With the announcement of Facebook’s new graph search, (and continuing my most recent SteerPoint blog post) I would like to pose one very obvious question:
What is the future viability of pay-for-referral business models – likeAngie’s List?
In review,Facebook announced last week their new “graph search” aka “social-search” feature (Zuckerberg stressed that it’s not a web search) will allow users to explore connections between people, their profile information and their interests on Facebook – who they know, what they do and what they like (businesses).
Basically, users will be able to search for recommendations for doctors, businesses, products, TV shows or bands from their known peers…and, peers of your peers!
What is Angie’s List? While businesses do not pay to be on Angie’s List, consumers must pay a subscription fee for membership and access to referrals. According to their Facebook “About” page, over 1.5 million households check Angie’s List before they hire roofers, plumbers, house cleaners, carpenters – and, lately even dentists and doctors.
Their mission states: “Angie’s List takes the ‘ask-your-neighbor’ approach to a higher level to provide reliable, unbiased ratings and reviews on local services…where more than 1.5 million households across the U.S. share their ratings and reviews on local home, yard, auto, pet and health care providers.”
Sure – that may be a reliable pool of satisfied consumers willing to go on the records about their consuming experiences. However, as of this writing, Facebook metrics claim 138.9 million monthly unique users in the US. And, we all know how Facebook users love to give their opinions.
SteerPoint doesn’t see a promising future for paid services like Angie’s List once Facebook finally rolls out the fully tested version of their “Graph Search”. If a consumer wants to search for one of these services, why not just go ask their Facebook friends to recommend hiring someone – for no cost?
It reminds us of an information technology quote we read years ago – we dated it back to Steve Wozniak as far back as 1984:
“Information wants to be Free. Information also wants to be expensive….That tension will not go away”
Thus far, researchers and analysts haven’t been too impressed with Facebook’s graph search. However, if they develop it to its full potential, it’s our position that Angie’s List might just get a run for their money on this one!