[Originally published 12/28/2007]
A small news item this week caught my eye: the owners of Angie's List, a service that rates home improvement and repair companies in a number of major cities, is suing yellow pages giant Ameritech Publishing. What Angie's List doesn't like is that some advertisers in the Ameritech directories are using the Angie's List logo in their ads as a way of indicating they were favorably rated by Angie's List.
My first reaction was that this was incredible free publicity for Angie's List, and they should be encouraging it, not going to court over it. Yet as I thought about it more, I started to see the other side of the issue.
First, if advertisers start to broadly include Angie's List "endorsements" in other publications, guess what? The need to purchase an Angie's List subscription is reduced. Cheap or lazy consumers can simply scan the yellow pages for companies sporting Angie's List logo and hire them with the knowledge they've been vetted by an independent review organization. Revenue to Angie's List: zero.
Second, Angie's List starts to lose control of its name and logo. A plumber well rated by Angie's List in January may not be well rated by December, but that annual yellow pages ad with the Angie's List logo keeps appearing, and appearing and appearing.
Third, people not familiar with Angie's List could easily be led to conclude that these advertisers have paid to be rated, which is not true. This leads to a distorted perception of Angie's List in the marketplace which could sully its brand over time. This is the primary reason that Consumer Reports has never let manufacturers advertise their Consumer Reports ratings; it doesn't want anyone jumping to conclusions about what it does or how it does it. If you want Consumer Reports information, you have to get it from Consumer Reports, which keeps control of the information, its presentation and its context in a way that enhances the brand.
Ratings services can have enormous market power, but they're like hothouse flowers: they will only flourish in a rigorously controlled environment. Let them into the outside world, and they quickly wither.