Google Ads vs Local Services Ads: Where Contractors Should Spend

Google Ads or Local Services Ads: which one deserves more of your marketing budget? With Google moving Local Services Ads into the Google Ads platform, the two channels are becoming easier to manage in one place, but they still work very differently. In this episode, Caitlyn and Meredith break down the “click meter” versus the “lead meter,” explaining how each channel charges you, what you can control, and where each tends to make the most sense for home improvement contractors.

They also walk through a five-question scorecard to help you decide how to allocate your paid search budget based on factors like job value, call response time, reviews, promotions, and LSA eligibility. Most importantly, they explain why cost per lead can be misleading, and why cost per issued appointment and cost per sold job are better metrics for understanding which channel is actually driving profitable business.

Want to find out how we can create a custom digital marketing game plan for your contractor business? Schedule a call with us at fatcatstrategies.com.

Transcript

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Intro: Welcome to Digital Marketing for Contractors, a podcast for home improvement contractors to help you crush your lead goals and take your business to the next level. Join us each episode as we give you powerful insights and practical tips on the best digital marketing strategies to help you grow your home improvement business. Let's get started.

Caitlyn: Welcome back to Digital Marketing for Contractors. I am Caitlyn Noble.

Meredith: And I'm Meredith Medlin.

Caitlyn: And for about five years now, every contractor I talk to ask me some version of the same question: Should I be running Google Ads, or should I be running local service ads? And they ask it like they're choosing between two buildings on the opposite sides of town.

Meredith: Yeah, two buildings, two front doors, two totally different decisions.

Caitlyn: Right. Well, as of August of this year, it says 2026, Google's started knocking down the wall between them. Local service ads are being moved into the Google Ads platform. The standalone dashboard on, which we call LSA ads, is going away. It is a phased rollout, so some of you listening may have already been moved, and some of you maybe not.

Meredith: And the reaction we've gotten from clients is basically, "Oh, good. The question of which should I

Caitlyn: Mm-hmm

Meredith: just answered itself, right?"

Caitlyn: Eh, kind of. The platforms merged. The decision did not go anywhere. You still have to decide which one your next dollar runs through. And now that they live in the same account, it is easier than ever to move that money around. And for most contractors we work with, paid search is the largest line item in the marketing budget that they can actually control. You cannot control what the manufacturer co-op program funds, you cannot control what referrals do next month, but you can control this.

Meredith: And one housekeeping note before we start. The migration we're talking about is rolling out in waves over the next couple of months next year.

Caitlyn: Mm

Meredith: if you go look at your account today and it looks the same as it always has, that's totally normal. Your turn will be coming soon.

Caitlyn: Ooh. Okay, let us clear the confusion first because I do not want anybody spending this episode worried about the wrong thing. What moved is the management interface. Google is retiring the separate local services ads dashboard and moving those campaigns into Google Ads as a pay-per-lead campaign type. The rollout started with the home services accounts in the United States, and it continues through next year. Google is sending notice by email before an account gets moved.

Meredith: And what did not change is honestly the bigger list. You still pay per qualified lead, not per click. Your ads still show on Google Search and on Maps.

Caitlyn: Mm.

Meredith: Service area targeting is still there. Google Guaranteed eligibility still applies to businesses that qualify for it, and billing was already running through Google Ads before this.

Caitlyn: Yep, exactly. So the way the leads get generated is not changing. Homeowners are not going to notice anything.

Meredith: Correct, which is why my honest take is that this is a convenience for the not a strategy change for the contractor. It's one login instead of

Caitlyn: Yeah

Meredith: you get reporting in one place. That's real, but it's not something that should change what you are selling or how you're planning to sell it.

Caitlyn: Yeah. My brain's already thinking about how we track the two ad budgets.

Meredith: Mm-hmm.

Caitlyn: And it'll be, it'll now have to be between the campaigns.

Meredith: Exactly.

Caitlyn: But anyways, there are a couple of practical things to do, though and they are a little time sensitive. First, if your account has not migrated yet, export your historical performance data. Get it out, and get it somewhere you own. Historical reporting does not always carry over cleanly in a move like this. And if you lose two years of lead, two years of lead history, you have lost your ability to compare year over year. Ugh.

