Home improvement services is a wild new frontier that has just scratched the tip of its potential, according to segment leaders at BIA/Kelsey’s Leading in Local: Interactive Local Media event at San Francisco Airport.

“ServiceMagic/Home Advisor is (only) a couple of hundred million dollars. Angie’s has never made a profit. The market is ripe but no one is there yet,” said Home Depot Silicon Valley leader Anthony Rodio, who also serves as GM of the company’s Red Beacon contractor scheduling service. “The pot of gold at the end of the rainbow is repeat business.”

Rodio noted that a real opportunity for the industry is that many millennials have moved away from DIY. “For some, their idea of a home project is upstreaming iTunes in the living room,” he said. But Home Depot is traditionally geared around DIY. The company hasn’t done enough to develop ‘Do it For Me’, said Roddio.

Serviz leader Zorik Gordon, the former ReachLocal leader, said that the void in the industry is that the segment is not transparent. Serviz will move away from unreasonable 300-500 percent upsells, and provide price charts, and reviews; it will also assign contractors, said Gordon, who says the startup will move beyond southern California, where it launched in July, and will reach 10-20 cities by the end of 2015.

Thumbtack CEO Marco Zappacosta noted that his company recently raised $100 million from Google and others. “What Google and others saw in us is that we have created a unique platform,” he said. “We have 600 unique categories.”

Thumbtack is taking a different approach than Serviz and The Home Depot’s Red Beacon in that it doesn’t assign jobs to service pros or collect money for jobs. Focusing on moving the money is “not the indicator” for the success of a transactional marketplace, he said.

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Local businesses are finding customers in lots of new ways with the expanding reach of social media and transaction capabilities. On the final day at Leading in Local: Interactive Local Media in San Francisco, a panel on “the new world of leads” with executives from Airbnb, Thumbtack and Lucky Oyster explored some of the opportunities.

Airbnb, of course, is one of the real breakouts in the space with ten million “guests” in 192 countries now participating in its apartment — as — hotel rental services. The company’s Joe Zadeh said the key to its “shared economy” service was understanding its clients. “People want to have more experiences, and they want to step away from having so many things,” he said. People don’t necessarily want to be an Uber driver after getting a ride, but they do want to become Airbnb hosts.

The company has been building its solutions based on need. For instance, it has developed a freelance photographer program because hosts need good pictures of their apartments. It is also working on providing “speed matches.” Guests “don’t want to wait six hours to get a response,” he said.

Lucky Oyster’s Matthew Berk, a longtime local industry executive and analyst, said that a key part of the new leads order is to provide a “structured” word of mouth platform about actual experience. It has been a ten year journey to provide digital word of mouth. For a local business, it will never be based on a tremendous volume of leads or reviews, he said. But you want to track it, promote it and bump it. The opportunity for innovation is in the form of discovering the right lead, he said.

Thumbtack’s Marco Zappacosta said leads for services have their own special criteria. The long term goal is to become a transactional marketplace, and the most convenient way for a seller to conduct his or her business. But “a lot of price discovery happens after the point of introduction,” he said, noting that Thumbtack now has a list of 30,000 contractors, and sends $200 million of business their way. His challenge: get more contractors. There is plenty of business, but a supply constraint.

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Leading in Local: Interactive Local Media, BIA/Kelsey’s flagship show, is now set for San Francisco Dec. 10-12 and we couldn’t be more excited. This year’s edition hosts a totally fresh, new slate of industry leaders.

The show opens with BIA/Kelsey research and the dynamic duo of Joanne Bradford and Kara Swisher. Bradford, of course, has pushed local into new realms during her tenures with Microsoft, Yahoo and Demand Media. Now she is applying her knowledge as President of Hearst’s San Francisco Chronicle. And Swisher remains the fearless interrogator that has dominated tech journalism for over 20 years – the last eight spent as cofounder of All Things D, along with Walt Mossberg. Nobody cuts through the hype like she does.

