If you own a local business, chances are you’ve experimented with Google Local Services Ads (LSAs). If you haven’t, you really, really should. If you have, you’ve probably seen them deliver great results. For many industries, LSAs can be an incredible lead generator, consistently bringing in phone calls and service requests.
But because the platform is so inordinately simple to use, it creates a dangerous temptation: the classic “set it and forget it” mentality. It works so well, just let it do its thing!
In a recent episode of Let’s Talk Shop, Matthew Ulmer sat down with Laura Jo Sharpe, Arc Intermedia’s Director of Paid Advertising, to unpack why treating LSAs as a passive marketing channel is costing businesses money—and how to add a level of scrutiny that turns LSA “leads” into actual revenue.
The Illusion of Simplicity
When you run Meta ads or traditional Google Search ads, there’s an inherent level of built-in skepticism. Marketers regularly audit these channels, asking tough questions like:
- How many of these leads are actually prospective buyers?
- How many searchers were looking for branded terms versus non-branded terms?
- Is our cost-per-acquisition scaling efficiently?
With LSAs, however, that scrutiny seems to too often go out the window. The platform operates on a pay-per-lead model, giving businesses the illusion of safety. The logic seems airtight: Google is only charging me when a lead comes in, so every dollar spent must be working.
Unfortunately, that is not how it plays out in reality.
We’ve found too many businesses and agencies simply checking at the end of the month, seeing that they received 50, 100, 200 leads from LSAs, and calling it a win without looking deeper. But if you aren’t actively managing those leads, you are likely overpaying for wasted interactions. There is a very dirty little secret about LSA.
The Reality of Wasted Spend
Here is a common scenario:
- Someone clicks your LSA and calls your office.
- The phone rings, but nobody answers.
- The caller hangs up after 12 seconds.
Even though no conversation took place and no business was won, Google may still call that a lead and charge you a premium for it, sometimes $75 or more, because a call was placed and an exchange occurred (even though the exchange was with an answering machine and a dial tone).
The key is that you can dispute bad leads and spam. And you must! it is critical that you assess every lead from LSA. Just please note that Google won’t always grant you a refund. Because of this, it is also critical to build a margin for waste directly into your budget. Your actual cost-per-lead (CPL) is likely higher than what the dashboard tells you on first glance.
How to Bring Active Management to Your LSAs
So, should you stop using LSAs? Absolutely not. LSAs remain an indispensable tool for local businesses. The goal isn’t to abandon the channel, but to apply the same vigilance to it that you would to any other paid media campaign.
To maximize your LSA performance, make sure you or your marketing agency are executing these steps:
Review and Count Every Lead: Don’t just trust the aggregate dashboard numbers. Log into the platform and look at every single interaction to confirm whether it was a legitimate lead.
Rate Your Leads (the Good and the Bad): LSAs rely on machine learning to optimize delivery. You need to actively rate your leads inside the system. Flagging when a lead is bad helps stop the bleeding, but rating a lead as good is just as important, since it trains Google’s system to understand exactly what your ideal customer looks like so it can find more of them over time.
Build Waste into Your CPL Calculations: Always assume that a portion of your LSA budget will go toward un-refundable, low-quality calls. Factoring this fat into your marketing plan ensures your real-world ROI numbers remain accurate.
LSAs are a fantastic asset for local growth, but they don’t run on autopilot. By keeping a close eye on what the platform considers a “lead,” you can stop throwing away ad spend and start driving true, measurable business growth.
Please watch the video to hear LJ explain this much, much more interestingly. And please contact Arc Intermedia if you’d like to talk to LJ directly about how she would handle your digital marketing needs.
