Tag Archives: Home Advisor

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

Home Advisor’s Chris Terrill: Poised for Growth, New Services

Almost two years ago, IAC was in a tough situation. It had a leading services referral business in ServiceMagic, whose main rival was Angie’s List, the paid subscription service. But the service wasn’t growing; had relatively low brand awareness; and seemed to be in danger of getting bypassed by a new crop of social media driven services.

In an episode of creative destruction, IAC, along with new CEO Chris Terrill, made the decision to rename the company to “Home Advisor”; and narrow its focus to home services. Terrill later refocused the company’s primary business model from pay per lead to monthly subscriptions that would include a variety of value added social media and directory services (pay per lead options remain available).

Today, the Home Advisor brand may not be as well known as ServiceMagic at its peak. It also remains under the radar in the business world. That is partly explained by the company not being VC backed or publicly traded as a separate company outside of IAC, says Terrill. “We don’t get written about as much.”

But Terrill says that the company remains one of the largest home service networks, with 80,000 service pros, two million reviews and 30 million home owner requests. It is also growing and profitable, and highly focused on “strategic sales.”

And it is focusing more on the awareness issue, conducting an ambitious TV campaign to reach more home owners. It will be spending even more on TV in coming months, with budgets that are in the “tens of millions” of dollars.

The picture looks bright going forward for Home Advisor and the entire home services space, says Terrill. Over the next couple of years, Terrill says Home Advisor will have a singular focus on growing its U.S. business.

“A lot of small entrants are coming into the space,” such as Pro.com, the service launched by former Amazon leaders (not to mention Amazon’s own entrance into the space.) “We see the local home space heating up,” he says. But Home Advisor remains a leader in the space – competing against players such as Angie’s List, Yelp and Home Depot’s Red Beacon — and continues to add building blocks, Terrill says.

Today, for instance, the company announced the purchase of Mhelpdesk, a 30-person Fairfax, VA-based company that helps service pros manage their businesses, and allows home owners to directly book services – especially over mobile phones. The service has over 10,000 service pros.

Terrill says that Mhelpdesk is a leader in a “rapidly growing space” that will prove increasingly important to the company. “It could not have worked 2,3,4 years ago,” he says, before the popularization of cloud-based mobile devices for SMB service providers. “It’s an important piece of the puzzle.”

Chris Terrill Discusses ServiceMagic’s Rebranding to ‘Home Advisor’

A few years ago, it became apparent that IAC’s ServiceMagic had stalled. While the 1,200 person company has continued to show growth, and had expanded to several international markets, it was clearly vulnerable to new challengers, ranging from Angie’s List and Yelp to new companies, such as Repair.com and RedBeacon (now owned by Home Depot.)

Part of the problem may have been that its assortment of services didn’t reflect how people look for service information. Part of it may have been that after 12 years, it was a tired brand to those in the industry, and unknown to those outside of it.

Now the company has pushed the reset button under the leadership of Chris Terrill, who’d served executive stints at Nutrisystem, Blockbuster and Match.com. Terrill’s been on board for 18 months now, and has extensively studied what he has determined is a “half billion dollar plus opportunity.”

“It’s about more than improvements and home projects,” says Terrill. “It’s all things in the service space.” Looking at the competition, Terrill sees a lot of potential to carve out a unique role for Home Advisor. “There is no go-to, ‘Trip Advisor’-like brand in the homes space,” he notes.

Rebranding is key to much of the company’s next steps. Home Advisor, the name of Microsoft’s real estate portal, was purchased from Microsoft for “less than six figures,” says Terrill. “It was the deal of the century.” The new name does a lot more for the company than the limited idea of “service” and the generic “magic,” he notes. Terrill adds that a major branding campaign, including TV, kicks off in January.

“We didn’t want to stop at the name change,” Terrill emphasizes. “We have completely changed the user experience.” New elements include a project cost guide, which users can use to project the actual cost for projects right down to local zip codes. Another new feature is Home911, which is an emergency service app. There is also content for home remodeling. Users can research it to “get beyond aspirational,” says Terrill.

What isn’t changing very much is the business model, although Terrill says it continues to evolve. There are basically two options. Consumers will still receive several qualified paid leads when they are looking for work. Different pricing is in effect for the standard lead or leads from Home911. What won’t change is that consumers will receive services for free. The company’s surveys showed that 90 percent of consumers would never pay for service information.