Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Angie’s List Inc (ANGI), Google Inc (GOOG): This Reviews Company Has a Big Problem

Google Inc (NASDAQ:GOOG) and Yelp Inc (NYSE:YELP) Strangle Angie’s List Inc (NASDAQ:ANGI)

Angie’s List Inc (NASDAQ:ANGI) List members simply don’t stick around – there’s no reason to do so once someone has already hired a handyman or a health care provider. All the value to be obtained from the membership has already been extracted.

So where do consumers, and ultimately investors, go?

Google and Yelp.

Google Inc (NASDAQ:GOOG) is the biggest, and in my opinion, best play on reviews. The company has a stranglehold on location-based reviews seeing as users can utilize its Maps App to find a quality service provider in their area – and figure out how to get there.

The Maps App and its growing reviews trump anything from Angie’s List or Yelp. And let’s not forget two very big factors that favor Google:

  1. It can extract more value per service provider in the form of upsells for AdWords in search results and videos on YouTube.
  2. Google Inc (NASDAQ:GOOG) recently acquired leading review provider Zagat, which adds tremendous third-party value to its reviews.

Neither Angie’s List nor Yelp offer the same kind of usability or value to the user as Google’s Map app and reviews. The economics of Google Inc (NASDAQ:GOOG) and its ability to generate more revenue per user and service provider make it a Yelp and Angie’s List-crushing machine.

Investors should steer clear of Angie’s List Inc (NASDAQ:ANGI) List and Yelp. The best play in the space is Google, which has a formidable economic moat and trades at 16 times earnings. Angie’s List’s pay-to-play service is a fantastic idea, but it simply lacks the economics necessary to make investors any money. Meanwhile, Yelp struggles as an “also-ran” in the space, a company which has only one hope for investors: a possible acquisition by Yahoo! Inc. (NASDAQ:YHOO).

The article This Reviews Company Has a Big Problem originally appeared on Fool.com and is written by Jordan Wathen.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.