Google Local Services Ads: what contractors are actually paying for

What Google Local Services Ads are, and what you are billed for

Google Local Services Ads (LSA) are the listings with a badge, a star rating and a phone number that show at the top of Google for searches like "roofer near me" or "AC repair". Google's own description of the billing is the reason contractors like them: you pay when a customer gets in touch from the ad, not when someone clicks.

The important detail is what Google counts as "getting in touch". Per the Local Services help center, a phone lead is charged when someone at your business speaks with the caller, and a missed call is charged if the caller stays on the line for more than 20 seconds during your business hours, whether or not they leave a voicemail. Any text or email from the customer is a valid lead. In the US and Canada, a booking request is a lead too.

Two consequences that change how you run it:

• Your phone coverage is part of your cost. A missed call during business hours can be billed exactly like an answered one. If the office lets calls ring out at lunch, you are paying for leads you never spoke to.
• Repeat contact is free for a while. Once a lead is charged, follow-up calls or messages from the same number or email are not charged again as long as there is interaction within 15 days. After 15 days of silence, the next contact can be a new charged lead.

The business hours Google uses are the ones on your Google Business Profile. If your LSA ad schedule differs, unanswered calls are only charged when they fall inside both. Keep those hours honest.

Google Guaranteed and Google Screened are gone: the Google Verified badge

Most contractors still search for "Google Guaranteed" because that was the badge on home-services ads for years, with "Google Screened" for professional services. Google announced in August 2025 that starting in October it would unify all Local Services Ads badges into a single Google Verified badge, replacing Google Guaranteed, Google Screened, License Verified by Google and the Money Back Guarantee.

What that means in practice, per the Local Services help center:

• Existing advertisers who had completed verification received the new badge automatically. No action was required.
• New advertisers have to complete Local Services screening and verification before the badge appears.
• The money-back guarantee tied to the old Google Guarantee badge was discontinued. Consumer reimbursement requests applied to services before December 7, 2025.
• Google states that LSA ranking is not affected by the badge change.

If a vendor is still selling you "getting Google Guaranteed" as a separate deliverable, ask what exactly they mean. The badge is now the output of passing verification, nothing more and nothing less. And if your own site or sales material still promises homeowners that Google will reimburse them, take that line down: the guarantee behind it no longer exists.

How Local Services Ads rank, according to Google

Google publishes the inputs. It does not publish the weights, so treat anyone who claims to know the exact formula with caution. The help center describes an auction that considers:

Notice how much of that list is operations, not advertising. Responsiveness, response time, reviews and verification are things your office controls. The bid is the only input that is purely money, and it is the one most owners try to fix first.

Google also says on its reviews page that star rating and number of reviews affect how you rank inside LSA. The ordinary way to grow both is to ask every completed job for a review, the same way for every customer, without filtering who gets asked. Our note on the FTC's fake reviews rule covers what not to do.

Bidding, budgets and lead credits

LSA offers three bidding modes: Maximize leads (automated, and the one Google recommends), Target cost per lead, and Max per lead, where you set the most you will pay for a single lead. Google's guidance mentions a minimum of about 10 leads per week for the automated mode to work well, and roughly two weeks for results to settle while the model learns.

If your market cannot produce ten leads a week in a category, automated bidding has little to learn from. That is a reason to start with Max per lead, set from your own numbers. The cost per lead calculator gives you that ceiling from job value, margin and close rate.

Credits are now mostly automatic. Google assesses leads when they arrive and does not charge for ones it judges invalid. Charged leads are re-assessed later, and ones its models judge low quality can be credited back to your balance, generally within 30 days. The original charge still appears on the invoice; the credit shows separately.

One change matters more than the rest: Google no longer credits leads for "job type not serviced" or "geo not serviced". If your profile says you do gutter work and you do not, every gutter call is yours to pay for. The fix is upstream: tighten job types and service areas so those leads never arrive. You can still rate leads in the lead inbox feedback survey, and there is a separate process for disputing charges.

Local Services Ads vs Google Ads: when each one wins

LSA and Search ads are not rivals; they answer different questions. Here is the honest comparison.

Where LSA tends to fit: urgent, phone-first jobs where the homeowner wants someone now and does not want to read a website. Google lists categories such as HVAC, Roofers and Water damage services in the US. An AC that stopped working or water on the floor is that kind of search.

Where Search tends to fit better: high-ticket, considered jobs where your page does real selling (a full roof replacement, a system replacement with financing), and work that has no clean LSA category. For a restoration firm, fire, smoke and mould work have no category of their own on Google's US list, so those terms are a Search job. Search also lets you add negatives and exclude the queries you never want to pay for, which LSA cannot do at the same depth.

For most contractors over $1M the answer is both, with each one reported separately. The mistake is letting them blend into one "Google" line in the P&L, because then nobody knows which one is earning its budget. Our checklist for auditing your own Google Ads is the Search side of this.

Own the data alongside it

LSA leads arrive in Google's lead inbox through a tracking number that forwards to your phone. That is convenient and it is also a trap: if the inbox is the only place the lead exists, you cannot connect it to revenue, and Google's reports stop at the lead.

A simple routine closes the gap:

1. Every LSA lead goes into your CRM the same day, with source = LSA and the job type. Manual is fine at low volume; do not let it depend on memory.
2. Record the outcome: booked, estimate given, sold, lost, and the job value if sold.
3. Reconcile weekly: charged leads in the LSA inbox against leads in the CRM, and note any credits received. Gaps here usually mean calls that were charged and never logged.
4. Report cost per sold job, not cost per lead. LSA can look cheap per lead and still lose against Search per signed job, or the other way round. The arithmetic is in cost per lead is not cost per acquisition.
5. Measure pickup. Because missed calls can be charged and can hurt ranking, the share of LSA calls answered live is a number worth putting on the weekly report. See what slow pickup costs.

Do that for a quarter and the "should we spend more on LSA" question answers itself with your own numbers.