Online travel service Lowestfare.com, armed with a $10 million-plus annual online marketing budget, inked the first of many exclusive portal deals last week with Internet directory LookSmart.com.
The six-year, $17 million deal gives Lowestfare.com status as the exclusive airline booking partner on LookSmart, starting with annual payments of $1 million that scale to $3.5 million within a few years.
"LookSmart was a smart buy," said financier Carl Icahn, founder and chairman of Lowestfare.com and former owner and CEO of Trans World Airlines, who said Lowestfare will spend between $10 million and $20 million a year to market and advertise the site online. Advertising is done in-house.
TRAVEL VIA THE NET
"We believe a large part of travel in the future will be on the Internet," said Mr. Icahn. "This is one of the major first steps in getting exposure on the Internet."
The next steps include deals with Internet guide site the Mining Co. and online community theglobe.com. Lowestfare.com, a division of Global Discount Travel Services that offers travelers discounts of 20% and more, will be the exclusive online airline booking partner on those sites, as well.
The Lowestfare.com deal is the first exclusive commerce arrangement for LookSmart, which is close to completing exclusive deals with a credit-card company, long-distance provider and online shopping agent.
"All the new portal deals entail the ability to integrate functionality onto the site," said Evan Krauss, advertising director at LookSmart.
For example, with the Lowestfare deal, users can search for the lowest airline fares on different areas of the site, such as business and sports.
The Lowestfare service will launch Oct. 1 on the LookSmart site. Other deals are expected to be announced this week.
While the Lowestfare deal gives the travel company exclusive airline booking services on Look-
Smart, the site is still accepting advertising from hotels, car rental companies, airlines and other travel companies that do not sell airline tickets online.
While the Lowestfare deal is based purely on cost-per-impression, the site is seeing more deals structured on a performance basis, such as click-throughs and cost-per-transaction, Mr. Krauss added.
Copyright September 1998, Crain Communications Inc.