Tag Archives: Angie’s List

Angie’s List Finally Drops Its Firewall

Facing pressure from declining membership revenues and a takeover bid from IAC’s Home Advisor, Angie’s List will end its paid membership this summer, allowing it to be in a better position to defend its leading 3.3 Million membership base against increasingly aggressive competitors in the home services referrals space, including Home Advisor, Thumbtack, Amazon, Google, Porch, Serviz and others.

While access to its reviews will be free, the company will offer paid tiers at $24.99 and $99 a year that will provide such options as its Fair Price Guarantee and an Emergency Services Hotline.

Paid memberships accounted for less than 20 percent of company revenues in the last quarter, down from roughly 50 percent of revenues just a few years ago. In a statement, the company said that it had concluded that the paywall “had limited our growth,” which it suggests will come from more advertising, direction transactions and premium services. The company ambitiously said it expects its moves to more than double its revenue to $750 million by 2020. It expects to make $345 million to $355 million in revenue this year.

In a conversation with me just after he came on board in November, CEO Scott Durchslag said he expects to build on the company’s “great base experience with advertising and service providers.” The business will see growth by building platforms with service providers and advertising partners, and becoming more of a marketplace. With a presence in 240 markets and 720 categories, and powerful data signals, “the company is ”poised on the final frontier of ecommerce,” he said.

While the basic service will now be free, Durchslag told me that he sees new opportunities in new premium offerings (which were not yet finalized.) The fair price guarantee strengthens value, while putting the company in a strong position to help direct bigger projects.

Big Thinking/ReThinking Angie’s List: Our Talk with CEO Scott Durchslag

Angie’s List is an iconic brand in the home services space that now has 3.25 million paying customers, 10 million verified reviews, and continues to grow its customer and advertising base. But it faces a growing group of competitors that see greater opportunities in the space and smell blood in the water, including Amazon, Google, Home Advisor, Houzz, Porch and Serviz. It also faces pressure from impatient investors who are distressed at the company’s stock price and are seeking new scenarios for the company, including possible mergers or a sale.

Did Angie’s List squander its lead and wait too long to update its interface with customers, develop ecommerce features, or move away from a customer paywall model? New CEO Scott Durchslag – a veteran tech leader from BestBuy, Skype and Expedia who just came on in September — talked with Local Onliner today about his plan and vision for the company, which includes the company’s new guaranteed leads and quality program; efforts to work with key brands on special promotions and sales; build out the B2B presence; and evolve the company’s call center to sell new products.

His three-pronged message: the company looks better from the inside than the outside; remains way ahead of rivals; but has significant upside in exploring new business and sales models. “We look at it as a pyramid,” says Durchslag.

“At the top are the kinds of things we can do to take care of things” for members, such as hiring contractors and keeping their pricing in line. At the core are Angie’s relationships with advertisers and brands. SMBs who make up the core advertiser base aren’t having all their needs met. Angie’s List has valuable analytics and can really get them up to speed with digital marketing. Brands that want to be picked by consumers are also able to upgrade their relationship with Angie’s to drive new traffic and purchasing – perhaps via the equivalent of slotting fees. Merchant and brand relationships will also receive renewed attention via dedicated sales teams and other dedicated B2B services.

Durchslag says that the pyramid’s foundation consists of new ways to monetize the service, especially upselling existing members to premium tiers, and leveraging the non-members who only access partial services. Non-members currently make up 85 percent of unique visitors to the site. They can bolster ad sales, and also might be monetized by buying “single drink” options, for instance, he suggests.

While Durchslag emphasizes that the business is sound – it just had its first profitable quarter –there are always new ways to do things and create more efficiencies, he says. Take the company’s telecall center, for instance. To Durchslag, the “Care Center” is something that is not offered by competitors like Amazon and Google and helps to differentiate the service. It also serves as a state-of-the-art CRM facility. “It is a precious asset,” he says. But the company might evolve the nature of what it does, perhaps using its knowledge of customer needs to offer a wider range of services to members.

Should Angie’s List Merge with IAC’s Home Advisor?

Home Service leads is a hot space, with a new generation of players throwing hundreds of millions of dollars to get into the market(s), including Thumbtack, Google, Amazon, Home Depot, Pro.com, Porch, ReachLocal, Yodle, Serviz, BuildZoom and the list goes on.

