefit from now. This ensures that that the development of our product is always based on proven technologies. If 3G does develop in the way the industry believes it will, then we will certainly look to working closely with partners for m-commerce.

As the number of UK broadband users grows, does Lycos have plans to serve their unique search needs; for example a search option for streaming media broadcasts?

Lycos: Broadband is purely a method for accessing the internet quicker than over traditional telephone lines. The real issue for broadband lies in the speed of delivery to the home and not as a stand-alone product. Our users can already search for streaming media broadcasts and we will continue to ensure that their needs are met in the future.

Thanks to Lycos UK for their participation in this interview.