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The word "Google" spelled out with two dollar signs in the middle of each "o" in Google.

How Google Local Services Ads Steal Traffic & Line Google’s Pockets

Google Local Services Ads have become an effective lead generation tool available to the modern-day advertiser. What started as a beta test in the San Francisco area in 2015 has now massively expanded across eleven countries and is now available to over twenty industries and counting, from DUI lawyers to junk removal companies.

But lately, Google Local Services Ads have sparked some controversy in the world of search engine marketing.

What Are Google Local Services Ads?

Google Local Services Ads are advertisements that appear at the very top of the search engine results page (SERP) on Google when you search for a service provider. If the service you’re looking for is available locally, Google Local Services Ads will appear & display the profiles of each available service provider. Local Services Ads appear in a holistic format that allows the company to display its company name, address, contact number, reviews, and ratings alongside their operating hours. 

A benefit to using Google Local Services Ads for businesses is its pay-per-lead structure. This means you only pay each time a customer gets in contact with your business through a Local Services Ad posted; moreover, if the lead turns out to be spam or just plain useless, you can dispute the lead with Google and, if they approve it, they’ll reimburse you for it. Additionally, since Local Services Ads are placed above text ads, the lead generation possibilities are greater than with regular expanded text or responsive search ads, especially with the notorious Google Guarantee badge.

How Google Local Services Ads Steal Clicks

Google must verify and background-check your business before you can launch Google Local Services Ads. This also includes a license and insurance check. Google prioritizes the user experience with their Local Services Ads and wants potential customers to know that you’re the real deal before they contact you. 

This screening process can take up to five weeks for some businesses, depending upon the industry. Once you pass the Google screening process, a radiant, green badge will display next to your Local Services Ads that screams, “Click me!” You can imagine what this does to the lowly Expanded Text Ads and organic search results that sit beneath them.

The ultimate benefit of having this radiant, green badge next to your Google Local Services Ads is the reimbursement potential that Google provides customers of yours who perhaps aren’t happy with the work you’ve provided them, lowering upfront risk on the customer’s end. Google maintains “absolute and sole discretion” over this and may reimburse up to $2,000 worth of spend to each customer of yours located in the United States, subject to a lifetime limit. Google also offers this reimbursement potential to customers located in other countries, such as Ireland, Spain, France, and more.

The ultimate downside, however, to Google Local Services Ads that especially feature a Google Guaranteed badge is how they affect your existing Google search ads. Businesses that utilize both traditional search ads and Google Local Services Ads will more than likely notice a few major performance discrepancies between the two.

Google Local Services Ads Can Easily Raise Your Cost per Conversion

You’re solely bidding on lead generation with Google Local Services Ads. You have no absolute control over how much Google may pay per lead. You only have control over your average weekly spend and monthly maximum spend. With traditional search ads, users can manually bid on clicks and set their maximum cost per click as low as they’d like. While this may affect performance, you retain total control over costs as well as total creative control.

With Local Services Ads, while they may automatically appear with rich data snippets that are still valuable, there are no headlines nor descriptions to be written and both are still today massively important components of any advertisement.  Google plays this off by telling you that “you will never exceed your monthly max.” While that may be true, how well your monthly max is spent is entirely up to Google in a very similar way to automatic bidding strategies for traditional search ads. For instance, your monthly max may only bring you 2 leads that cost you $200 each; you have no way of strategically spending your ad budget like you do with traditional search ads to turn those 2 leads into a possible 10 or 20.

Traditional Google Search Ads May Not Appear at All If Local Services Ads Can Serve

Search Engine Land pointed out in a very recent study that, sometimes, Google Local Services Ads take precedence over traditional search ads. Check out the picture below of a search query I ran for “personal injury lawyer.” Here, we see only two traditional search ads show up underneath the Local Services Ads:

A picture of a Google Search Engine Results Page for the query "personal injury lawyer"; Google Local Services Ads are shown at the top while two regular Google Search Ads are shown right below them.

Now, take a look at this other picture I took of the same search query just three refreshes later:

A Google Search Engine Results Page (SERP) showing three Local Services Ads at the top and no traditional Google search ads underneath; all that we see underneath them are organic map listings & search results.

