Chances are you’re familiar with Angie’s List, even if you haven’t subscribed to their referral service. Maybe you’ve used Home Advisor (formerly known as Service Magic) or other online directories like Yelp, Merchant Circle or Manta? If you’ve lived in your town for many years, and have lots of connections, you probably look for contractors by “word-of-mouth” which works well … and most of us realize, traditional yellow pages are no longer a reliable “go to” resource.
What most consumers don’t understand is that the people (or should I say companies) making the biggest profit in the construction industry are media companies. They’re investing millions of dollars to dominate search results, and with limited time or resources, contractors have to play their games or be shut out of the online market.
So when you wonder why a small roofing or handyman business listing is wrong, or doesn’t include a link to the company website, don’t blame the business owner. They don’t set the rules, and rarely do they create these listings as Angie's List explains “You could be on Angie’s List already and not even know it” when outlining how their service works.
Many online directories generate millions of web pages with computer generated data. Other directories buy this data from less than reputable companies like Dunn & Bradstreet, who fabricates and sells business information. Manta immediately removed my false listing data but D&B tossed all the changes submitted so I wrote about my personal story in Business Directory Madness.
Who Owns Online Directories for Contractors?
The housing industry is recovering, and that's clear when you see how much the big players are investing in online directories that offer contractor referrals. Home Advisor's parent company just offered more than a half billion dollars ($512 million) to buy Angie's List. What's more important to understand is the offer was made by InterActiveCorp (IAC), an American media and Internet company with over 150 brands across 100 countries.
The scary part of the story is what will happen if Home Advisor and Angie's List marketing resources are merged? While they have very different business models, they'll dominate until companies like Facebook and Google are able to compete with them. And that's not all, as here are all of the other web properties owned by IAC, driving traffic to Home Advisor today:
- Lending Tree, the online mortgage comparison site was acquired in 2003.
- Service Magic (now Home Advisor) was acquired by IAC in 2004.
- Ask.com (once Ask Jeeves) was acquired in 2005, for $1.85 billion.
- About.com was acquired from the New York Times in 2012.
- Investopedia.com was acquired in 2013, from ValueClick (previously owned by Forbes).
- … so acquiring Angie's List fits right in line with this acquisition growth strategy.
The Business Models Behind Online Directories
This topic is important for homeowners to understand, so this is the first in a series of articles on how to find contractors online. For now we'll just give you a list of the most common business models used today, and how their owners make money.
- Online homeowner referral systems like Angie's list, have an annual subscriber fee that homeowners pay to gain access to reviews written by homeowners in their area.
- Contractor referral networks like Home Advisor or Contractors.com, require contractors to sign up and pay a predetermined fee for each lead (no job guarantee) they receive, or a percentage of the jobs done.
- Business and trade associations like the Chamber of Commerce or the National Home Builder's Association, have membership fees which include an online business listing.
- Classified advertising sites like Craig's List, charge users to place listings on their site where contractors can promote their business or reply to projects listed by homeowners.
Please share the contractor directories you've used, and the experience you've had with them, both good and bad. This will other homeowners make smarter decisions about when and which directories to use.