Last year, Google rolled out its Local Service Ads to contractors and professional firms in the United States. In this article, you’ll learn how this pay-per-lead advertising platform has affected marketing campaigns and click-through rates on Google My Business listings.
What are Local Service Ads?
Google’s Local Service Ads (LSA) is a pay-per-lead advertising platform. In 2015, the tech giant launched the product in California’s San Francisco Bay Area. The company initially referred to this product as Home Service Ads.
They required businesses to undergo a background screening process to ensure they met all insurance and licensing requirements. They also mandated participating companies to conduct criminal background checks on all of their employees.
In the past, consumers using Home Service Ads could contact businesses directly or select three companies for a quote comparison.
The Launch of Google’s Local Service Ads
Google expanded the program to markets outside of the state in mid-2017., they rebranded the program as Local Service Ads (LSA). In 2022, they rolled out the Local Service Ads across the nation.
Companies and their employees must undergo the same background screening processes before they receive the Google Guarantee accreditation. The company targeted this certification toward home service providers like plumbers, electricians, and locksmiths. Approved businesses receive a badge on their profile.
The platform also offers the Google Screened badge. The tech giant tailored this program to attorneys, financial planners, real estate, and other professional services.
- These businesses have undergone the screening process required for the Google Guarantee. These companies have a customer review score of 3+.
- There is no coverage for customers’ claims, unlike the Google Guarantee.
Under the new format, Google no longer allows consumers to use the LSA platform to request quotes from individual contractors or compare service quotes. They must contact the companies directly.
Google has also instituted a satisfaction guarantee when customers hire businesses they found through a Local Service Ad. If the customer doesn’t like the contractor’s work, the tech company will cover claims up to the job invoice amount. There is a lifetime cap of $2,000.
In summary, Local Service Ads:
- Local Services Ads are pay per lead, not by click. Companies can bid on a per lead basis instead of paying for clicks that don’t turn into engagements.
- Google serves these ads through search engine results pages that appear on mobile, desktop, tablet devices, and voice search.
- Google will display these ads based on the searcher’s location and positive reviews.
- Google must approve businesses before they can take part in the program.
Features of Google’s Local Service Ads
Local Service Ads as an independent product, even though businesses will still need an AdWords account. The platform uses a separate dashboard and app from other Google products; however, users can access features from Google Manager Accounts (MCC).
Small businesses can run their LSA campaign at the same time as AdWords. Each one would have separate budgets and can run by themselves, even if the company pauses one campaign.
These ads display when a person enters a keyword relevant to Local Service Ad categories. They appear at the top of the AdWords in search engine results pages on all mobile and desktop devices. LSAs will offer the best advantages to those businesses with high relative ratings and strong brand awareness in local markets.
A Recent Study Examines the Potential Impact of Google’s Local Service Ads
Google released LSA to U.S. professional firms in September 2022. Sterling Sky, a Canadian SEO Agency, started a study to find out how Google’s LSA affected their clients’ advertising campaigns.
The agency examined whether LSA stole clicks that would have gone to local pack results in Google My Business listings if the ads didn’t exist.
Their researchers studied Google My Business Insights for 110 separate listings from different attorneys. They tracked discovery searches (not direct links) and avoided branded searches.
Sterling Sky only used searches from the two months following the LSA launch (October and November). They compared this data to those conducted before the rollout (July & August). The company excluded searches conducted in September when the platform launched.
Local Service Ads Have Lowered the Click-Through Rates of GMB by a Minimal Amount
Sterling Sky primarily serves law firms. Their researchers were curious to learn how the ads impacted their customers. According to Joy Hawkins, the agency’s owner, they assumed the ads were stealing clicks from the local pack.
In their study, the company defined the click-through rate as the total actions divided by the discovery searches. Average click-through rates declined on GMB pages after LSA launched, but not by much. Before LSAs were present, the rate was 3.22 percent. After the with Local Services Ads, it decreased to 3.03 percent.
The researchers also measured the impact of LSAs on mobile devices by examining the call-through rate. They analyzed this metric to learn how it changed after Google released a new platform.
The average call-through rate (call actions/discovery impressions) was 1.32 percent. This figure lowered following LSA to 1.24 percent. The click-through rate for websites (which appear on desktops) lowered from 1.71 percent to 1.60 percent. They concluded LSA had an equal impact on mobile and desktop devices.
Sterling Sky also studied how LSA impacted average businesses The click-through rate decreased the total actions take by customers by 5.11 a month. On average, two of these clicks would have resulted in calls. Three of the clicks would have been on the business website.
The click-through rate for driving directions was 0.19 percent during the late fall months of 2022. The company says it was less than half of what it was in 2019 but attributed the decline to reduced travel in Fall 2022.
Branded Searches Have a Larger Impact on Click-Through Rates than LSAs
Sterling Sky calculated the click-through-rate based on discovery searches because direct searches for specific businesses wouldn’t surface local packs or LSAs. They determined if there was a significant decrease in branded searches, it would lower the total clicks and result in a lower click-through-rate.
They found the number of direct, branded searches in October and November was 11.71 percent. This figure was much lower than the summer months. The company believes the drop in branded searches caused the decrease in lost clicks, rather than Google’s LSAs.
The Study’s Conclusions
Google’s LSA decreased clicks on Google My Business listings two months following its launch. The decline was infinitesimal. LSA only resulted in five fewer clicks per month compared to the average. They concluded that reduced branded search rates had a larger impact on the click-through rates.
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