IAC’s ServiceMagic Buys Market Hardware
IAC’s ServiceMagic, a leader in delivering leads to services, has purchased Bethesda,MD- based Market Hardware, which provides websites and search engine optimization for 2,500 SMBs. Market Hardware, which has 30 people, targets “high online spend verticals” that closely mirror ServiceMagic’s base of 56,000 pre-screened professionals.
Market Hardware has relationships with 40 associations in the segments that it serves. It is also known for its “Vertical View” process of studying and launching new segments in six weeks or less.
The acquisition is the most recent of several for ServiceMagic, a 930 person company with an annual run-rate of $120 million. In the past several months, it also purchased ZipExpress, which partners with retailers to hire out installation jobs; and has expanded internationally via the acquisition of Koening in the U.K. (including 123Devis.com and 123GetAQuote.co.uk) and Travaux.com in France.
ServiceMagic also recently invested in BuildProof. The company is described as “the PayPal for home improvement,” setting up escrows so contractors don’t run off in the middle of the night.
In a release announcing the deal, ServiceMagic noted that it is entirely logical for the company to expand its offerings with MarketHardware. “Many top-rated home service professionals in the ServiceMagic-approved network don’t have a visible storefront. Having and maintaining a professional website gives them a chance to showcase their business online and the great home improvement work they are doing in the community,” said CEO Craig Smith.
Speaking at the ILM conference, Co-Founder Rodney Rice seemed to hint that a deal was in the works. “We’re focused on broadening out our offering to service professionals,” said Rice. “We won’t have a ‘one size fits all approach.’”
CEO Brian Kraff separately told The Kelsey Group that “the website is quickly becoming a focal point in all forms of marketing. It just simply makes sense for SM and MH to join together to bring a consultative, verticalized, full service approach to providing online marketing services.
“Our companies are a great cultural fit,” he continued. “Our team is looking forward to helping SM expand its offering. Their team is energetic, down-to-earth and operationally minded. They get a division that is a leader in the website space, and we get a parent company with 56,000 contractors who can make use of our competencies. Feels good.
At Kelsey’s recent ILM conference in Santa Clara, Kraff provided additional detail about his company, and it’s “vertical view” concept. The idea of vertical view is not to build a template, but to understand the segment so that Market Hardware could differentiate the business, he said. “The upper quartile of each segments especially needs to have a differentiated Web presence to stand out.”
Kraff also noted that Market Hardware is aimed at companies that are on their second or third websites and are ready to spend more on a “consultative approach.” Market Hardware clients are especially spending more on high pay per call/per per click actions.
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This is a smart move by ServiceMagic to get a new beachhead in the battle for SMB marketing dollars. If you own the SMB website I think ultimately you own their marketing budget. There is also a long-term SEO advantage (there always is with me after all) – the SMB site will usually be favored by Google in the delivery of local search results. This has big implications for how SMBs are going to spend their $. Check out the comment in my post about how a SMB is using their comparing the results of their SEO efforts to a potential IYP buy http://www.localseoguide.com/servicemagic-acquires-market-hardware/
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