HomeAdvisor + Angie’s List’s $500MM Deal and the Local Big Picture
May 8, 2017 | Contributed by: Greg Sterling
The coming merger between IAC’s HomeAdvisor and Angie’s List may signal a new round of consolidation in the local space. Yelp’s purchases of Nowait and Turnstyle are other recent acquisitions, as sites seek to build services and bulk up to fight Google and Facebook.
The IAC-Angie’s List deal also mirrors other trends (verticalization and operational integration) happening in local. It may also reflect the growing need to build a brand and not rely as heavily on SEO/organic search for traffic. The thought here is that the less SEO is available, the more you need to be top-of-mind for the consumer.
IAC had been trying to buy Angie’s List since November of 2015 but the latter’s board had resisted. Pressure from Angie’s List’s investors and the company’s inability to generate consumer usage growth were triggers for acceptance of the bid. The deal is worth roughly $500 million.
The merged entity will be spun out as a new public company, ANGI Homeservices, though both HomeAdvisor and Angie’s List brands will remain. Each has slightly different positioning in the market. Angie’s List is a review site (essentially) while HomeAdvisor is a dating/lead-gen site for service providers.
Angie’s List’s subscriber-membership model came under increasing pressure from free rivals such as HomeAdvisor, Yelp and Thumbtack, among others. There wasn’t enough of a difference between these free sites and Angie’s List to sustain growth. So the company introduced a freemium model in 2016 hoping to lure those unwilling to subscribe. It didn’t work — fast enough.
More interesting to me is the way the deal also reflects the way marketing companies are becoming operational platforms (don’t say “on demand services”). HomeAdvisor offers front and back office management tools, including appointments, invoicing and payments. Angie’s List was headed in that direction as well. Now it will simply use the HomeAdvisor back end.
Yelp has a growing number of transactional tools as well. Facebook and Google are moving in the same direction.
All this means that sites and directories that simply offer listings without rich content or similar consumer and business tools will be marginalized in the relatively near term.