Google Just Changed Local Services Ads (Here's What Contractors Need to Know)

Google changing their LSAs again, but like kind of in like a big way. They're like basically turning it into ChatGPT, and then that old system's gone. Like the results will be like answer-driven and not search-driven anymore.

US home service verticals are all coming in in August.

Like Google only spends like $5,000 no matter what I do. If it runs like Google Ads, like I see that as like a big upcoming— like ad budgets get fucked really quick.

If you start seeing a drop in leads, first place you should go look is your LSA.

What should I be looking out for?

Yeah, so one is Welcome back to Owned and Operated, a top 150 business podcast.

I'm your host, John Wilson, and on this show we talk about home service companies and how to build them. A lot of it's, uh, me talking about my own home service company here in Ohio, Indiana, and Tennessee, but we also bring our friends on and we talk about things they're trying in their business, we talk about acquisitions and a ton more, so make sure you sub. Today I'm joined by my good friend Sam Preston, the CEO of Service Scalers, and we're talking about kind of like a weird thing that seems to be happening right now, which is Google changing their LSAs again, but like kind of in like a big way. They've definitely been sending updates, but like they're just yeeting LSAs straight into PPC is what it sounds like. So I wanna, I'm trying to figure out like how should I be thinking about this as a contractor? Welcome to the show.

Yeah, you should be thinking about this. This is a big change, specifically if you're already running LSA. Yeah, but also if you've not run LSA, I think this is— there's gonna be a ton of people that are not paying attention. They're not going to see this. Uh, each account's going to get 14 days. Uh, they're gonna get 14-day emails notifying them, a 7-day reminder, and then that old system's gone. It's all gonna be moved over to PMax. Uh, inside of Google Ads. And, uh, so if you haven't been running LSA, this might be a good opportunity to jump in and play around with it. Um, because I think there's going to be a lot of people that are not paying attention and suddenly their LSA is just not working as well.

Okay, so can you like, yeah, explain to me what is happening? Yeah, like, is it a— so effectively, is it going to be PP— is LSA just like PPC now? Or is it an LSA function inside the Google Ads platform? Because I feel like that's— those are 2 really big distinctions.

It's a big one. And for now, they are just moving the platform, not the product. So there will be some different changes and we can— we will go through that. But effectively right now is you're able to log into your LSA account and that's where you do your LSA activities to drive leads through that. This is a platform that hasn't changed all that much. They've done some tests, right? Like they allowed you to rate your leads and things like that. They're always testing different things, but now they are pooling that system inside of Google Ads where you can run now PMax campaigns.

Yeah.

LSA style.

So you're gonna run PSA or PMax LSAs?

Yeah.

And PMax, I think, is what stands for Performance Max, right? So basically like automates your budget to maximize either number of leads or cost per lead or whatever output you're aiming for.

Yeah, I mean, the— what PMax was really good at is putting your ad everywhere. So whether you're running a search campaign, a YouTube campaign, Uh, like if you go to, uh, the New York Times and you see like a little ad that's in the corner of that, that's usually put there by something like a Performance Max, uh, campaign. Uh, it gives you very low cost per clicks to, um, and traffic to your site. The leads generally weren't as strong as just a straight-up search campaign. Um, and then last year we really were trying to move away from that. So we tested it last year and PMax really wasn't working very well, so we moved away from that. We really primarily search throughout all of our, uh, campaigns. This year we're testing it out more and starting to see more success. Uh, yeah, what's funny is like since, since PMax can put that ad anywhere, the, the primary channel that was working inside of PMax was still search, and we're just starting to see that. So that's, that's a big change that we're already seeing is Performance Max is starting to work better, and now it makes a lot more sense that Because I think it's Google has been like preferring that channel or that, that type of campaign. So now they're moving LSA inside of it. It's still going to be a pay-per-lead model. So it won't be pay-per-click for now. I'd be surprised if that stays forever. I think Google makes way too much money on their pay-per-click model. And I think this is part of why they're doing it. I think the other thing is this merges all the paid, um, uh, products that they have in one account. And Google Ads has an API that you can hook into, um, whereas, uh, LSA did not have that. It was—

LSA doesn't.

Yeah, your PMax campaign.

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Click the link below to get started. Yeah, I wonder if this is like— it reminds me a little bit of— they're, they're doing— they're combining Google Search or— sorry, they're making Google Search like— I don't even know how to describe it. They're like basically turning it into ChatGPT. Like the results will be like answer-driven and not search-driven anymore. And I was wondering how they were gonna do LSA, but like, this makes more sense because they are driving their like ads into it and like LSA is just a part of that, which I feel like that makes a lot more sense. But I think that change is going live this fall. Like they're basically sunsetting like the Google search that we've known for 20 years and it's just becoming like an answer.

