Advertising for Home Remodeling Companies: Here’s the Difference Between Local Services Ads and Pay-Per-Click Ads
Just when you think you’ve got a handle on all the different ways to advertise online, a new digital marketing channel gets introduced.
You’re probably at least somewhat familiar with advertising on social media platforms like Instagram and Facebook. And, you’ve most likely used (or at least thought about using) Google PPC (pay-per-click) to drive intent-based traffic to your website.
Whether you’ve had success with these channels or you’re looking for another alternative, LSAs are worth a look. In this article, we’ll define what LSAs are and show you how they differ from other advertising options, particularly PPC. 
What Are LSAs?
A few years ago, Google rolled out Local Services Ads to home remodeling companies, builders, and other home service professionals. Local Services Ads, LSAs for short, are designed to help local service businesses attract more eyeballs and generate more leads.
At first glance, it can seem like Local Services Ads and pay-per-click are synonymous. They are both Google products that charge you to reach your target audience by showing up prominently in a Google search.
However, there are also six distinctions between the two that we’ll explore in-depth. By understanding Local Services Ads vs. PPC, you’ll be able to determine if LSAs are the right call for your home remodeling business.
- LSAs Appear at the Top of Google
It used to be that the only way to ensure landing the top spot on Google was to buy PPC ads. That is no longer the case.
Now, LSAs are the first thing that shows up when someone searches for something like “plumber near me.” Note that the first Google PPC ad is shown below the LSA.
According to Search Engine Journal, LSAs get 25% of all clicks whenever they’re displayed. If you want to dominate the first page of Google, it would serve your home remodeling business well to run LSAs, PPC campaigns, and a combination of local SEO strategies. When it comes to local SEO, we recommend optimizing both business listings and your Google My Business page to increase your chances of being in the Google Maps 3-Pack.
On a side note, if you do not see an LSA appear in a search query for one of the approved LSA industries, it could mean you don’t have a lot of competition. Alternatively, it could mean that your competitors have encountered a glitch that’s preventing their ad from being displayed. Either way, this could be a massive opportunity for you.
- LSAs Use a Different Payment Model
You’re probably already somewhat familiar with how you pay for Google ads. As the abbreviation PPC suggests, you pay Google every time someone clicks on your ad.
By contrast, with LSAs, you only pay when someone becomes a valid lead. Google defines a lead, in this case, as anyone who calls or messages your business through the ad platform. This means that you’re no longer stuck paying for spammy or competitor clicks.
Note the use of the term “valid.” The good news is that Google won’t charge you for invalid leads. What constitutes an invalid lead is defined by Google as one of the following:
- The caller was a solicitor, someone seeking employment, or they had a wrong number.
- The call was spam because it was pre-recorded or not from a live human.
- The caller requested services outside of your geographic area, or they asked for services you don’t offer.
- The caller wanted to visit a physical store or purchase a product.
Some calls you may receive from LSAs aren’t leads, and unfortunately, those won’t be credited back to your account. Examples of those include:
- Someone canceling an appointment.
- A call that came in outside of your business hours.
- The caller was still in research mode or wanted advice but wasn’t ready to hire anyone yet.
Though the cost of a lead may be more expensive than a click, you’re more likely to win the business because the person contacting you by phone or through your website is probably farther along in their research. Someone who clicks on your website from a PPC ad, on the other hand, could be merely doing research or shopping around.
- LSAs Use a Flat-Fee Model
If you’ve tried doing PPC yourself or worked with an agency, then you know that the only ways to improve your ad position are through bidding higher, enhancing your relevance score, or getting creative with keyword targeting.
In some industries, there’s so much competition for high placements that bids can get ridiculous. Paying upwards of $40 to $50 or more just for a click is not sustainable for most businesses, but that’s the norm in a lot of industries. As ad costs rise, it can be tough to compete at that level.
Unlike PPC, LSAs use a flat-rate pricing model. This means that you can specify how much you’d like to pay for a lead, and Google will stay within that limit, ensuring that your monthly budget is never exceeded.
Despite the flat fees, there may be some variation based on your location, your bidding mode, and the type of lead or job. As the leads begin to roll in, you can review your statements and make adjustments as needed. This is a lot easier than managing the myriad variables in PPC like keyword match types, bid adjustments for devices, negative keywords, affinity and in-market targeting, and everything else.
- LSAs Prioritize the Searcher’s Location
Both LSAs and PPC incorporate multiple factors when determining where your ad shows up. Recall from the screenshot above that you can see three companies in the LSAs portion of the Google search engine results page with an option to select the arrow button at the bottom to see more service providers.
However, while the PPC ranking algorithm is incredibly complex and something of a black box, Google has shared that the biggest ranking factor for LSAs is the proximity of the Internet searcher to your location. This eliminates the frustration of yanking your hair out as you try to figure out how to rank your business. With LSAs, you don’t have to worry whether you’re using all of the ninja strategies available.
Keep in mind that this proximity factor means that you probably won’t be able to attract customers outside of your city. If you are interested in attracting customers from other markets, you can still use PPC and other ad platforms.
- LSAs Tend to be Less Expensive
Remember when we talked about the high costs of PPC campaigns? Depending on your exact numbers, you could see a dramatic decrease in your customer acquisition costs with LSAs.
Let’s illustrate with an example*:
|
LSAs |
PPC Campaign |
| Cost Per Lead = $25.00 | Cost Per Click = $10.00 |
| Conversion Rate = 50% | Conversion Rate = 10% |
| Customer Acquisition Cost = $50 | Customer Acquisition Cost = $100 |
* These numbers are rough estimates and do not reflect actual client data. Rather, it’s an example based on industry averages provided by Google.
Also, remember when we said that the leads generated from LSAs tend to be further along in their research and more likely to convert? This distinction can save you even more money because the leads coming in through LSAs are of higher quality.
By dealing with a lower volume of high-quality leads, your team can spend less time on non-qualified leads. Imagine how much money you can save in phone calls, follow-up, answering questions, and generating quotes!
- LSAs Require You to Complete an Application Process
Anyone with a website and a credit card can run PPC ads, but Local Services ads have a much higher threshold when it comes to accepting advertisers.
To qualify for LSAs, you have to apply and get approved by Google. The application process varies by industry, but for those in the home services businesses, Google will require the following:
– Business background check
– Owner background check
– License verification
– Insurance coverage
– Additional screening as required
Though this process can be time-consuming and paperwork-intensive, you do end up with a “Google Guaranteed” green check mark by your business name. This badge gives you instant credibility. 
Ready to Get Started with LSAs?
LSAs make sense for most home service professionals, but you’ll need to determine how they best fit into your marketing strategy. Should they take the place of PPC or supplement it? Should you allocate resources from other channels to Local Services ads?
At Home Remodeler SEO, we can evaluate your business goals and help you make this determination. Contact us to schedule a free strategy call.
