Combined logos of HomeAdvisor and Angie's List

IAC's announcement May 1 that its HomeAdvisor service will essentially take over Angie's List is being sold to stock analysts today as a way to grow and increase share in what it estimates as a $400 billion market for home services. What can the soon-to-be-published 2017 Remodeling 550 tell us about the likelihood of that happening? Here are some numbers that can provide context.

Slides prepared for a presentation to analysts sketch out what IAC thinks is the current state of the market. Roughly 90% of all service providers (SPs) are found offline, and transactions closed with service providers found on either HomeAdvisor or Angie's List appear to figure in fewer than 5% of all SP engagements.

By combining HomeAdvisor's thousands of service providers with the Angie's List network of consumers looking for remodeling and home improvement services, IAC thinks it can create a service that is sure to grow. Here are the numbers that HomeAdvisor believes it will bring to the combined company:

Slide from HomeAdvisor presentation to analysts showing growth in service requests and service pros

And here's an example of how it believe Angie's List customers would use the service.

Page from HomeAdvisor presentation to analysts on its merger with Angie's List

Now let's compare that with the findings of Remodeling 550 members. Our report lists the biggest full-service remodeling and replacement contractor firms in the country. They tend to be bigger and usually more well-established than the typical remodeler, and are less likely to pursue lower-paying home-improvement work.

We asked each group to identify their top three sources for leads. Here's what the top 300 full-service firms told us. We've marked in red the bar that denotes social media as a source:

"Top 3" Lead Sources for Full-Service Remodelers
Source: Remodeling 550 The 300 biggest full-service remodelers in the 2017 Remodeling 550 named these lead sources as being among their top three.

And here is the list for the top 150 replacement contractors:

The 150 biggest replacement contractors on the 2017 Remodeling 550 listed these lead sources as being among their top three.
Source: 2017 Remodeling 550 The 150 biggest replacement contractors on the 2017 Remodeling 550 listed these lead sources as being among their top three.

In other words, both full-service remodelers and replacement contractors already are saying they are getting leads from social media, but that source trails word-of-mouth advertising and the company website as a source.

One note: When we identified social media, we also included Houzz on this list. Services like HomeAdvisor and Angie's List can raise remodelers' ire because they include reviews that remodelers at times consider unfair. Houzz is much more of a promotional service and a way to showcase projects. Lumping Houzz in with HomeAdvisor, Angie's List and other social media services could have influenced how RM550 members responded.

HomeAdvisor believes so strongly that people will prefer going online rather than to their neighbors that it has created a $100 million ad campaign to persuade people that its method is better. "Ninety percent of project referrals are word-of-mouth, yet the majority of homeowners consistently tells us they want background checks and scheduling--features only HomeAdvisor provides," said Chris Terrill, CEO of HomeAdvisor, said in a press release. "HomeAdvisor is built to do what neighbors and friends can't, and this campaign exposes the shortfalls of the status quo and demonstrates a better way."