Meredith: So second, sort out the access before it moves. Don't wait until after the fact. Everything is gonna run through the manager account.

Caitlyn: Mm.

Meredith: So make sure that the right people at your company are on it, and the wrong people are off of it. We have walked into more than one situation where the only person with real access was a marketing coordinator who left the company back in

Caitlyn: Ugh

Meredith: or something.

Caitlyn: Yeah. Okay, definitely. That's a good red flag.

Meredith: Just good best practice.

Caitlyn: Third, understand that bidding behaves differently inside the new campaign type. If you had somebody manually managing bids, and this is again back in LSA, those local services ads, that lever is not going to work the way that it used to.

Meredith: And this is the bridge to the whole rest of the episode because both channels now live inside one account. Moving budget from one to the other is gonna be about four clicks. It has never been easier to shift this money around.

Caitlyn: Which makes it more important than ever to know why you are shifting it. All right. So we're gonna get into the bulk of the story called the two meters, is what we're frame, calling this framework. Forget the product names for a minute. What you actually have are two meters, and they charge you for two completely different things. The first one is the click meter. That is your Google Ads search campaigns. They are paying for attention. Every homeowner who clicks your ad costs you money, and it costs you the same, whether they call, fill out a form, or bounce in four seconds because they were looking for a job, not a bathroom.

Meredith: The second one is the lead meter, and that is local services ads. You are paying for contact. You get charged when a homeowner calls you, message you, or books with you.

Caitlyn: The way I put it to clients is this: the click meter charges you for the invitation, the lead meter charges you for the handshake.

Meredith: And the trade you're making is control versus simplicity.

Caitlyn: Mm.

Meredith: On the click meter, you control almost everything: keywords, negative keywords, ad copy, landing pages, your offer, what hours you run, where the traffic lands, and what it sees when it gets there. You're essentially buying a chance to persuade somebody.

Caitlyn: And on the lead meter, you control almost none of that. There are no keywords. There is no landing page because there is no link to your website inside the ad unit at all. What determines whether you show up is your proximity to the searcher, your review profile, and how fast you respond. You are buying position and a badge

Meredith: Which means the levers you pull to improve performance are completely different. On the click meter, you improve results by writing better ads and building better landing pages. On the lead meter, you improve results by getting more reviews and answering your phone faster.

Caitlyn: Okay, let us talk about what a bad month looks like on each one, because they fail differently as well. A bad month on a click meter is expensive traffic that never converts. You spent the money, you got the visitors, nobody called. Ugh.

Meredith: And a bad month on the lead meter is paying for leads you would have never sold anyway.

Caitlyn: Mm.

Meredith: Somebody outside your service area, somebody asking about a product line you don't carry, and then you're in the credit process trying to get that money back from Google.

Caitlyn: Ugh. And that process is largely automated now, which means the answer is not to argue harder or file more disputes.

Meredith: No. The answer lives upstream. Tighten your job type selection, tighten your service area so the wrong lead never gets to you in the first place. You can't out-argue a system, but you can configure it better.

Caitlyn: Yes. Now, here's the part where our audience is different from everybody else this advice gets written for.

Meredith: Yeah, because almost everything published about local service ads is written for emergency trades.

Caitlyn: Mm.

Meredith: I'm talking water in the basement, no heat in January. The homeowner is not comparison shopping. They're calling the first name they see.

Caitlyn: And that is not our buyer. Let us go through where each meter wins. The lead meter is strong whether you are entering a new market or expanding into new ZIP Codes and you need visibility fast. It is strong in trades where homeowners search with real urgency, and in our world, that is mostly roofing and gutters after a storm rolls through.

Meredith: And it's strong for companies that already have a deep recent review profile, and a call center that answers fast.

Caitlyn: Mm.

Meredith: Because responsiveness is literally an input into whether you show up.

Caitlyn: Now, the click meter, and this is where the replacement world separates itself. I have to remind myself, I've got to stop. Lead meter, LSA. Click meter, Google Ads. Okay. Number one, high ticket with high consideration products. So this is back to Google Ads. A homeowner who is about to spend $25,000 on windows is not calling the first result. They want to see your gallery. They want to see your financing options. They want to read your warranty. The lead meter, LSA, does not link to your website, so your single best sales asset never gets in front of them.

