The following post is actually a comment that was left on my old blog in response to a post called “Angies List Ratings Given High Marks by Auditor.” The comment was made by a tech-savvy local plumber in Seattle. I have not edited in any way; it’s reproduced verbatim.
He comments primarily on his experience with Angie’s List but also about Google and the cost of a click for the keyword “plumber” or “plumbing” in Seattle. The discussion of Angie’s List from the point of view of an advertiser is very interesting:
I have years of experience with Angie’s List as a local plumber in Seattle. They have gotten money out of me and gave nothing in return except much trouble from customers that tend to be pretty passive aggressive. Angie’s List get paid on both ends – Any contractor listing you see is only visible to you if the contractor is paying Angie’s List through the nose. My cost for Angie’s List “hot leads” was $300 each. Testing Angie’s List cost me $7000 over two years. While paying such high costs for leads may work for a major construction project , it won’t work for a service call where we charge by the 1/4 hour.
Google clicks have gotten as high as $38 per click here in Seattle when the search term used is “plumber” or “plumbing”. On the average it takes 15 clicks to get a call. Do the math on the cost to the guy ringing your doorbell.
Angie’s List cost per job performed was 75% of my company’s average invoice total (about $400). My company does over a thousand jobs a year.
Any homeowner service using this advertising method is paying way too much to maintain any integrity in the service. This type of advertising creating an incredible amount of pressure to convert to a commission-based high profit business model for basic traditional services. If I pay Angies List hundreds of dollars just to ring your doorbell how can I treat you fairly when your plumbing problem requires an hours work? I can’t so I cancelled my advertising contract with Angies List.
Angie’s List uses a unique money making model that actually is a kind of pyramid scheme. They put all the local harvested contractors into their listings but you only will call highly rated ones. In order to be highly rated you must pay Angie Thousands of dollars a year for position in order to be seen AND time in grade is required to accumulate favorable reviews. Only a dozen or so can be in that position. The homeowner only calls the ones at the top so all new advertisers must invest thousands on continuing annual contracts to play the game on Angie’s List.
My solution was to put up a free local business directory with the policy of no shills, no fake listings, no paid advertising just so my neighbors and the local small businesses here in Seattle could find each other. (www.SeattleOnly.com) It may take a while for the new directory to get any real traffic as it is dependent upon local participation by local businesses and consumers.
In my opinion, it is time for both local business and consumers to get control over how we find our services and customers as the marketers are hijacking the business to consumer relationship and forcing costs so high that nobody can bear the costs.
Question: Why should we need out-of-state corporations to connect homeowners to services down the street? Surely there is a simple, inexpensive way for us to know our neighbors and small businesses. We all need to put a little thought and effort in that direction.
October 15th, 2012 at 8:34 am
Fantastic insights!
The economics given really do not make financial sense. Particularly in the case of Angies List where the consumers are paying as well to be members (what a great achievement to get both sides of the market paying for the service).
In the case of Google, how did it ever get to $38 per click? Is it a case of the big players (YP’s, Reach Local, Red Beacon, Service Magic … ooooops Home Advisor, etc) crowding out the space? Or is it a flood of local plumbing businesses that are getting sucked into paying $38 per click? It sure seems very excessive!
October 15th, 2012 at 9:23 am
Despite (allegedly) gouging SMBs, they still lose a boatload of money, and seem to be losing more each Q: http://finance.yahoo.com/q/is?s=ANGI.
October 15th, 2012 at 1:25 pm
Thanks for the detailed article, we are very glad to be on the positive side of the local search equation, we do believe the future of this industry is what we are currently offer to our advertisers, pay only for a valid real time phone call from ready to hire consumers, you can decide how much to pay and when you want to get the calls, the full transparency we offer allows the advertiser to track his activity and get refunds for bogus leads, no fixed fees, no other stories, simple and easy!
October 15th, 2012 at 1:59 pm
[...] critique of Angie’s List on Screenwerk today from a plumber in Seattle. Angie’s List recently pushed into Vermont where tens of [...]
October 16th, 2012 at 12:10 am
Greg:
That is an interesting read. Did you strip the response from the original article from 2009? I didn’t see it. (I would–> it eliminates duplicate content).
Wonder how this plumber is faring now?
First, his economics and web awareness are top notch. An smb has to maintain that level of smarts to tackle high rankings both organically and the many advertising alternatives. It clearly guides one in how to get your presence on the web where it counts, and how and where to spend money to do so.
His current presence on google search is interesting and one way to “skin the cat”. It turns out the smb has two websites. One has his original name and is tied to a google + local listing. But that doesn’t show high.
