Angie's List and HomeAdvisor Advertising Will Soon Cost More

Angie's List and HomeAdvisor have merged. Expect the cost of home improvement leads to go up

"The Next Multibillion Dollar Marketplace "

The US market for home improvement service providers is estimated at $400 billion. 90% of sales leads for home improvement services still come from offline sources like word of mouth referrals. The size of the market resulted in Angie’s List being purchased by IAC, the parent company of HomeAdvisor, for $500 million. It was announced recently that IAC would merge their Angie's list and HomeAdvisor services calling it a "Significant opportunity for immediate, near and long-term value creation". IAC has a goal of increasing the “take rate” (the amount it gets from each transaction) to maximize the monetization of the leads they provide. Currently, both HomeAdvisor and Angie's List are paid 3-4% of each job. No new increase or time frame has been announced but the handwriting is on the wall, the cost of leads will go up. An IAC presentation points to the take rate of online services like Airbnb (10-12%), Uber (25%), HomeAway (10%) and Zillow (15%) as an indication of benchmarks and has stated the "Home Services marketplace has plenty of room to grow".

If You Use Angie's List or HomeAdvisor For Lead Generation, What Should You Do?

It's pretty clear as the owner of a content marketing firm, that I think most paid advertising has a low long-term return on investment. Lead generation using Angie's List, HomeAdvisor, Porch, ThumbTack, Yelp or God forbid the Yellowpages is a waste of hard earned marketing dollars. Paid advertising only generates leads while you're paying the provider whereas a well-written blog or investment in your website's photography and written content will generate leads indefinitely. Your website and the search engine optimization that goes along with it are long-term assets that you control.

Will Your Home Improvement Firms Brand Suffer?

“Typically, (Leads) were just checking out prospective contractors and entered the contact information simply to allow entry to the next page! As potential clients become more familiar with these tactics from different websites, they often put fake phone numbers in, leading to even more confusion by the caller on the other line.

The whole practice seemed a little bit like smoke and mirrors, and it didn’t really fit with our company culture of character, quality service, and transparency. To make things even worse, it was a fight to get refunds for the false-leads from Home Advisor”

— Joshua Davis Owner at Accutemp Services

Lead generation directories like Angie's List will deliver leads, but if you're seeking a better clientele who wants a premium level of service, paid leads my prove to be a disappointment. If, as an example, your seeking to remodel master suite bathrooms, following up with prospects who are looking for competitive pricing and are comparing your services to Re-bath is costly. Ask yourself, is the traffic generated by Angie's List or other sources relevant to my business? It is also important to know how many of your competitors are on these sites, how many sales will generate a return and will paid advertising on this platform harm my brand because I'm being seen as equal to inferior competitors. Keep in mind that the end users experience will also influence your firm's brand. The ever present self-promotion, increases in advertising rates, and the need to offer coupons to be seen in some directories can be tough to endure as a consumer. Who chooses a kitchen remodeler because they offer a coupon?

Building lead generation assets you own with a strong content marketing initiative means that you have control over the search terms you want to get found for and project images you show. If you wisely invest in drip marketing campaigns, blogging, and good photography, your firm will have an advantage over any competitor who relies upon lead generation directories. If you're seeking a long-term marketing strategy where you have full control of your brand, contact us. We'd be glad to help you attract the clients you really want.

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About Michael Conway

I'm the owner and strategist at Means-of-Production. My firm builds Squarespace websites, Houzz profiles, and content marketing and advertising solutions for architects, interior designers, design-build contractors and landscape design firms. Our all-in-one marketing tactics attract the right clients with exceptional architectural photography and brand messaging that sets you apart from the competition.