Other top speakers represent our idea of real innovation (and real fun, too.) Startup Rising Author and former Washington Post Digital and Health Central leader Chris Schroeder lends a global perspective to what works with startups. In the same light, Intel senior researcher Lama Nachman – yes, Discovery Channel’s “Curiosity Expert” – talks about developing the next generation of mobile technologies.

Other initial speakers include DemandForce CMO Patrick Barry, talking about the next wave of one stop local platforms; Hubspot SVP Mark Roberge, going deep on sales organization effectiveness; Weather.com VP Denise Chudhy, talking why weather is the true model for national local; Five Stars CEO Victor Ho on the emergence of Transaction Marketing and Point of Sale integration; Groupon VP Sean Smyth on how Groupon leverages its millions of users in new directions; Telmetrics CEO Bill Dinan on how the new metrics are changing local; and Thumbtack CEO Marco Zappacosta on new ways to leverage directory models for leads.

Indeed, a lot of things have happened in local in 2013. The rise of collaborative consumption via AirBnB, Uber and other companies combining listings, social media and purchase capabilities might be the biggest thing to have hit the industry. As Interactive Local Media, we’re going deep on collaborative consumption with Airbnb director Joe Zadeh, Lucky Oyster CEO Matthew Berk, and two more great names that we can’t announce yet.

Other superforums will focus on mobile wallets and the rise of digital agencies. In the end, we’ll end up with 40+, hand-picked speakers.

Here’s an initial list:

Joanne Bradford, President, SF Chronicle
Kara Swisher, Co-Executive Editor, AllThingsD
Chris Schroeder, Author, Startup Rising
Victor Ho, CEO, FiveStars
Patrick Barry, CMO, DemandForce (Intuit)
Mark Roberge, SVP, Hubspot
Denise Chudhy, VP, Weather.com
Lama Nachman, Sr. Staff Researcher, Intel
Sean Smyth, VP, Partnerships, Groupon
Marco Zappacosta, CEO, Thumbtack
Joe Zadeh, Director, Airbnb
Matthew Berk, CEO, Lucky Oyster
Bill Dinan, CEO, Telmetrics

We’ve extended our Early DIscount rates through October 2. Please register here to save.

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Thumbtack, which has set itself to compete against Angie’s List and ServiceMagic in the SMB leads space, has raised $4.5 million from Javelin Venture Partners, with MHS Capital and Tim Draper participating.

The eight-person San Francisco company, founded in 2009, claims nearly a quarter-million active merchants — up from 150,000 in July — and “hundreds of thousands” of visits. Founder Marco Zappacosta tells us that the company continues to scale well on “both sides of the marketplace” — merchants and consumers. He says the company will use the funds to hire 12 people as soon as possible and focus on building the user experience. “The money is all about investing in the experience and really develop a marketplace solution,” he says.

Zappacosta notes that the company provides standard features such as quotes and finding the right people, but “there is a lot more we can do.” For instance, Zappacosta hopes to add payment and invoicing capabilities throughout the site, as well as scheduling.

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The new breed of lead providers for services appears to have slowed down. While Angie’s List is all over the air waves, building its consumer base for an expected IPO, and ServiceMagic is performing well for IAC, and expanding, not much has been heard from such new companies as Redbeacon, Cox’s Kudzu, Likelist, HelpHive, Sears’ ServiceLive and Thumbtack.

For at least some of them, however, things continue to develop behind the scenes. Redbeacon, for instance, tells us it is now serving the top 50 U.S. markets and has built out its team.

Similarly, Thumbtack says it has made good progress toward its goal of building out “the largest directory of independent service professionals.” The angel funded company has 11 staffers in San Francisco, and a 120-person support team in the Philippines.

Thumbtack now has a database of 150,000 merchants around the U.S. It is also gaining consumer traffic, and now provides around 30,000 leads a week. It has had 550,000 unique visitors in the past 30 days, driven largely from SEO and social efforts.