Meredith: That is the one that I would underline. Your website is doing sales work for you, and one of these two channels simply does not let it.

Caitlyn: Correct. Number two, promotional offers. Almost every contractor listening runs a monthly or seasonal promo. That offer needs to live on a page. You cannot run a no payments for 12 months offer through that LSA, the lead meter. There's nowhere to put it.

Meredith: And number three, product line control.

Caitlyn: Mm.

Meredith: If you sell baths, but you do not do full kitchen remodels, keywords and negative keywords let you fence that category off with real precision. On the lead meter, you are picking from a list of job types that Google just gives you to choose from.

Caitlyn: Correct, yeah. Okay, number four, brand defense and remarketing only exists on the click meter, AKA Google Ads. We did a whole episode on bidding on your own brand name, so I will not repeat it here, but that capacity lives on one side of this only.

Meredith: And I want to add one more thing on our click meter side, because it is the piece that gets undervalued the most, and that is data.

Caitlyn: Say more.

Meredith: I will. When you run search campaigns, you learn things. You learn which product lines people are actually searching for in your market.

Caitlyn: Mm.

Meredith: You learn what language they use, which is not always the language that you use. You learn what your competitors are bidding on. That intelligence flows back into your SEO, your offers, and honestly, into your sales conversations.

Caitlyn: And the lead meter, which is LSA, gives you almost none of that, which, I mean, for now, like who knows, that could

Meredith: Sure

Caitlyn: now that it's gonna be on the same platform. But you get a lead and a recording. You do not get to see what somebody typed in before they found you. totally change. It could totally change.

Meredith: Yeah. That could change, and also, the fact of the matter is, that doesn't necessarily make it a bad channel. It just makes it a channel that you can't learn from in the same way. And a, for a company that's trying to figure out where do they want to expand next, or which product line to push in the spring, that difference is worth real money.

Caitlyn: One caution in the other direction, though, so we are being fair, the click meter, AKA Google Ads, demands maintenance.

Meredith: Yes.

Caitlyn: If nobody is there weekly adding negative keywords and watching the search terms, it will quietly waste money for months, and the reporting will look busy.

Meredith: Yes, so that lead meter is much more forgiving of neglect. That is legitimate, and that is an advantage for a contractor

Caitlyn: Mm-hmm

Meredith: I

Caitlyn: That's

Meredith: if you don't have a marketing person on staff, or you don't have an agency in place right now.

Caitlyn: 100%. So which is exactly the trade-off. More control means more responsibility for using it.

Meredith: All right, so there's one more thing, and that is the one that decides this for some of you before you even get into the framework, and that is your eligibility.

Caitlyn: Mm. Local services ad categories are trade by trade, they vary by state, and they change.

Meredith: Fun.

Caitlyn: It's, it's so easy. So, so, so simple, and like such a shot in the dark as I... We have, you know, we have amazing clients all over the country, but yeah.

Meredith: Mm-hmm.

Caitlyn: Bath remodeling has its own category now, and it did not always. Some of the product lines our audiences sell have limited coverage or no dedicated category at all.

Meredith: So before you budget a single dollar towards the lead

Caitlyn: Yes

Meredith: go pull up the current eligible categories list for your

Caitlyn: Easy to find

Meredith: and, confirm your primary product lines are actually on it. Sometimes the decision will have already been made for you.

Caitlyn: That's lucky. And, and again, don't, like, settle. Check monthly.

Meredith: Yeah, exactly.

Caitlyn: They're not gonna alert you and say, "Hey, this is now available," but go check.

Meredith: Right. And if you're curious, you get in there and you can't find

Caitlyn: We can

Meredith: shoot us an email. We're happy to help.

Caitlyn: 100%. I think Meredith just volunteered herself for all the help.

Meredith: I think she did. Uh-oh.

Caitlyn: All right. Five questions. Every one of them scores a point towards the meter or a point towards the click meter. Grab a pen but if you're driving, 'cause I know a lot of you

Meredith: Yeah

Caitlyn: as you've told me, and we love you guys for that.