No, no, not this fall. August. Oh, August. Okay. US home service verticals— plumbing, HVAC, electrical, appliance repair, house cleaning, lawn care, roofing, pest control, and moving LSAs— are all coming in in August. And then later in 2026, uh, other types of services. Like, they're pushing it.

That's kind of wild.

And I, I think it is, uh, to what you've said, is I think they're moving more to the AI mode. And so that is like one of that first steps because they are going to want to run ads through there.

Yeah, totally. No, that makes, that makes total sense. Yeah, that's, that's really wild. I, I just want to understand, like, I would love to hear— I feel like LSA changed the game for home service. It made getting leads easier for for everyone for a while. And like, people still do it. It's like a high, it's like one of the best lead sources out there. And I think I would just be fascinated to know like what percentage of, I'm just gonna Google it. But how much do they make from LSA versus PPC?

That's a great, while you're searching for that.

Because it feels like they keep treating it like sort of like a stepchild, but it has to be, Like very valuable to them? No one knows. Okay.

My hunch is that they make more at PPC and that's one of the reasons why they're making this move. But there is gonna be a lot that stays the same. So right now—

Yeah, walk me through it. Now I'm Googling like Google's revenue mix.

Get it. So top of search and maps placements, same position. So like, okay, what they're saying is when you search for plumber near me, that first section is still going to be LSA. Your Google Verified and Google Guaranteed badge should carry over.

Okay.

It's still going to be keywordless targeting. It's still going to be a pay-per-lead model, not a pay-per-click. Uh, your lead history should transfer over to the lead manager, um, and then disputes should still work. Um, it's just, it should be the same, uh, mechanic, new location. Um, I am interested to know because they didn't mention this, but like, how will listening to those phone calls work? Will it still be the same system?

Mm-hmm.

Um, and so that'll be, that'll be super interesting.

Yeah, no, that will be really interesting. There's a couple changes here too. I've got some notes.

Yeah. Yeah.

This, like, what are the big, what are the big changes? What should I be looking out for?

Yeah. So one is setting your budget. So it's going to go from weekly to daily.

Um, okay. Which, and that's, I feel like that's how Meta and Google Ads worked anyways. Right.

Yeah. Um, and so it's, it's, it's important to know that because one of the things that'll happen and we had this issue with LSA, cause you set for weekly and you would just use all your budget early on in the week, you might have this same issue with daily budget is where you'll get a daily allotment. Let's say it's like $50 and you spend all $50 of those dollars at 8 a.m. Well, that means you're not getting any of the leads that are coming in between 4 and 7 p.m., which are generally your best leads because people are getting home, finding issues and reaching out.

Yeah.

So like, that's gonna be a thing. You're gonna wanna make sure that's high enough to get through the day. Um, the type of bidding is gonna change. So the old way used to be like a manual, uh, max cost per lead. Um, and now it's gonna be an automated target. Um, they're calling it CPA, but it's effectively the same thing. Uh, cost per lead that's gonna come through. Yeah.

Honestly, I kind of like this.

Same.

I think, I mean, 'cause as I think about switching over to daily budgets and as I think about like using the PPC structure, which I think is what they're saying they're gonna do, like that should work better. I would imagine that would work better than this sort of like the weekly thing always felt a bit odd to me.

This should give you more control. That was always one of my biggest complaints about LSA is like, If I did everything right and it wasn't working, there was nothing else for me to do.

Yeah, whereas like this, if it's on the back of the PPC, like ad system, this would probably fucking kill. And maybe the way to think about it is like, yeah, well, I mean, obviously I don't know, like, so I don't know. The answer is I don't know. Like, I wanna, now I wanna deploy it and like, I kinda wanna try, but I think I'm into it. Yeah, I think I like this.

I agree. So like, one of the things that—

If I come back in 2 weeks just like weeping, you'll know that I did not in fact like it.

Yeah.

Totally wrong. I hated it completely. It was the worst thing ever. And I'm mad at the gods of Google.

We will find out one way or another.

Yeah. Yeah, we will.

So one of the things that's changing is there's going to be campaign-level CPA, or at least this is what they're talking about. So like, Uh, one of the issues with where, uh, in the old system is that you would set your budget and you would say, here are all the services that we're going after, right? Uh, and you would get leads, and sometimes you get a lead, uh, for, uh, very expensive for really cheap service. And again, not a lot that you can do. Now everything's gonna be based off campaign, apparently.