Last week, we dropped by Thumbtack’s San Francisco headquarters to visit Marco Zappacosta, the company’s 26-year-old leader. Zappacosta says the company may have underestimated how much effort it takes to jump-start a marketplace. But its flexible model of letting businesses either pay up front for leads or on a commission basis appears to have hit a sweet spot.

The problem with most lead gen companies is they don’t offer leads on an opt-in basis. They require a merchant commitment every month. They force them to pay for things they don’t want. “There are times when a merchant is busy, or on vacation,” notes Zappacosta.

Whether merchants choose to pay up front or a higher amount of commission after jobs are completed, however, “varies by category,” says Zappacosta.

In both cases, however, Zappacosta says: “We’re underpricing relative to what we’re charging. More established, higher-end businesses, like roofers, want to pay up front for leads. They have an internalized sales cycle and don’t want to monkey around after an introduction is made.”

Categories on the lower end, such as tutors or handymen, however, don’t have any cash flow. “They also don’t trust us,” he jokes. Zappacosta also acknowledges that it has proved difficult to track how much jobs end up costing.

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The home and trade leads space was getting a lot of attention a year ago, with a number of social media driven leads companies hoping to cut in on longtime leaders such as ServiceMagic and Angie’s List. Among the contenders: Cox’s Kudzu, Redbeacon, Likelist, HelpHive , Sears’ ServiceLive and Thumbtack.

Not much has been heard from the space since then, but it hasn’t been standing still. Redbeacon landed a deal with Yahoo; some new contenders have jumped in (i.e., The Washington Post’s ServiceAlley); and Angie’s List has landed another $24 million in financing as it heads toward an apparent IPO.

Angie’s List and ServiceMagic, in fact, are all over the airwaves with their commercials — among the most prominent ambassadors for the Interactive Local Media ecosystem.

Thumbtack, too, says it has been quietly making inroads. The 11-person, San Francisco-based service, landed an angel round in June 2010. Since then, it has signed up 110,000 home and trade pros (and rejected 5,000 that did not pass its background checks).

The site has generated 100,000 leads in the past three months (30,000 in the last week). It also has done well with consumers, generating 390,000 unique visitors last month.

The site’s traffic comes largely from SEO, rather than from media partnerships. It works efficiently because only job specific information ends up in the search results (i.e., San Francisco Plumber). “It means we have what you are asking for,” says CEO Marco Zappacosta.

The service, which is national in scope, rather than focused on individual markets, works with home and trade pros in two ways: They can either opt to pay for leads upfront or pay commissions after they get the job.

Leads are only provided to home and trade pros on an opt-in basis, allowing for vacations or full schedules. That differs from lead gen providers that require pros to accept a minimum number of leads towards a monthly commitment.

Which revenue model that is ultimately chosen varies from category to category. More established professionals in higher end categories, such as roofers, want to pay for the lead upfront. They have internalized their sales cycles. After they have gotten a lead, they don’t want to monkey around (with leads providers such as Thumbtack).

On the lower end, home and trade pros such as tutors or handymen want to pay a commission. They don’t have a lot of cash flow, and they may not trust the leads provider to provide a good lead, at least the first few times they use them, says Zappacosta.

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Site founder Marco Zappacosta says the funding will be used to expand Thumbtack’s eight-person team, which is based in San Francisco. It will also be used to expand key features such as e-mail marketing, appointment management and its “Personal Concierge” service.

Zappacosta tells us that the site has evolved considerably from its earliest days. It is now focused on simple tasks such as invoicing, record management and appointment management. “Payment solutions are really hard to pull off,” he says.

The company remains wedded, however, to its core concept of providing “deeper, richer” background on service providers rather than relying on licensed lists. It now has profiles on 40,000 service professionals in 11 markets, including Atlanta, Chicago, Dallas, Las Vegas, Los Angeles, Miami, New York, Phoenix, San Francisco, Seattle and Washington, D.C.

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