Meredith: Yes.

Caitlyn: Just go back through the show notes. Forward this to somebody. I mean, gosh, you could even probably grab and get this list of questions from you. Okay, Meredith.

Meredith: Exactly.

Caitlyn: Go ahead.

Meredith: Okay. So recapping, lead meter is...

Caitlyn: LSA

Meredith: LSA, and our click meter

Caitlyn: Google Ads

Meredith: Google Ads.

Caitlyn: Right. It's kind of dumb we're calling it those two things, but it helps.

Meredith: Hey.

Caitlyn: Click meter, lead meter. Lead meter, LSA. Click meter, you're paying for

Meredith: Got it Boom. All right, question one on our scorecard. Is your primary product line an eligible local services ads category in your state? If the answer is no, go ahead and stop there. The click meter, AKA Google Ads, takes the whole budget by

Caitlyn: Uh-huh

Meredith: and the rest of this is just academic.

Caitlyn: Perfect. Love that. Question two, what is your average job value? Lower ticket, faster decision, that favors the lead meter. Higher ticket with longer consideration window favors the click meter for the reasons we just walked through.

Meredith: Exactly. All right, question three, how fast is your call center answer?

Caitlyn: Mm.

Meredith: And does that include nights and weekends? If you're under five minutes every single time, that favors the lead meter, or your LSA, because speed is a ranking input there, and you will get rewarded for it. If you're slower than that, or you're a business-hours-only kind of call answering

Caitlyn: Yeah

Meredith: that is gonna favor the click meter. That's where a landing page and a form can really hold onto a lead until somebody at your company can actually get to it.

Caitlyn: That's a great point.

Meredith: Yeah.

Caitlyn: Number four, you... I mean, we cannot avoid this one, and

Meredith: Mm-mm.

Caitlyn: The absolute truth, is how strong is your review profile in the exact service area you want leads from? Not your overall star rating, the reviews in that geography recently. Strong and recent favors the lead meter, LSA. Thin and lopsided favors the click meter, while you can build that up.

Meredith: Exactly. All right, question number five, does your offer strategy depend on monthly or

Caitlyn: Mm

Meredith: promotions? If yes, that is going to favor the click meter, your Google Ads, because the offer needs somewhere to live.

Caitlyn: Okay, y'all, so now how to read it. If you came out four to one or five to zero, you have a clear starting allocation, and you should weight heavily in that direction. If you came out three to two, run both and let the next thing we talk about help you pick your answer.

Meredith: And let's be really clear about this, because we don't want anybody taking this scorecard into a budget meeting and

Caitlyn: Oh

Meredith: it like it's the gospel.

Caitlyn: I... We're I'm gonna... We're gonna have clients calling us, be like, "Lead meter, score meter, da da da da da, click meter." But yeah, no, it is a starting allocation. It's not the final answer. Meredith, I think we should go through those five questions real quick one more time.

Meredith: Yeah, let's do that.

Caitlyn: Okay.

Meredith: Question one.

Caitlyn: Yes.

Meredith: Is your primary product line eligible in the LSA category in your state? If it's not, then let's not even worry about LSA right now. Let's focus on Google Ads.

Caitlyn: Perfect, and remember, y'all can easily find that online if you can't reach out to us. Number two, what is your average job value? If it's a lower ticket, faster decision, lean towards LSA. Higher, longer consideration, like a more expensive job, go towards the click meter.

Meredith: Mm-hmm. Question three, if you have fast answering speed to lead call center I mean, let's consider LSA.

Caitlyn: 100%.

Meredith: If you're slower than that or, you know, you don't have weekends and nights call center answering, let's shoot for Google Search Ads or just Google Ads in general. That way your users can get to a landing page and fill out a form until you can give them a call back.

Caitlyn: Yes, definitely. Okay, question four, reviews, baby. Review, review, review. Do you have reviews in the service areas you are wanting leads from?

Meredith: Mm-hmm.

Caitlyn: If you do not, lean heavily towards Google Ads. If you do, LSA could be your answer.

