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Angie's List has been in the media a lot lately – for its IPO last November, for its current sale of stock to generate advertising revenue (thereby diluting the value of existing stock), and for its decision to return to advertising on the Rush Limbaugh show in spite of significant controversy. However, there's another elephant in Angie's parlor, and it threatens to utterly destroy the credibility of Angie's List's marketing, not to mention the integrity of its business model.

Angie's List has long marketed their service to consumer subscribers by cultivating a belief that businesses are not allowed any control over subscriber-written reviews of those businesses. This supposedly fool-proof policy is echoed by many who advocate for Angie's List:

no one can pay to be on Angie's List

http://blog.ebates.com/...

This perception is a result of Angie's List advertising promoting a policy in rather absolute terms, and designed for very specific marketing purposes. Another example of the myth, again from a third party:
And remember no contractors can pay to be on Angie's List.

http://www.granite-countertop-info.com/...

But Angie's List went public last November, and has since been furiously engaged in tapping businesses, as well as the customer-subscribers that patronize those businesses, for revenue. Rather than come clean with subscribers about their evolving business model, Angie's List has sought to retain the consumer-friendly appeal of its earlier policy in order to avoid mass un-subscriptions. This makes for a tricky business relationship in which Angie's List arbitrates between two other groups while partially concealing its relationship with one of the two groups. The implications, after the jump.

This is the current, official version of policy from Angie's List:

Companies don't pay to be on Angie's List

http://www.angieslist.com/...

Do you notice a subtle perceptual difference? It is no longer can not, it is now do not.

As in, companies do not pay to be on Angie's List, but maybe they can pay for something else that amounts to the same thing?

Indeed, businesses do have a relationship with Angie's List in which money is exchanged. The extent to which this forces verbal gymnastics upon Angie's List may be understood from this interaction with an advertiser:

Dawn Bedgood posted to Angie's List
May 21
We entered into an advertising contract with Angie's List several months ago. If you are a contractor considering doing the same, PLEASE keep reading!

Angie's List makes money a couple of ways - One is by charging homeowners to become a "member". Another is by charging contractors to be listed on their site as a source of advertisement. The commercial that says businesses can't pay to be on Angie's List is clearly not 100% truthful - you can pay to be on Angie's List. What happens next is the fun part!

As business owner, you sign a contact for 12 months (at a hefty price I might add) to be listed on their site as a vendor. It's only subsequent to entering into a contact that the bad news starts heading your way.

FIRST, you find out that your listing placement among the other vendors in your area depends solely on your number of customer reports and has absolutely nothing to do with the monthly fee you are paying each month (ie: you have to go out and do the work of getting referrals sent in.). OK, it's some extra legwork, but it's doable. The problem is, Angie's List neglects to disclose another tiny piece of information: THE ONLY reports that affect your listing/rating/placement, etc. are reports given by existing "members" (ie: homeowners who pay to have access). Customer reports that you obtain do not count because they are "unverified", unless the reports are from paying members of their website. In fact, these reports won't even show up on Angies List!

Simply, unless all of your clients are existing, paying Angie's List members, your monthly cost to advertise on Angie's List is a COMPLETE waste of time and money.

While we have received excellent and much appreciate reviews from our clients, I have never received one customer from Angie's List and I am canceling my contract.

P.S. There is a penalty fee for early cancellation. Of course there is. :) I hope this is informative for any of you considering buying into a program like this. [emphasis added]

Angie's List responds:

Angie's List – Hi Dawn, we’re sorry you’ve been dissatisfied with your advertisement. You’re right that contractors can pay to offer a discount to Angie’s List members, but they cannot pay to be listed on Angie’s List. And only contractors that receive an A or B rating from our members are invited to offer a discount. Our members make their hiring decision based on overall grade and number of reviews and when there’s an added discount to that stellar track record, it’s a bonus for them. Most contractors love that only member reviews count toward their overall grade. But we do allow reviews from non-members and anyone can view those comments anytime on your profile page. The grades just don’t count until they become a member. Contractor results are sorted based on discount and then the number of reviews. At any time our members can choose to change that sort logic. If you’d like to talk in more detail or have any more questions, please contact Tom Hulbert, Director of Ad Sales, directly at 866-543-5478 ext 3960 or tomh@angieslist.com  [emphasis added]

http://www.facebook.com/...

Assuming that the assertion that Angie's List "[charges] contractors to be listed on their site as a source of advertisement" is truthful (and i've seen it corroborated in comments following other Daily Kos articles), what can we make of the puzzling response from Angie's List that "You’re right that contractors can pay to offer a discount to Angie’s List members, but they cannot pay to be listed on Angie’s List"?

Is that double talk, or what? Is it any wonder that Angie's List prefers to communicate with its advertisers privately?

The dilemma results in such technological (and mental!) gyrations as this, from the Angie's List website:

Can a service company or health professional pay to change their rank on Angie's List?

Angie's List has several search settings. There is a search setting that will return profiles that have coupons/discounts first, but members can choose not to display these results.

This search option doesn't change the grades the company or professional has earned, and they cannot pay to show up at the top of the List for every search under any setting.

http://www.angieslist.com/...

Language contortion, again. But let us consider these last several points [from Angie's List] together:
"...contractors can pay to offer a discount to Angie’s List members..."

[and]

"There is a search setting that will return profiles that have coupons/discounts first..."

[but]

"...they cannot pay to show up at the top of the List for every search under any setting..."

So, businesses advertising err, paying "to offer a discount to Angie’s List members" can manipulate the searches, under some search settings but not under others. Clever Angie! Your multiple search implementations allow you to play word games with subscribers, while concealing the exchange of money behind the scenes.

Is this any way to run a business?

