On Demand is New Focus for Some Home Service Providers

Competition in the home services leads space has been heating up – and so are the tensions. Just this week, Angie’s List has filed suit against Amazon, contending that Amazon Home Services has been egregiously signing up for the member’s- only service around the U.S., and grabbing proprietary service recommendations.

On Demand home services is something that several of the companies are hoping to differentiate themselves with. We saw it with HomeJoy at our LODE event a couple of weeks ago in San Francisco. Home Advisor has also been rolling out its Instant Booking on demand service.

Mizamin, an Israeli Startup with international ambitions, also hopes to get ahead with on demand home services. Its mobile app has gotten 200,000 downloads in Israel, mostly generated from a small social media ad campaign and word of mouth. CEO Yuval Aronov told us that providing home services on an on demand basis has some quirks to it. Many home pros resist keeping to real schedules and are eager to take jobs as they come up. On the other hand, certain types of jobs, such as pest control, need to be scheduled in advance.

Mizamin has built an App that enables multiple providers to receive queries in real time. When a plumbing assignment goes out to Mizamin’s roster of 40 plumbers in Tel Aviv, three-to-six usually answer, he says. The biggest channel for most plumbers have been SMS. “Some don’t use their smartphones professionally,” he says. “They are afraid to drop them in the toilet.”

eBay Sells Off Craigslist Stake

eBay’s one-time dream of anchoring its large classifieds/marketplace business with Craigslist as now officially ended. Last week, eBay accepted a cash buyout from Craigslist for its 28.4 percent stake, allowing eBay to focus on splitting off its multi-billion dollar PayPal division as a separate company.

eBay isn’t disclosing what it received for its stake, but it is likely to be at least 10x what it sunk to buy into Craigslist, or $320 million. Aim Group analyst Peter Zollman notes that Craigslist has plenty of cash in the bank to pay for those shares, with estimated profits of $304 million in 2015, or nearly 2.5x more than its $130-140 million profit in 2013. The surge in profits occurred as Craigslist started charging auto dealers for used auto ads, in addition to its fees for apartment, recruitment and escort listings in certain markets. Other parts of the site remain free.

eBay had purchased its stake in 2004 for $16 million from one of the Craigslist’s early employees. It initially sought a friendly relationship with the Craigslist leadership, paying founder Craig Newmark and CEO Jim Buckmaster $16 million for goodwill. In exchange, it was awarded a board seat.

In theory, the relationship could have worked. eBay was one of the only dotcoms to successfully build community into its business model . Publicly, it remained a company that was dedicated to “community first.” In reality, however, that may have been an earlier version of eBay. At the time of the deal, eBay had already begun focusing on hyper-efficient services – unlike Craigslist’s avowedly lowtech, small revenue approach. It had also started charging higher fees on most items, and focusing more on profits than on building a viral, Craigslist-like community. It also was focused on a number of big dollar paid classifieds and vertical areas, especially eBay Motors.

By 2008, relations between the two companies dissippated into a number of lawsuits and counter-lawsuits, as eBay set in motion a plan to launch its Kijiiji classifieds as a Craigslist clone – apparently as a hedge in case it wasn’t able to assume control over Craigslist. Later, in court documents, it was revealed that eBay had passed along confidential board information to the Kijiiji team.

Ultimately, Kijiiji – now eBay Classifieds in the U.S. — never broke out as a person to person classifieds success, although it is the leading classifieds site in Canada and has a good presence in many countries. Even if does not serve as an effective P2P anchor for classifieds, eBay has become one of the leading online classifieds sites in the world, with major international properties such as eBay Kleinenzeigen, Marketplaats, Gumtree and LaQUo.

While eBay may ultimately be more focused on its enterprise businesses, former CEO Meg Whitman’s 2006 description of classifieds as eBay’s “lead generation, advertising based model” still holds true. As for the future of Craigslist, we’ve noted press reports in The Wall Street Journal and others suggesting that Craigslist has been made obsolete by the emergence of smart phones and lost its chance to become a major ecommerce player. The latter part may be true – Craigslist is hardly poised to compete in the goods value chain against Amazon, Google, eBay and others. But it remains the global leader in person-to-person online classifieds, and there is no reason to suggest that it won’t remain the leader.

