I use 'looking' when looking for traffic passed to me by ATC, but also saw one shouldn't really say that according to the GA Supplement CAP413, one should just say 'Roger G-XX' or just 'G-XX' to acknowledge a traffic call. It's a habit though.
Though this isn't where I would use contact 1 ahead, it's just in the circuit at an A/G field where the operator may well be in an office with no traffic information or situational awareness - here pilots are simply helping each other out by letting each other know they have seen each other in the circuit. Seems like a habit at our field, some use it some don't, probably depends which instructor they had or if people just pick it up by hearing it. I certainly like the benefit of it myself.
It's also better to hear than 'Rolling' which really does annoy me
