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HomeAdvisor’s parent company, IAC/InteractiveCorp is buying Angie’s List in a deal that creates a monster home services consumer review and booking platform called ANGI Homeservices Inc. The goal, according to parties involved, is to make the new ANGI Homeservices Inc. more like Uber and Amazon–mobile, quick, simple, and easy to use.
The Angie’s List merger shouldn’t be taken at face value. While it sounds great to have an all-in-one “Uber-like” HVAC service portal, let’s be real—hiring an HVAC company to install $15,000 worth of equipment is different than ordering a cab to take you 5 miles.
So, what does the Angie’s List deal mean for home service companies? In this post we’ll cover what happened, why the deal was made, and what this new company will mean for your home services business.
Late Monday, May 1, IAC Corp, owner of sites like HomeAdvisor, Match.com, Tinder, and The Daily Beast, will merge Angie’s List with its own home services reviews platform HomeAdvisor in a deal valued at over $500 million. The new, publicly-traded company will be named ANGI Homeservices Inc.
Why Did IAC Purchase Angie’s List?
Why did IAC buy Angie’s List? To put it simply, they want a piece of the extremely profitable online service pie. Home services is currently lagging behind other consumer services in the shift to online booking and service.
“Home Services is one of the last commerce categories where the vast majority of the market is still offline.” – Joey Levin, CEO of IAC
HomeAdvisor has more than nine million homeowners served and 156,000 service providers—but while HomeAdvisor is growing (revenue jumped 38 percent to $499 million last year), growth has stalled at Angie’s List. IAC hopes that by putting them together it can draw more users to the fast-growing service:
“We’ve only just scratched the surface of this tremendous market opportunity, given 90 percent of home improvement transactions are still generated via word-of-mouth. By combining HomeAdvisor and Angie’s List’s complementary strengths, the combined company will be able to leverage its joint models and resources to not only accelerate market penetration but also continued online conversion of that marketplace,” HomeAdvisor’s CEO Chris Terrill said in a statement.
What The HomeAdvisor and Angie’s List Merger Means for Home Service Business Owners
First off, creating an Uber-like experience for home services most likely won’t work. Well, it might, but not that well. How Uber and Amazon are structured are to find you what you need fast, and at the lowest price. That’s probably not best for hiring home services companies.
In our experience from working with so many contractors, we don’t see home service businesses the way Angie’s List and HomeAdvisor do. We know an installation with a higher price can still have more value than the same job at a lower price if it’s done with great customer service and the absolute best technicians. We also know that most people who use the method of “lowest price near me” usually end up calling one of our clients to clean up the mess that a cheap plumber left behind.
With those considerations in mind, here are the most important takeaways for home service business owners:
- Don’t freak out. You shouldn’t let this merger impact your marketing decisions quite yet. The deal shouldn’t close until Q4 (if that), and there probably won’t be any real changes until 2018.
- If you’re not a micro-business this shouldn’t bother you at all. HomeAdvisor is best for extremely small, one-man one-truck operations. Why? Because it’s a speed game. When you get a lead, you have to be the first company to reach out to that potential customer.
- Remember, when it comes to customers you want quality over quantity. One piece of reverberating feedback we get from clients is that, to put it bluntly, the leads from Angie’s List and HomeAdvisor kind of suck. Not because they’re attracting bad customers, but because the platforms themselves aren’t great for customer service at all (companies are frequently categorized for services they don’t even offer). The perfect customer is a repeat one that refers dozens of family and friends. Where do you get those kind of customers? From referrals and your online real estate. This will be an interesting trend to watch, however, as the younger generations—the ones who rarely pick up the phone to call anyone but mom—become homeowners in need of services.
- ANGI Homeservices Inc. is going to have a LOT of competition. So HomeAdvisor and Angie’s List are combining to create this great new hub for home services? Great! You know who else is doing the same thing? Google and Amazon.
Google’s Home Service ads basically offer the exact same feature ANGI Homeservices Inc. will offer, right in the same place you search for Chinese takeout. It’s already being rolled out in California, and will soon take over nationwide.
If someone asked your customers, “Do you trust Google more than Homeadvisor?” the answer will most likely be “yes.” Not only does Google offer reviews, they also must verify the company before being admitted into the ad program. Top that, ANGI Homeservices Inc.
Final Thoughts: Don’t Get Caught Up in the Shiny New ANGI Homeservices Inc.
We get it—this deal is tempting to buy into on the surface. One place for you to get all your leads and reviews? Sounds FABULOUS! However, as anyone who’s ever bought a used car from a parking lot knows, things aren’t always what they seem.
You should NEVER put all your eggs in one basket, and that goes doubly for digital marketing. You’re probably better investing in your website and SEO, which are long-term assets that continue producing over time, than a pay-to-play strategy. Why put your success in the hands of another platform? Use the majority of your marketing spend to beef up the assets you OWN. This includes shoring up your website, both on the front and back end, taking control of (and properly using) your social media sites, and creating assets like videos that you can promote for proven lead-driving techniques.
The more you can control the transaction, the better, and that’s how you should allocate your marketing funds. Invest in call tracking. Invest in data analytics. Invest in those services that will help you close more leads and attract more, better customers, without having to direct your spend toward something that may or may not end up working, and is ultimately out of your control.
Not sure if you want to continue with Angie’s List or HomeAdvisor? While performance largely depends on your industry (remodelers might find better luck there than plumbers or HVAC companies), we have a few recommendations for different, more data-driven ways to spend your marketing budget allotted for those platforms:
- Smart Selling – No matter how many leads you get from any platform, if your customer service representatives can’t close them it’s like they were never there.
- PPC – Want a proven marketing avenue? PPC (or Pay-Per-Click) is an excellent way to go in order to catch customers in those micro-moments of the decision-making process.
- Social Media – If you’re looking to get your brand out there and in front of the audience that matters, social media is a better avenue to go.
- SEO – This is by far the best investiture for home service businesses. Not only content—SEO is far much more than that. Search Engine Optimization includes cleaning up your website code, off-site profiles, and content so they all complement each other and assist the consumer down the buyer’s funnel.
Everything we do at Blue Corona is based on data. This cool-headed approach makes us impervious to the viral marketing trends that eventually flop, costing the company more money then they made in return. While we always encourage testing new avenues of generating business and increasing your web presence, we recommend sticking to a cost-per-lead model. Be sure to always track your tests, and if the CPL isn’t there, move on.
You May Be Interested In:
- WHAT A FREE ANGIE’S LIST MEANS FOR YOUR HOME SERVICES COMPANY
- SHOULD CONTRACTORS INVEST IN DIRECTORY SITES & PAY PER LEAD SERVICES?
- DIRECTORY SITES FOR REMODELERS
About The Author: Betsy is the social media lead and a digital marketing expert with Blue Corona. When she’s not managing Blue Corona's digital content campaigns she’s urban exploring, hiking with her dog, or teaching horseback riding lessons. Twitter: @educatedbets
View more blogs by Betsy McLeod