When I did a search on (only one) (hopefully) logical search term for a seattle plumber, I found a different website for his business than the one inside the google + local package. Its ranking was high, above the 7 pac. He has strong search visibility. I did not see any ppc ads for his business.
Its an interesting strategy. I’ve seen it around the web in diffferent cities for different services, wherein a business foregoes the google + local element of rankings to work to vault above the “local pac”.
Only a few people know what works best. He has very high rankings. He doesn’t have the benefit of an eye catching pinned location with his address or eye catching reviews. But he sits above those pinned results.
In terms of using the web to get business….what works? …and as the above writer acknowledges with his analysis of costs…what works on a cost efficient basis?
One little thing I like to help answer that question, is google adwords/ ppc. The particular element that it adds to the mix is analysis with regard to impressions…ie the number of searches for relevant plumbing searches.
After all is said and done, one thing that adds to the mix is an analysis of ALL searches within google and what percentage of those searches is turning up on your site.
If you are both advertising and showing up in organic (or in the mixed pac)…you can add your ppc clicks and your organic clicks to get a sense of how well you are doing.
Kudo’s to this business person though. He is clearly thinking through the issues.
October 16th, 2012 at 2:50 am
Dave: The original post is old but the comment just came through this weekend. It wouldn’t have been seen so I highlighted it.
October 18th, 2012 at 6:05 am
[...] being a bad investment. Angie’s List keeps its reviews behind a pay-wall and has been accused of being a pyramid scheme. Regardless, reviews matter and finding ways to help your customers talk about their experience [...]
October 22nd, 2012 at 5:51 am
I would love to hear what Angies List have to say about this.
October 22nd, 2012 at 12:49 pm
We’ll see if someone responds in comments. I suspect if I sought out an official response if would be a relatively bland PR missive.
October 23rd, 2012 at 3:17 pm
Angies List is a flawed business model in my opinion! Here is why-
-Any business owner could have their, wife, brother, mother, etc- log on and write a fake positive review on the company.
-Angies List does NOT do a background check on the companies. They don’t check for licenses, references etc.
-Angies List does not know the laws in each state regarding each industries. For example, Roofers who advertise Insurance Fraud on their website or Movers who are required to post their license number on any and all advertisements.
- I personally have a fake Angies List Account. They do NOT check the name on the credit card vs. the name on the account!
- Why would any consumer pay to access their database. You can get more detailed information on the elsewhere for Free!
- If a consumer does write a negative review, only a very small segment of the population will ever see it because it is a paid website. Thus, many business owners don’t care about it.
- Angies List advertises that business owners don’t pay to be on the site! Not %100 true! If you don’t pay to be at the top of the list, you are for the most part in outer space!
- Angies List has started taking reviews on Doctors. This is a slippery legal slope! So if a customer goes online to bash a Dr. the Doctors can NOT respond due to Hippo/Privacy regulations! This ought to be challenged in court!
- Angies List has never turned a profit. Many investors are being sold fools gold! It will be interesting to see if Angies List can stand the test of time!
October 23rd, 2012 at 3:20 pm
Whoops, my apologies for the few typo’s! Been a long day already!
October 25th, 2012 at 2:41 pm
[...] on a combination of subscriber fees and advertising revenue. (See this Seattle plumber’s critique of Angie’s List’s advertising model.) There is also some e-commerce revenue ($3.9 [...]
December 1st, 2012 at 7:55 am
What an interesting post. Whatever happened to this plumber?
December 1st, 2012 at 2:19 pm
I don’t know actually. I’m sure he’s still around.
December 6th, 2012 at 2:51 pm
Hello, Neat post. There’s a problem together with your web site in internet explorer, could test this? IE still is the market leader and a big portion of people will pass over your wonderful writing due to this problem.
December 6th, 2012 at 5:19 pm
Plumber brick. Not sure what the problem is. Can you explain more fully. I and most of my colleagues are on Macs which are no longer supported by IE. Globally IE is no longer the top browser (Chrome is) and in the US it’s down to 38% share. By Q1 2013 it should be at 30% or perhaps below.
December 21st, 2012 at 4:18 pm
Hey! Do you know if they make any plugins to protect
against hackers? I’m kinda paranoid about losing everything I’ve worked hard on.
Any recommendations?
January 10th, 2013 at 8:23 pm
[...] in here, it hurts. However, businesses are being built in local. But stories like this and this lead me to wonder if local SMBs understand the ROI of their marketing [...]
February 6th, 2013 at 11:22 pm
Actually the problem is that when we appoint the plumber we must know his testimonials, his previous work etc. Only professionals will save your time and money.