Wanderful Bets on Mobile ‘Cash Dash’

Wanderful Media, the newspaper-owned promotions company, has expanded on its original Find&Save coupon portal, which now includes 500 national and regional merchants, and 18,000 brands. The new expansion efforts are focused on Cash Dash, a geolocation promotions feature found within the Find&Save Apps, and Coffee Table, an iPad-oriented retailer catalog that it acquired at the end of 2014.

The big bet is on expanding Cash Dash, which puts Wanderful’s network – which not only includes Wanderful’s newspaper owners, but also key Yellow Pages and others — into the world of incentive promotions. The original version sent promotions to shoppers while they are at retail stores and presumably, in a shopping context. A typical offer might be “Spend $15 at Walgreens, get $5 back from Find&Save.”

These aren’t real time, card-linked offers, which would provide real time feedback; more comprehensive buying information; and ties with financial institutions. In the interest of simplicity, no credit card is used. Instead, consumers snap a picture of their receipt to validate (and track) their spending on a personalized basis. The new improved version adds additional capabilities designed to add shopper frequency and spending, including a “Cash Cart” that lets shoppers select items from a weekly circular ad to create their own cash back offers.

All of the efforts require consumers to get comfortable taking photos of their receipts, and to remember to do so — something that Wanderful execs say has not been an issue.

Speaking about Cash Dash at BIA/Kelsey’s NATIONAL event in March, Dallas Morning News SVP of Business Development and Niche Products Grant Moise noted that major retailers wanted a one stop mobile promotions solution. “It has driven up to $100,000 in sales for some advertisers,” he said at that time.

HomeAdvisor Is Rolling Out ‘Instant Booking’ Nationally

HomeAdvisor, formerly known as ServiceMagic, is set to roll out its Instant Booking service in July on a national basis. The Instant Booking service, which is now live in 20 cities, represents a different business model for the company, which previously only provided leads from its network of paid professionals.

The rollout of Instant Booking is one clear example of how traditional service leads and directory providers such as Home Advisor, Angie’s List and Thumbtack hope to respond to increasingly intense competition from the likes of Amazon, Google (evidently), Pro.com, Serviz and others.

Speaking at BIA/Kelsey’s NOW conference June 12 in San Francisco, VP of Product Development Paul Zeckser said that Instant Booking has won real champions for “lower consideration” jobs that don’t require a lot of strategy and planning. Homeowners using the services are 2x more satisfied. Moreover, eight of 10 appointments become closed jobs. By August, more than $100 million of booked appointments will occur via Home Advisor Marketplace, he said.

Internal research, however, suggests that the vast majority of consumers will probably stick to the company’s traditional leads model. Instant Booking will help win the business of the 16 percent that don’t want to talk to someone first, said Zeckser. Some portion of the other 84 percent may also want to ultimately use Instant Booking, but “they want to talk to a professional before they hire them.”

Zeckser also noted that most of the professionals who respond to Instant Booking will be those that have migrated from a manual calendar or a white board to an electronic calendar, such as Google Calendar. Roughly 60 percent of Home Advisor’s service pros now use electronic calendars, up from 50 percent a year ago.

BIA/Kelsey NOW: The Impact of The Local On Demand Economy

BIA/Kelsey’s NOW conference today in San Francisco highlighted the Uberification of the local space and its impact, pro and con, on traditional marketing channels, especially advertising.

“It is about evolving markets,” said event head Mitch Ratcliffe. Some people grossly simplify what is happening as if there will just be “an uber for this, an uber for that. but there are different services and niches for each vertical,” he said. It is not about preserving “monocultures.”

“Uber is just one possible solution for transportation,” for instance, said Ratcliffe. “The Local On Demand Economy is the first great tool for monetizing (an employment) exchange. And it acknowledges that the 90 year-old idea of a job for life is probably beginning to end.” And that’s not necessarily new, either. “Benjamin Franklin didn’t have a job,” notes Ratcliffe. He did have a portfolio of interests.

Keynoter Joanna Lord, Porch VP of Business Development, noted that “the funnel is so different now. The search and find models that drove Google’s emergence is now ‘get it,’” she said. And consumers are willing to pay a premium for convenience and excellence. “Fifty five percent would pay more for a better experience.”