Other recent discussions of Angie's List and Rush Limbaugh on Daily Kos include Angie's List's CEO is a doctrinaire far right operative 1st and a CEO 2nd?, and Three Ways to Stop Rush Limbaugh. I also wrote a diary a few days ago about Rush Limbaugh and Angie's List.

Originally posted to Richard Myers on Sun May 27, 2012 at 09:43 PM PDT.

Also republished by Sluts.

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Comment Preferences

  •  If you are on Facebook (4+ / 0-)

    Please join our Facebook community (the original Flush Rush group) here:

    http://www.facebook.com/...

    Follow me on Twitter: @denverunionguy

    by Richard Myers on Sun May 27, 2012 at 09:45:26 PM PDT

  •  Does Angie's List provide good service? (1+ / 0-)
    Recommended by:
    wilderness voice

    Check out this (representative?) example that others have linked to, but also explore other comments after this blog post:

    http://www.knaddison.com/...

    Follow me on Twitter: @denverunionguy

    by Richard Myers on Sun May 27, 2012 at 10:48:33 PM PDT

    •  from your link (4+ / 0-)
      Recommended by:
      DBunn, Deep Harm, OldGrammy, Richard Myers
      You have to be very brave to write a bad review on Angie's List because they give your identity to the contractor and there is a good chance that he is going to go after you if you wrote a bad review. As a consequence there are very few reviews if any for someone who is awful. Most reviews are positive and often are solicited by the contractor. I know of someone who was offered reimbursement by the contractor to go on Angie's List and write a positive review.
  •  Rush has become a folk villain (4+ / 0-)

    A Rush Pinata at a party I attended earlier.

    Republicans take care of big money, for big money takes care of them ~ Will Rogers

    by Lefty Coaster on Mon May 28, 2012 at 12:27:45 AM PDT

  •  If I was a contractor (1+ / 0-)
    Recommended by:
    hnichols

    I would offer to pay for memberships for my customers in return for their writing a review of my business. I wouldn't even ask them to make it a favorable review. You know they'd feel obligated.

    It's a good thing I have scruples, because otherwise....

    It isn't what we don't know that gives us trouble, it's what we know that ain't so. — Will Rogers

    by dconrad on Mon May 28, 2012 at 04:41:46 AM PDT

  •  I've thought for some time that the value of (4+ / 0-)

    Angie's List was more an advertising ploy than a fact and
    wondered how well the business model would hold up.  I briefly tried to use Angie's list but frankly was too cheap to pay for information I decided I could get for free from talking with friends around town and even looking at free web reviews.  My initial contact got me on the Angie's List email contact list and I was actually besieged with requests to join the plan.  When I told them that I had decided that I could get reliable information about contractors, doctors etc. from talking with friends and acquaintances I was told I was absolutely wrong because I couldn't know the number of people that post to Angie's List.  I responded that I had found that once I'd had input from 3 or 4 people about a given vendor additional opinions, in my experience, didn't add any value, especially if I didn't know the source of the opinion.  That they are turning to vendors to sustain their business is not a surprise, but this is good information to thave.  

    Knowing the truth, even if disconcerting, is always better than a comfortable self-deception.

    by Old Gray Dog on Mon May 28, 2012 at 05:38:29 AM PDT

  •  Catch-22 (3+ / 0-)

    According to the ads on the teevee, your business gets customers from Angie's List because they read the reviews from previous (happy) customers.

    But...you can't have reviews from non-Angie subscribers. You only get reviews after Angie subscribers read the reviews and become your (happy) customers. Of course there are no reviews for Angie subscribers to read until ...

    Heh.

    I'm not familiar precisely with exactly what I said, but I stand by what I said, whatever it was. - Classic RomneyBot 2012

    by lotac on Mon May 28, 2012 at 05:41:36 AM PDT

    •  I find it ironic that (0+ / 0-)

      Angie's List and Komen appear to have the same issue -- they are basically marketing companies, masquerading as something entirely different. I expect that both started out with good intentions. But greed appears to utterly corrupt such entities.

      Follow me on Twitter: @denverunionguy

      by Richard Myers on Mon May 28, 2012 at 12:09:28 PM PDT

      [ Parent ]

  •  They are in trouble (4+ / 0-)
    Recommended by:
    jasan, DBunn, sabo33, Richard Myers

    overvalued and vulnerable to boycott

    market cap is 5x sales which is pricing in a lot of growth. This could be justified by revenues which have been growing at 10%/quarter, except they are losing money at an ever faster clip. If the revenue growth were to come to  a halt the stock would crater. Apparently they are doomed to fail.   Even a partially successful boycott would put a lot of pressure on them:

    Angie's List's Growth Is Not Being Translated Into Profits

    From the cash side, the company has about $88m of cash as of December 2011 and it burned about $37 million is 2011. Clearly it will need more cash soon and will probably issue more shares to fund the growth of the company. Since we started looking at the stock, ANGI announced that insiders will sell $65 million of its shares while it will sell $10 million. Not a really good sign for current holders.

    To finalize, ANGI is an $800 million company that is not able to translate its business model and growth story into profits and will not be able to do so in the future as its business relies heavily on marketing and sales people and the service is just not "sticky" as evidenced in the cancellation rate.

    We believe ANGI's management will continue to grow revenues and continue to issue stocks to fund this growth until investors realize this growth is not being translated to profits and the company is losing about 20 cents on each dollar of income.

    As a result, we are short this stock and believe it will finally go into insolvency.

  •  Ad showing with this diary (3+ / 0-)

    is for Angie's List.  Creepy targeted advertising backfires at least once in awhile.

    The sum of my experiences with Angie's List could be described as contradictory, self-promoting, and not constructive.  Entirely consistent with the picture of an incoherent business model drawn in the diary.

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