There is a thicket of ethical and practical issues that cause contractors to be wary, frustrated, and angry with Angie’s List. Stories abound about the difficulties of getting rid of negative reviews — get more positive reviews written is Angie’s List’s response — and about aggressive advertising tactics, especially since Angie’s went public in 2011.
Angie’s List had a net loss of nearly $53 million in 2012 and has not made a profit since its inception. Contractors told REMODELING that since going public, Angie’s List employees have been more aggressive in getting them to advertise, in collecting payment, and in seeking reviews from current and former clients.
“[Angie’s List] called a client we [did] a job for six years ago,” says Terry Stamman, owner of Twin Cities Siding Professionals, in Minnesota. That person wrote a negative review. “We don’t even have the same employees we had six years ago.”
Contractors don’t have to pay to be on Angie’s, but they do have to pay to advertise. Service provider advertising is 69% of Angie’s total revenue, up from 57% in 2010. Consumer membership revenue declined from 43% in 2010 to 31% in 2012.
When Angie’s List is new to an area (currently it’s in 219 markets), membership fees are low; in more established markets, joining costs more. When a contractor buys advertising, his costs rise depending on the number of people in his market.
Contractors don’t have to advertise, but if they do, they must offer Angie’s List members a discount. If you have a no-discount policy, you’re out of luck. And your own success will cost you. For example, if you’re an A-rated window company, Angie’s might suggest that, for a fee, it will offer your name when someone calls seeking a window company. If you’re an A-rated company that can’t afford to pay the fee, it’s your loss.
By taking money from both sides, says media consultant to the home improvement industry Darren Slaughter, “[Angie’s List is] doing a disservice to both contractors and consumers.”
Contractors report finding it difficult to disengage from advertising. And signing Angie’s terms and conditions means that anything you submit to its site becomes Angie’s property. “You’re giving away your business identity. ... Your name, phone number, Web address,” says Brian Javeline, president and co-founder of MyOnlineToolbox.com. “Everything about this service is designed to drive traffic to [Angie’s List] first.”
Despite the issues, remodelers are sticking with Angie’s, but those we spoke with feel like Bob Davis, of Window Outfitters, in Savage, Minn., who is “only on it for self-defense.”
The Rest of April's Cover Story:
Online Review Sites topic page
Necessary?Evil?: Online review sites are here to stay
Sites for Sore Eyes: Consumer-driven sites leave contractors no choice but to play the game
Site Guide: A quick guide to the dominant online review services
Optimized Engagement: SEO experts explain how reviews can boost your online visibility
Leading Lights: A shifting definition of what constitutes a lead
Friend or Faux?: Despite fake reviews, consumers are stll believers—for now
Friendly Recommendation: Word still spread quickly via the new wave of review sites that use media
Good Word: Why you should (or shouldn't) pay for positive reviews