LODE companies are also extending the notion of loyalty beyond the four pillars of “no loyalty,” “inertia loyalty,” “latent loyalty” and “premium loyalty,” she said. “There is now a 5th type of loyalty: Reciprocal loyalty.” Lord defines this as a“premium relationship befitting both the consumer and the brand.”

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Goodbye Pennysaver: Is There Life Left in Shopper Publications?

Is there life left in local, broadsheet “shopper” publications that highlight home and trade businesses and things for sale? Not according to OpenGate, a $3 Billion LBO firm that abruptly laid off workers for Pennysaver USA, the industry’s largest company, which it purchased in 2013 from Harte Hanks for $22.5 Million. At that time, the company had annual revenues of nearly $200 million and had 800 employees in California.

Other shoppers remain in business, such as American Classifieds (Thrifty Nickel) and many locally or regionally-owned Pennysavers. The name “Pennysaver” goes back to the 18th Century, and is not exclusive.

Our guess is that OpenGate didn’t see a clear path to profitability and decided to simply pull the plug (apparently, without paying final wages.) Core advertisers and consumers have many alternative options on Craigslist and other sources, and OpenGate didn’t seem to have a plan that would have upgraded Pennysaver to a hyperlocal, searchable and mobile-oriented model. That’s where things need to go.

We look across the aisle, for instance, to Cox Target Media’s Valpak, a coupons and advertising business. It has thrived on a hyperlocal publishing strategy, and has developed a robust digital strategy. Valpak has just announced a great Apple Watch app. But PennySaver wasn’t going there.

Theoretically, we still find Shoppers an appealing alternative sales channel. They are generally 100 percent commission, and many products could theoretically be added to their bundle (Google, et al). WebVisible, at one time, teamed up with American Classifieds to pursue such a model. PennySaver, itself, teamed up with Antengo, a mobile classifieds service. But that was discontinued when OpenGate came on board.

AOL’s Sale to Verizon: All Eyes on Mobile and Video

Verizon’s announcement today that it will buy AOL for $4.4 billion is a bid to get beyond dumb pipes and airwaves to get deeply into mobile and video. By doing so, Verizon, a $200 Billion company,  hopes to play on more of a level playing field with other major telecom players combining access to content and personalization services, especially Comcast (with NBC U) and  AT&T (with Direct TV.)

The all-cash deal provides a 150 percent return for shareholders in AOL from when CEO Tim Armstrong came on board in 2009. The price is 17 percent above the current stock price. And at the lower price – which may ultimately be even lower if some of the content properties are sold – a lot less is riding on it.

Have you seen this movie before in 2000, when AOL was disastrously sold to Time Warner for $165 Billion?  A lot of the same synergies are being discussed:  video on demand, personalized content and subscription revenue.

But this time, it is really all about mobile; video on mobile; and the prospect of converting (or selling) 2.1 million dialup subscribers that continue to be AOL’s biggest moneymaker. Indeed,  AOL has built or bought a powerful arsenal of mobile ad serving and video tech, especially LTE Multicast, which uses its cellular network to broadcast live video.

In our view, content is not likely to be an important factor here.  It would have been more important if AOL had merged with Yahoo, or with Microsoft.  The biggest “what if” probably involves MapQuest, which has technically lagged behind mapping leaders but retains a powerful, verb-like brand in that space.  Given Uber’s $3 Billion bid to buy Nokia’s HERE, it may ultimately emerge as an important factor in the deal – much more so than Huffington Post.  AOL’s sizable effort to make Huffington Post into a super content portal, including a major local dimension, failed dramatically last year. Similarly, Armstrong’s huge, multi-hundred million dollar effort with hyperlocal site Patch amounted to very little.

To some degree, we also see Verizon’s acquisition of AOL as an acqui-hire. Verizon has  stumbled around advertising for several years but not had an impact. It also has made some small investments in content and classified properties, but hasn’t been confident enough to really spend. Its biggest effort was a promotional program with the NFL to broadcast games for free.

We like the statement issued in the name of Verizon CEO Lowell McAdam, who we note, has long had his eye on geotargeted advertising. “Verizon’s vision is to provide customers with a premium digital experience based on a global multi-screen network platform. This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience.”