Why is this a big deal? It places even more control over your advertising in the hands of Google. As PPC advertisers, we should prioritize understanding how the mediums that serve our advertisements work so that we can retain as much control over our ad spend as possible. An algorithm will never be able to replace the significance of the human touch.

Google Local Services Ads function like an automated bidding strategy on steroids. It’s important that I drive this point home with as many people as possible because of the merciless money trap that is Google Ads automated bidding. Advertisers who use manual bidding strategies with their Google search ads take profits away from Google by restraining their spending; advertisers who do the opposite and rely on automated bidding strategies give money away to Google by placing their spend entirely in the hands of the company that profits from it. Google Local Services Ads function in the same way: While you can control your “monthly max,” you have absolutely no way of telling Google how much you want to spend per lead, therefore greatly reducing any strategic possibilities of generating leads at a lower cost per acquisition.

The Oxymoron That Is Google Ads Support

Google likes to frame its instructions in odd, sales-y ways. They tell you that they have your best interests in mind as a PPC advertiser. But, when you really stop to think about that, how can that possibly be the case? Do you really believe that one of the largest digital monopolies in the world actually cares about saving you money?

We as PPC advertisers pay Google for their “billboard space,” but, largely speaking, Google has the best billboard space in town. They’ll never have to worry about generating enough ad revenue to cover their expenses; when most digital marketers think of search engine ads, they think Google Ads.

Google knows this and continuously frames their advertising products in ways that take advantage of newcomers, saying, “Oh, whoops! Our bad,” as they wink at you and walk away with your money. They use fancy, ambiguous phrasing like “auction-time signals” and “portfolio Target CPA bid strategy” when talking about automated bidding to try and convince you that only they know how to do what you’re trying to do. 

And the whole thing about Google’s machine learning algorithms for PPC ads? Forget about it. Trusting that is like buying a house from someone who won’t tell you how or when it was built. At the very least, you’d want to know if the house you’re about to move into was safe. Retain as much manual control as you possibly can and protect your ad spend.

If you were to run a Google search right now for something like, “How to write the best Google search ads,” you’d want to stay away from the instructions that Google publishes and turn to the instructions that your fellow peers publish instead. 

This is very counterintuitive and perhaps not what you’d expect from a large company that’s supposed to be a digital role model, but it’s the unfortunate reality of search engine advertising.

Some Notable Google Local Services Ad Industries

Some industries that currently have Local Services Ads available to them now include:

  • Lawyers
  • Carpenters
  • Commercial Cleaning Services
  • House Repair Services
  • Electricians
  • Event Planning Services
  • Financial Services
  • Junk Removal Services
  • Movers
  • Photographers
  • Plumbers
  • Real Estate Services
  • Tax Services
  • Videographers

Google is working on rolling out its Local Services Ads to more industries.

How Do Google Local Services Ads Negatively Impact Organic Search Results?

Local Services ads have undeniably modified advertising strategies for businesses, but they have also altered the frequency with which all other components on SERPs are clicked. When Local Services Ads are present, organic search results see a decrease of 44% in the number of clicks they receive.

This steep drop can be explained in the relative positioning of both Local Services Ads and organic search results. The former is placed above the latter on the SERP; users don’t have to scroll down to see Google Local Services Ads. This is all the more prominent when users are using a mobile device. As a result, it’s not surprising that Local Services Ads are steering traffic away from organic search results. 

How Much Money Is Google Making from All This?

Google offers many types of space and time for advertisers to buy with Local Services Ads, Google Search Ads, etc. Google’s parent company, Alphabet Inc., had the highest net reach in the United States in 2019. Due to this immense amount of reach, Google makes most of its money with its advertising.

In Q3 2020, Google’s total revenue was $46.2 billion, 80% of which was generated by advertising. In nominal terms, revenue from advertisements totaled up to $37.09 billion. This was a sweeping 9.8% increase from Q3 2019. 

So, Google is more than happy to take your money and your American Dream. How do you beat this? You sign up with a digital marketing company that knows how to play the game. 

Successfully Navigate the Google Monopoly with Boomtown Internet Group

Contact us today and we’ll show you, step by step, how you can successfully navigate the new world of digital marketing that Google has created. 

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