The old leaders in the space – IAC’s Home Advisor (ex ServiceMagic) and Angie’s List — presumably remain on top. But they are seeing a lot of pressure as they strive for profits, brand recognition, and to keep their traditional merchant ties and consumer activity.

Indeed, the two companies have evolved their services considerably. Both have made marketplace adjustments to focus on features such as on demand leads, mobile-centric research and ordering, social-driven reviews (and in Home Advisor’s case, service cost estimates.) But there is always a sense that they are under performing, given the market’s growing acceptance of mobile comerce. Wall Street has certainly given Angie’s List a drubbing.

Now TCS Capital Management, a giant New York-based investor that has quietly amassed 9.1. percent of Angie’s List, is seeking to push the companies together in a merger. Would it be a good marriage that leads to new profits, customers and sustainability? Or would it be an unwieldy combination of two struggling companies with very different strengths?

IAC could probably buy Angie’s List at a discount, given its recent struggles. The two large players — ostensibly, direct competitors — could double up on national advertising; scale back duplication in customer service and merchant sales; re-focus the huge marketing costs that both companies have recently been taking on with TV campaigns; and perhaps attract interest down the road from a mega player such as Google that is not deeply rooted in the space.

But are Barry Diller and the IAC team ready to make such an investment? It has seen some positive activity with Home Advisor recently. According to CEO Chris Terrill, who was speaking at BIA/Kelsey’s SMB event a few weeks ago in Denver, the company is on pace to make $350 million this year, and has seen seven quarters of accelerating growth. It also has seen real success with a strategy of focusing on individual verticals, instead of a broad, Yellow Pages like, multi-vertical approach.

But it is an open question whethere IAC is “all in.” While we see the new TV branding campaigns – at last — and the new focus on on demand, we’ve also seen cutbacks overseas. IAC may also be distracted for some time by its just announced efforts to spin off its Match dating properties (Tinder, Match etc).

Angie’s List, meanwhile, derives a great deal of its value not only from its advertising revenue, but from its unique, premium subscription model; its behind the firewall reviews; and its ties to a devoted merchant base. Some services thrive exclusively on their Angie’s List activities.

It might be attractive for Angie’s List to get rid of its huge expenses supporting customer service. But would its appeal hold if the subscription model was dropped and it was made free? And what would be left for loyal customers if the brand was dropped? And would Home Advisor’s aggressive moves into social media and on demand serve the typical Angie’s List subscriber, which generally skews older?

In truth, Angie’s List may not have a choice but to seek a sale to a rival player: it doesn’t have deep pockets, and with so many choices out there, the market might be moving away from the premium subscription model. Advertising has become an increasingly dominant part of the Angie’s List business model. Still, a sale or merger with Home Advisor doesn’t really seem like an ideal marriage to us.

Source: Home Advisor

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.”

Angie’s List Goes ‘Mobile First’

Angie’s List, which has recently seen a deterioration in its stock as investors have lost confidence in its ability to grow its premium subscription and ad model, has announced that it has gone Mobile First. The changeover is significant because the company, which has nearly three million users, has continued to support a wide variety of media. Many years after other companies went all digital, for instance, Angie’s has continued to provide personalized phone referrals to its well heeled (and older) home owner customer base.

The move to mobile first is accompanied by the launch of a new mobile app, which offers “concierge level” help for consumers seeking to hire the right service and medical professionals. It provides research for providers; shop for specific home improvement services; and “SnapFix” a project, automatically assigning service pros to projects based on specifications.

“We studied our members’ behavior and directly asked them what they want from us,” noted a company press release quoting founder Angie Hicks. “As a result, we’re not just connecting them to highly rated service companies through a swipe or a click, we’re stepping into the transaction, improving their experiences start to finish.”

A press note added that the new efforts are “symbolic of the corporate shift from just providing highly reliable information to getting in the middle of transactions to make the hiring process easier and the results better, faster.”

We’ll be diving deep into the future of Home Improvement services with local digital leaders from The Home Depot, Thumbtack and Serviz on Day 1 of the Leading in Local conference in San Francisco Dec. 3-5. You may register here.

Angie’s List Provides New Details in S1; 820,000 Members

Angie’s List issued an S1 this week as it seeks to raise $75 million from an IPO. The S1 is full of details about the 16 year-old service reviews company. Its massive, $60 million national ad campaign over the past 18 months, for instance, has produced a membership roster of 820,000 paying households in 170 U.S. markets.