Yeah.

So you'll be able to put your services that you get a better profit, a better average order value in one campaign with a level CPA that you're willing to pay, and then the other ones in a different campaign, again, giving you more control over what actually works. Yeah, I think one of the differences that I'm, you know, interested in seeing is that LSA was one of those things where you could just go to YouTube and figure it out. Like if you were a small contractor—

This definitely complicates LSA.

Yeah. So I remember talking people through it like, here's our exact algorithm, this is what we do, here's our recipe, go do it because you're small enough that you shouldn't hire an agency yet. Go just do it.

Yeah.

And now I am a little nervous about how that will affect people. If you're more tech savvy, I think they're going to make it hopefully easy for you to set up.

Yeah.

PMax, like the setup is definitely more complicated than just like turn it on, get verified. And see how it goes.

I mean, I think one of the other like risks that will probably happen easy is if it's on the back of the PMax structure, which it sounds like we think it is, then most— the issue that most people have with their LSAs is their LSAs don't fully spend. So yeah, that, that issue might go away. where like, hey, suddenly your LSAs do fully spend. 'Cause what most people do, and I think that's why I'm kind of into it, like if it's on the back of like a better search function, like maybe this works. And then, you know, it's a better situation. But most, like I know people that set their weekly budget to $1 million 'cause they're like, we'll never spend it. Like Google only spends like $5 grand no matter what I do. But like, If it runs like Google Ads, like, it might spend it. And I see that as like a big upcoming, like, ad budgets get fucked really quick.

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Well, it's going to be good and bad, right? So for the people that have money and they want to spend, I think you're going to be— it's going to be much easier for you to go like price out the, the competition.

I'm ready to price out some people.

You're willing to spend.

I'm ready.

Someone can only spend $50 on a cost per lead. This is something you've been preaching for years now.

Yeah.

If someone can only pay $50 for a cost per lead, but you're willing to spend $150, like you'll burn through your budget and you'll get those leads where somebody else might not.

Yeah.

Um, so I am curious to see how that, that performs. There are some urgent tasks, right? Again, like it's, uh, we're recording this on July 23rd. This is not going to go out for another week. So like you're pretty close to August, guys. Uh, so yeah, first thing you need to go do is your performance reports do not transfer. Your lead history should, but your performance reports won't. So go into this dashboard and make sure that you're exporting those. Make sure you export your monthly lead volume by category, your cost per lead by category, your total spend, your dispute credit history, your booking ratings. All that's going to go away. Yeah. So Google's own— like the only thing they've said is, uh, that, uh, no action is needed for you.

Okay.

Except for backing up reports. So, yeah.

Um, okay, so if you need— okay, like previous, which, you know, we'll probably need that.

Yeah.

Okay.

So we're doing that for all our clients right now where we're pulling out all that data.

Oh, nice.

And all that performance.

That's sweet.

Because we want to be ahead of that.

Yeah, yeah, yeah, yeah. I do wonder how, um, I do wonder how, like, I feel like this is the second time they've like shuffled the LSA around because I feel like a year ago they were like, hey, LSA is now GBP, um, and now they're like pulling it from the GBP. It'll be really interesting to see like how that, how that interaction works because they became the same thing and now they're divorcing it.

Yeah, I remember we used to have the review strategy of like you want to send that review specifically to your LSA reviews, not your GBP, because there are 2 different places and they became one. So it didn't matter where you sent it. That will still be super important. So one of, you know, one of your checklist items that you should be doing is auditing your GBP for NAP consistency, name, address, phone number. So name, address, hours, phone, make sure everything is set correctly because you will still be using GBP as a profile for how you're running your LSA ads. I don't know exactly how that'll work. That's just what we're seeing inside of Google. So if I give you a checklist real quick of things that you should be doing right now is one, go export all your historical reports now to audit your GBP. 3, decide on the campaign structure before.

I'm writing these down. I'm over here like, let's go.

Good, good, good. Uh, ServiceScale also wrote a blog on this, so.

Oh, nice.

I don't know if we can put that in the show notes, maybe.

Yeah, yeah, no, we can like toss a link to that. That'd be sweet. I mean, I think this is a big deal that everybody needs to be like pretty thoughtful about. 'Cause I think LSA has, as I think about the big challenges, I've already, I've already said them, but like the big things I'm thinking about are We've always overestimated our weekly budget because LSA never spends it. Now it might. So like, that's a big deal.

Yeah.

