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Small businesses are often at a disadvantage when it comes to advertising in service verticals. They simply do not have pockets deep enough to both hold off big-name brands and continually pay exorbitant click costs for high-volume, highly-competitive keywords. Depending on what service vertical you want to advertise in, you can often expect to pay $5, $10, $15, or more on average per click for such sought-after search terms. Those costs are, too often, not feasible for so many small businesses unless they’re somehow able to maintain an extraordinary conversion rate.
Google recognized this reality, and in 2018 began offering a solution for small businesses to try and level the playing field: Local Services Ads. Local Services Ads are sponsored business listings that are eligible to show for service-oriented search queries.
Unlike regular text ads or search campaigns, Local Services Ads generate impressions based on service categories the advertiser opts into (there are no keywords used) and can only show in a particular geographic market. Furthermore, you set a desired weekly budget you’d like to pay on average, and you’re charged a flat fee per phone call generated from these listings, which vary by service category and geographic market. If there’s something wrong with the contents of the call—for example, if the caller hung up immediately or asked for something completely irrelevant to your businesses—you can identify it in your Local Services Ads dashboard and not be charged for that call.
To paint a clearer picture: If you run a moving company specializing in short-distance local moves in the Los Angeles market, you could create a Local Services Ads account in the Moving & Relocation category and select only local moves as the service type you offer. Then, you could narrow down where your ads are eligible to show by zip code within that market. Google would then show your ads only to users in the zip codes you specify that submit search queries related to local moving companies. If a user generated a phone call from your ad and the contents of the call fit Google’s criteria for a lead, you’d be charged a flat fee determined by Google for Moving & Relocation services in Los Angeles.
At Portent, we’ve helped some of our clients opt into Local Services Ads. In this post, I’ll review our experience using these ads for two of our larger-scale service clients and their results to answer the question: are Google Local Services Ads worth using?
We’ve onboarded two large-scale service clients with Local Services Ads in several different geographic locations. We’ll call them Client 1 and Client 2. Client 1 is in the Moving & Relocation vertical, and Client 2 is in the HVAC vertical. In our experience, the whole onboarding process for both clients was extraordinarily cumbersome and took multiple months to complete.
For Client 1, the insurance and license verification process contained extra layers because of the Moving & Relocation vertical. For a single small business with one location, this may not have been as big of a deal. For a business with multiple locations, it was more strenuous on the part of our client. Furthermore, completing the background check process for each field worker took time as we were dependent on each individual to input their own information.
For Client 2, we followed Google’s instructions to bypass their regular background check process for field workers as this client performs their own background checks that appeared to meet Google’s standards. After the client spent the better part of three months ensuring all field employee background checks were accounted for, Google initially denied our client’s request to bypass their regular background check process—despite a completed questionnaire that met Google’s standards—because of a technicality with geographic markets. After another month of back-and-forth and getting legal counsels involved, their request to bypass was finally accepted.
Once onboarding was finally complete for each client, we got to see the Google Local Services user interface (UI) and dashboard. The UI is easy to navigate, and there are only a handful of pages (call reporting, profile settings, etc.).
The amount of actual control you have as an advertiser is limited to selecting which specific services you want to opt your ads into (pre-set by Google) and which specific locations within a given geographic market you want your ads eligible to show in (towns, cities, and/or zip codes). Furthermore, you set a desired weekly budget that Google aims to fulfill along with the eligibility for hours of the day and days of the week you want your ads to show.
After a quarter of running Local Services Ads for Client 1 (Moving & Relocation), we evaluated the cost-effectiveness of these ads versus our standard paid search text ads. While call quality was excellent and their assigned lead rate was over 90% from Local Services Ads, the desired ratio of long-distance move requests (of significantly higher value) to local move requests fell well short expectations. Paying a flat fee between $30 – $40 for each call (depending on geographic market) proved to be too expensive as the eventual cost per booked move (final sale) ended up being 2x – 3x higher than our standard paid search campaigns in Google Ads.
For Client 2 (HVAC), we saw better results. While the volume of incoming calls was lower than our regular text ads, and the opportunity rate didn’t significantly differ, the conversion rate to confirmed sales proved to be higher. As a result, with the flat fees paid per call, the average cost per sale ended up being half what it was for our regular text ads.
Based on the results we’ve witnessed, the answer isn’t as clear cut as we had hoped for.
From a call quality perspective, Local Services Ads are definitely worth it. The rate of qualified leads per phone call exceeded that of our standard paid search campaigns and that of several other digital channels.
From a cost perspective, it depends. Paying a higher flat fee per phone call than what we typically see from our other paid search campaigns can be made up for in the end with better call quality and an eventual lower cost per sale. However, if you depend on a specific type of service within your vertical to stay profitable, you may find that the average cost per call ends up being too expensive even with better conversion rates or that the incoming call volume is lower than you want to see any given week.
If you’re a small business advertiser in a service industry with a limited budget, we recommend you give Google Local Services Ads a shot. Chances are your onboarding process will be less strenuous than the examples in this post. There is also more upside than downside given the results we’ve seen, and the potential for better lead quality via phone calls. Be wary, though, that it may not be the miracle answer you’re looking for to make up for all the desired lead volume you want. There will be a limit to how many phone calls you’ll likely be able to acquire during any given week. That’s why, if you do decide to test these ads, do not neglect your other digital channels, including paid search campaigns in Google Ads.
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