The company, which earned $35.58 million in 2010, has also seen a shift of its revenue pie. While revenues were split 50/50 between membership fees and advertising in 2008, it has now shifted to 39 percent membership fees and 61 percent advertising. The company currently has 19,750 advertisers.

Additional opportunities come from the introduction of Angie’s List’s Big Deal, which has now been introduced in 27 cities and is available to members and non-members alike. More than 62,879 deals have been sold since its launch in June 2010.

Key to the company’s next stage is a successful introduction of new a la carte verticals such as Health and Wellness and Classic Cars, and increased user penetration in large markets such as New York and Los Angeles. The key is to maximize marketing dollars from its national ad campaigns, which receive 100 percent of its marketing budget.

Several major questions remain about the company.

1. Can it make money? Angie’s List has been outspending its revenue in its rapid push to gain scale via national advertising.

2. Can it compete against free services? Like Cable TV and newspapers, Angie’s List’s business model is based on a dual revenue stream of membership (“paid circulation”) and advertising. Customers will only continue to pay for the service if reviews are considered more accurate, more local and more numerous than competitors.

3. Can it go more local? As Angie’s List’s growth relies more on suburban and exurban areas, it will be challenged to provide more locally-oriented service providers. Its current metro-wide approach includes many service providers that are further than 50 miles away in some cases.

4. Can it market locally? Angie’s List is currently devoting 100 percent of its marketing dollars to national advertising. The effort treats the entire country as a single market, making it less efficient to reach smaller markets. If Angie’s List is to grow these markets, it is going to need to rely more on local media, social media and word of mouth.

5. Can it acquire and integrate companies? Angie’s List is mostly homegrown and remains a relatively straightforward operation that relies very lightly on innovative technologies. As the company seeks to add more features and grow overseas, however, it is likely to need to acquire various entitles (a la ServiceMagic). It remains to be seen how well it will integrate other operations.

A Full Report is being published next week for BIA/Kelsey Marketplaces clients.

ILM:10: Groupon, Angie’s List and Gannett Phoenix Discuss Deal a Day

In the wake of Groupon‘s rejection of Google’s reported $6 billion offer, Groupon VP of Business Development Sean Smyth told ILM:10 attendees that one positive aspect of the news coverage was the incredible exposure that Groupon received. “We had three million new email subscribers last week,” he said. “We normally get one million per week.”

Smyth, a media vet with prior stints at MetroMix, Gannett and Tribune Interactive, said that the headcount at Groupon is now up to 3,000 employees, with half of those in sales – both telemarketing and premise. Groupon covers 300 markets, with 165 of those in North America. It is currently running 650 deals a day, with 260 in North America.

“It is an absolutely amazing space to be in,” said Smyth. But it is also fast evolving well beyond simply offering two or three deals a day (and a banner ad) in emails. Currently, the company is focused on verticalizing and personalizing efforts, as well as developing specialized features for SMBs that would allow them to control deal flow, contacts and promotional creative. “We’re trying to find different ways to get deals in front of people,” says Smyth, noting recent affiliation deals made with Yahoo, eBay, Tribune Gannett and Media General. “We love having 40 million email addresses. But if you don’t get the right deal to the right person at the right time, it doesn’t mean squat.”

Speaking on the same “Deal a Day Superforum,” Angie’s List VP Mike Rutz said his company sees deals as a natural extension of its SMB advertising. “We have been offering coupons for 15 years,” he said. In fact, having a coupon is a requirement of being an advertising on Angie’s List.

With Angie’s List Big Deal, which launched six months ago, Angie’s List opens the deal beyond its member fire wall, but members gets a discount above and beyond the standard offer. It is a great acquisition tool for membership, and also provides enhanced value for members, says Rutz.

At the same time, it is a great retention tool for advertisers, and helps build out their profile with a horde of new reports. “Ninety-six percent who ran a Big Deal have stuck with us”, he says.

Gannett Phoenix’s Mike Coleman added that his company’s new DealChicken.com is also taking the newspaper in some new directions, having attracted 40,000 local users in its early months. On the merchant side, “it is a very different sales conversation with a merchant.

Indeed, Deal Chicken is only sold by a dedicated staff in the division, as well as by Gannett Local, the company’s new SEO/SEM arm. The core newspaper staff isn’t involved at all. “They already have too many products to sell,” he said.

The model seems to be a winner. “There is huge interest at other Gannett properties,” he said.