IAC’s ServiceMagic, a leader in delivering leads to services, has purchased Bethesda,MD- based Market Hardware, which provides websites and search engine optimization for 2,500 SMBs. Market Hardware, which has 30 people, targets “high online spend verticals” that closely mirror ServiceMagic’s base of 56,000 pre-screened professionals.
Market Hardware has relationships with 40 associations in the segments that it serves. It is also known for its “Vertical View” process of studying and launching new segments in six weeks or less.
The acquisition is the most recent of several for ServiceMagic, a 930 person company with an annual run-rate of $120 million. In the past several months, it also purchased ZipExpress, which partners with retailers to hire out installation jobs; and has expanded internationally via the acquisition of Koening in the U.K. (including 123Devis.com and 123GetAQuote.co.uk) and Travaux.com in France.
ServiceMagic also recently invested in BuildProof. The company is described as “the PayPal for home improvement,” setting up escrows so contractors don’t run off in the middle of the night.
In a release announcing the deal, ServiceMagic noted that it is entirely logical for the company to expand its offerings with MarketHardware. “Many top-rated home service professionals in the ServiceMagic-approved network don’t have a visible storefront. Having and maintaining a professional website gives them a chance to showcase their business online and the great home improvement work they are doing in the community,” said CEO Craig Smith.
Speaking at the ILM conference, Co-Founder Rodney Rice seemed to hint that a deal was in the works. “We’re focused on broadening out our offering to service professionals,” said Rice. “We won’t have a ‘one size fits all approach.’”
CEO Brian Kraff separately told The Kelsey Group that “the website is quickly becoming a focal point in all forms of marketing. It just simply makes sense for SM and MH to join together to bring a consultative, verticalized, full service approach to providing online marketing services.
“Our companies are a great cultural fit,” he continued. “Our team is looking forward to helping SM expand its offering. Their team is energetic, down-to-earth and operationally minded. They get a division that is a leader in the website space, and we get a parent company with 56,000 contractors who can make use of our competencies. Feels good.
At Kelsey’s recent ILM conference in Santa Clara, Kraff provided additional detail about his company, and it’s “vertical view” concept. The idea of vertical view is not to build a template, but to understand the segment so that Market Hardware could differentiate the business, he said. “The upper quartile of each segments especially needs to have a differentiated Web presence to stand out.”
Kraff also noted that Market Hardware is aimed at companies that are on their second or third websites and are ready to spend more on a “consultative approach.” Market Hardware clients are especially spending more on high pay per call/per per click actions.
Congratulations to the Market Hardware team!
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[...] firm targeting SMBs that takes a vertical approach to customer acquisition. Peter Krasilovsky has additional numbers a detail. Congratulations to Market Hardware CEO Brian Kraff who built a real business over a period of [...]
[...] With regard to small business owners, the Kelsey Group predicts the downturn will drive a significant increase in the number of SMBs who actively market themselves online. “Web sites will be viewed as a cost-effective alternative; a channel that didn’t make sense in a booming market will fast become a necessity,” said Matt Booth, Kelsey SVP. One of the best examples of this dynamic are SMBs who provide “home services”. I am referring to painters, landscapers, carpenters, etc. – who for years had more leads than they could handle. Suddenly these businesses are desperate for new prospects – and, as a result, they are turning to the web, and to firms such as ServiceMagic to help generate new leads. Kelsey estimates that 60% of these business will have a web site by 2010 — up from just 33% today. The anticipated growth was a key driver behind ServiceMagic’s savvy acquisition of Market Hardware. [...]