Performance could hypothetically go up or just be unchanged, or I guess go down. But like, if it's on top of PMax, I'm actually kind of excited about that. And then really need to audit our GBPs. So like, all that to say, like, this feels like a big deal. Yeah, we'll toss that link in our show notes. And like in the description below, if you're watching on YouTube and you can check it out. That's good. That's good.

A couple of other things that you need to do is you need to rewrite your callouts. So your BBB callout will not transfer. It was on LSA. It will not transfer over to the Google PMax. And then prep like 6 other callouts. So things like, think like your license and insured, 24/7 emergency, Free estimates, same day.

Yeah.

Financing, family veteran owned, things like that as a callout. Make sure you get those down. And then I think you need to be in the mindset of a weekly or 2-week window of monitoring after the switch. So just make sure that you're in it. If you're working with an agency, make sure they're in it and giving you a report on what's going on.

Yeah.

And just like Know that this is happening. If you start seeing a drop in leads suddenly, first place you should go look is your LSA, you know. So this is a big deal. This is a massive migration. So you just— you don't know how these are going to go. It could be nice.

It's just going to happen. Yeah.

Fumble the bag.

So yeah. So maybe the big thing to be thinking about over the next couple of weeks is like, do you have a backup lead source in case something goes shitty? Yeah.

Yeah. I even had 2 different sales calls this last week where I specifically would not sell them LSA. I was like, I'm not going to like start an account for you if in 2 weeks it's going to be completely different. Let's talk in 2 weeks.

Yeah.

And so we're like paused on selling that service until we get past the next couple of weeks and then we'll be back.

Well, I think that makes sense. I think we're definitely like in an observation period of like what's going to happen? How's it work? Okay.

Yeah.

This was good. I've got a lot to like go talk to my marketing team about. This is good. This is good.

Let's go.

Okay, so like biggest takeaways. I feel like we talked about the biggest risks. Seems like an opportunity. And like if you migrated tomorrow, the big things are gonna be like get your records, audit your profile, Um, update your callouts, which— yeah, and that's like, you know, family-owned and operated, insured, licensed. Um, verify like where the leads go. So like check the phone numbers because LSAs are like attached to specific phone numbers for us. Yeah, dude, this is gonna be kind of messy. This is gonna be messy.

Yeah.

I bet this will be rough, and it's just gonna happen with no warning, right? Like, it'll— like one day we'll just wake up and we migrated.

Yeah.

Yeah.

And they should give you a 14-day window with a 7-day warning. But, you know, you just need to be prepared if you're, if you're running other ad platforms, do it. The other thing, if you, if you're running a PPC campaign account right now, I would highly recommend starting PMax, you know, if you don't already have one in there.

Yeah.

I think it'll matter. You know, like we want to start getting conversion data inside those conversion events. I think it's helpful. We're running them anyways and feeling pretty strong. Like those are, those are being helpful. So highly recommend if you have the budget, start running those anyways. It might help you in that transfer. Yeah. And I don't think it'll be I think it will be one of those things that is messy. I think things will happen. I don't think it'll all be bad. I think some people will come after this and go like, I had a great August because this switch happened and I covered a lot more ground than I usually get from out of sight.

Yeah. No, that's really interesting.

Awesome.

Well, man, this was good. This feels like we covered some good stuff. I feel like I've got some notes here. I loved it.

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I was going to say, I do actually have some data points that might give us insight into one of the reasons why they're moving over here. Uh, we don't know exactly, uh, how much revenue they're making, but the average LSA cost per lead is $53. The average PPC in comparison is $149 for non-branded leads. So it's almost 3 times more expensive to get a PPC lead than an LSA.

Yeah, that's interesting.

Now, again, the LSA is blended, so we'll have branded—

Yeah, locksmiths at $5 and Yeah.

Yeah. And so maybe the lead quality is not nearly as good. So there might be some stuff there, but the average return on investment was a 7.84 for LSA. And we found that from Searchlight because they have all the data where they connect stuff. It's great, which I don't actually have that for PPC, which is super interesting. So it'll be interesting, man, uh, to see how this change shakes out.

Yeah. So you basically think they're like tripling revenue, like for this segment anyways. That's fucking cute. I wish I could just do that.

Uh, you know, just, yeah.

Click a button.

It'd be nice if we had the type of monopoly, you know, just a little, little own the market.

Yeah, yeah, that is, that is, that is crazy. That's crazy. Awesome. And any other quick hits on this?

Nope. Just be prepared. It's coming for you. And you'll be okay. We'll make it through.

We'll make it through. Thanks for coming on today. I appreciate it.

I think for you, John.

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