Meredith: And then question five, if your strategy for your promotional offer, or if your offer strategy leans promotional, heavy on seasonality, let's go for Google Ads, 'cause you're gonna have to have that offer living somewhere like a landing page.

Caitlyn: 100%. Okay, thanks for letting us recap that. I think those were five really good points.

Meredith: Mm-hmm.

Caitlyn: So let's go ahead and get into the number that's gonna settle that argument, especially if you're split in between, like, three to two about where to go.

Meredith: Yeah.

Caitlyn: Most contractors go wrong. It's not their fault when they're trying to decide this, because it is what every dashboard is putting in front of them. Cost per lead, oh, this is very controversial.

Meredith: Mm-hmm.

Caitlyn: Cost per lead is the wrong scoreboard for this comparison between LSA and Google Ads.

Meredith: Yeah, so let's talk a little bit more on that, because I think this is critical.

Caitlyn: Yes. The two meters produce different kinds of leads. One is somebody who tapped a button while, like, they were just on a listing. The other is somebody who read three pages of your site, looked at your gallery, and then called. Comparing those on cost per lead is like comparing two crews on hours worked instead of jobs installed.

Meredith: Okay, so what is the right number to be looking at?

Caitlyn: Cost per issued appointment, and if you can get there, cost per sold job by source.

Meredith: Beautiful. Okay, let's walk the funnel out for everybody.

Caitlyn: Okay, inquiry, appointment set, appointment confirmed, appointment issued, demo, sold. That is a journey, and every one of those steps has a drop-off rate. A channel can absolutely win on cost per inquiry and then lose badly on cost per issued appointment because the set rate is weak or the cancel to prior issue number is ugly.

Meredith: And to measure what you need three things in this place. Hold on, let Run that back, Turbo. And to measure you need three things in place, dynamic number insertion so calls get attributed correctly, clean lead source fields in your CRM, and call center discipline about tagging the source at intake every single time without exception.

Caitlyn: Yes, 100%. And if your CRM cannot tell you your set rate and issued rate by source, this whole debate is unanswerable and you are picking with your gut.

Meredith: Yeah, so let's give an example. And I wanna flag that this is a made-up company. We're gonna call them

Caitlyn: We've used our friends before

Meredith: Exterior. Yeah.

Caitlyn: Mm-hmm.

Meredith: They're fictional composite company that we made up just for this exercise. So these numbers illustrative, and they're not benchmarks that you should take into your own budget meeting.

Caitlyn: Correct.

Meredith: Let's get that clear. So let's say Heritage Exterior ran both meters, our LSA, and Google Ads for a full quarter.

Caitlyn: Okay, three months.

Meredith: The lead meter produced cheaper raw leads.

Caitlyn: Always does.

Meredith: Noticeably cheaper. And the click meter produced fewer leads at a higher cost per inquiry. And on the surface it looked like it might be the loser.

Caitlyn: Then they pulled issued appointments by source out of the CRM.

Meredith: Okay, and then this is basically gonna show you that the click meter leads,

Caitlyn: Google

Meredith: or Google Ads, set and issued at a much higher rate, because those homeowners had already seen the product gallery on the website and the financing page before they ever even called the company. They were further along in the process. Cheaper leads on one

Caitlyn: Mm

Meredith: but more expensive appointments. They shifted money towards their click meter, AKA Google and their cost per issued appointment came down even though the cost per lead went up.

Caitlyn: Which is the whole point. The cheapest lead and the cheapest appointment are almost never the same channel.

Meredith: Exactly. So okay, time for a quick agency horror story.

Caitlyn: Bum,

Meredith: Cue the spooky music.

Caitlyn: I think this is gonna release in... This is probably gonna release in October, so.

Meredith: Ooh.

Caitlyn: Okay. This is a contractor who called us because their lead flow had collapsed. Not softened, collapsed.

Meredith: And what had happened was that about 18 months earlier, they moved their entire paid budget into the lead meter.

Caitlyn: LSA.

Meredith: LSA ads. Somebody put a spreadsheet in front of them, the cost per lead number looked better, and they made a

Caitlyn: Yep

Meredith: in one meeting and said, "Let's put it all into LSA."

