IAC’s ServiceMagic reported today that it saw a 51 percent boost in 4Q revenues, growing from $25.3 million in 2008 to $38.2 million in 2009. The boost was accompanied by 21 percent growth in the number of home and trade providers that pay for its leads and a 46 percent gain in service requests. The addition of revenues from two new units — ServiceMagic International and Market Hardware, a search and Web site provider for verticals — also increased the pot.
Profits, however, were low at $1.2 million. They were held down by increased marketing efforts, including an expanded sales force and a major advertising campaign. Losses caused by the rapid expansion of the company’s international unit also held profits down.
ServiceMagic CEO Craig Smith is keynoting at Marketplaces 2010, March 22-24 in San Diego.
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This does not surprise me after recent experience. They were VERY aggressive in trying to recruit me as a contractor, but the service was expensive for my work. The following barrage of false advertising, unethical barrage of unsolicited – and impossible to unsubscribe emails continues months later.
Servicemagic is an unwanted expensive middleman adding no value to the contractor – consumer relationship. Contractors pay stiff fees to join, and for every “lead” provided, whether they get the gig or not. Information about contractors is scanty and inaccurate – many are not there for long, and pass on their bad experience to the end customer.
I was approached to be a contractor in a cold call. The salesperson was aggressive and scripted, I wasn’t interested, but kept getting repeat calls. My first question kept getting circumvented, simply: “How much does this cost?” The price structure was ludicrous. For most people on either side, there are direct ways of getting in touch with each other – all much cheaper and more satisfying. SM does not provide more customers to your market, or more contractors…. All they do is give contractors willing to PAY a little extra edge in reaching lazy, less informed customers – and these are not necessarily GOOD customers.
The insult on top of this is that I was added to a spam mailing list immediately after declining. 3 or more emails per day – not branded with servicemagic’s name, but anonymously offering contractors for a variety of services. They all resolved through a link bidding system to Servicemagic! I was getting additional spam from these same illegal marketers. Servicemagic had no website unsubscribe page, or department to deal with this. I finally contacted a public relations person who said she would stop this flow (they were evading my fairly aggressive spam filter). No luck. She claimed 3rd parties were not following “their rules”. Uhhhh hello! So don’t pay them!
The pressure of the economy I think has pushed them to more aggressive and unethical behavior to support their huge infrastructure – financed entirely by contractors passing on their fees to customers. Sad. Do whatever you can to make sure this leech business model does not survive!
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