HomeAdvisor Spending $100 Million to Combat Word-of-Mouth Referrals

HomeAdvisor is spending $100 million to convince homeowners to rely on its platform above referrals from friends and family. That should tell you something about where the market is going.

In its new campaign, dubbed “Just Ask HomeAdvisor,” the message is simple: Your friends and family can’t give you the same assurances HomeAdvisor can.

Through a series of nationally airing vignettes that play off neighborly moments, HomeAdvisor illustrates the shortcomings of personal referrals.

A Fair Message

The first ad shows two neighbors checking their respective mailboxes. One asks for a recommendation on a roofer, and the other gives one—or at least attempts to. Before the second neighbor can say the name of the company, the first is rattling off requests. He needs a background check, quotes from competitors, average prices for the area, and he wants it scheduled two weeks in advance. The first neighbor walks away before the second can find the words to respond, and the commercial ends with the tagline: “You can’t expect your neighbor to do everything HomeAdvisor can.”

It’s a well-aimed message, considering the trends.

Of the 69 percent of homeowners surveyed in a recent Zillow trends report, about half used an online resource to help with the project. The growing consumer reliance on the internet has irrevocably altered the home improvement process, making way for new industry staples, such as HomeAdvisor and Yelp. As a testament to their popularity, during last year’s fourth quarter, HomeAdvisor’s revenue growth jump from 27 to 35 percent, while Yelp’s revenue increased by more than $150 million.

A Total Trust Problem

But even with a stunning surge in popularity and relevance, those review sites have so far been unable to overtake personal referrals as the industry’s go-to who-to-hire authority.

“It’s a total trust problem,” said Rick Cleri, general manager of internet marketing agency Contractor Nation, whom Professional Remodeler interviewed last year. Cleri was referring to a survey in which 62 percent of respondents reported finding their contractor through a friend of family. “The bigger the job, the bigger the trust problem.”

A Transition Year

Chris Terrill, CEO of HomeAdvisor, hopes the “Just Ask HomeAdvisor” campaign will address that issue. “Ninety percent of project referrals are word of mouth, yet the majority of homeowners consistently tell us they want background checks and scheduling,” Terrill said in an official statement. He went on to predict that 2017 will be the “tipping point … at which we begin to see the offline word-of-mouth market materially move online.”

Terrill is not alone in his prediction. In Chicago, Matthew Stock, who runs U.S. Waterproofing, has seen the same writing on the same walls. “Word-of-mouth referrals still have a slight edge over the internet, but that gap is really tightening,” Stock says, citing his own market research. “I would think in the next few years the internet will surpass word-of-mouth, at least for our target market, which is Chicagoland homeowners 35 to 64 years of age.”

Of course, Chicago is just one market. But then again, it's a really big market.