Caitlyn: Mm. And along the way, the search campaigns went dark, which meant no brand defense, no remarketing, no traffic going to offer pages, and eventually nobody maintaining the landing pages at all.

Meredith: That literally made my soul leave my body just reading it. Then two things happened at once. Their review velocity slipped because they had a rough stretch on the install side, and a competitor across town got serious about response and started outranking them.

Caitlyn: One crew, one set of ranking inputs, no backstop. When the channel moved against them, there was nothing underneath.

Meredith: And the lesson here is not about which channel is better. This is a concentration risk story. So any time one source owns your entire lead flow, whoever controls that source often controls your business as a whole.

Caitlyn: Mm.

Meredith: And that is true of the lead meter, your LSA. It's also true of the click meter, your Google Ads, and it's true of lead aggregators as well.

Caitlyn: Completely agree. That's a spooky story.

Meredith: spooky.

Caitlyn: So five things y'all can do tomorrow morning, this afternoon. One, find out whether your LSA account has been migrated yet, and if it has not, export your historical performance data this week. I think if it has and you haven't exported your historical

Meredith: What happens?

Caitlyn: I don't know.

Meredith: Good luck. No, I'm just kidding.

Caitlyn: Well, well, I, truly don't know. I'm sure, I, you can... I bet you have a Google support number if you're anyways. But okay, so yes, find out if your LSA account has been migrated yet. If y'all are listening to this, it's probably October 2026. This started to roll out in August of 2026, so yeah, TBD on what to with the historical data.

Meredith: Maybe we'll give you guys an update.

Caitlyn: Yeah. We should give you an update.

Meredith: Yes. All right. Number two, pull up the current eligible categories

Caitlyn: Yes

Meredith: in local service ads and verify that every product line you sell is actually covered in your state.

Caitlyn: Definitely. Number three, run the five question split score card and write down the score. We went through those twice. It takes about 10 minutes.

Meredith: Number four, ask whoever runs your CRM for one report, and that should have set rate, issued rate, and cost per issued appointment by lead

Caitlyn: By lead source, y'all

Meredith: for the last 90 days. If they can't produce this, that is your real project that you need to take on right now.

Caitlyn: And we've just, I think, recorded a 100 episodes about that.

Meredith: At least 101.

Caitlyn: About how to do that as well. And then last but not least five number five, we're going to audit your service area settings and your job type selections on LSA so you stop paying for leads you were never going to sell at all.

Meredith: Mm.

Caitlyn: Okay. Okay, we're gonna recap. I know we kind of went a little wonky and called the lead meter and the click meter, but we know what we're talking about. So there's two meters in this story. Click meter, Google Ads, charges you for attention and hands you the controls. The lead meter, AKA LSA, charges you for contact and takes the controls away.

Meredith: And the number that settles all of

Caitlyn: Mm-hmm

Meredith: is the cost per issued

Caitlyn: Hallelujah

Meredith: not your cost per lead.

Caitlyn: If you want help figuring out where your next dollar belongs, you absolutely should book a paid ads performance review with us. You can do that right through the discovery call link on our website. And just in the, you know, marketing

Meredith: Mm-hmm

Caitlyn: field, just say, I want some paid ads performance review."

Meredith: Mm-hmm.

Caitlyn: And we will look at both meters inside your account and pull your cost per issued appointment by source and tell you straight up where that money should go.

Meredith: So if you are interested, this sounds good to you, you want some help, go to fatcatstrategies.com.

Caitlyn: Backslash contact-us.

Meredith: Yes. Contact us or, and hear me out, hit the landing page and look for the contact us button.

Caitlyn: weird.

Meredith: Weird.

Caitlyn: We do, we are a marketing agency.

Meredith: We are a marketing agency.

Caitlyn: We do know how to drive leads to our own website. Go to fatcatstrategies.com, y'all, and go to the discovery form.

Meredith: Exactly.

Caitlyn: And if you know a contractor who's having this exact same argument in a sales meeting this week, please send them this episode. It's gonna be a game changer. Thanks y'all for listening. Have a great one.

Outro: Digital marketing for contractors is created by Fat Cat Strategies. For more information, visit fatcatstrategies.com.