6 Reasons Google Local Services Ads (LSAs) are a Racket in Real Estate

Earlier this year, Google started testing something truly awful: In the middle of my wife's Google Business Profile, they inserted the Local Services Ads (LSAs) of 10 other real estate agents. It was kinda like the digital equivalent of other agents standing outside your open house, handing out business cards.

As 2024 comes to an end, I'm no longer seeing these ads in my wife's GBP...but it was a good reminder of my ongoing frustrations with LSAs. So if you'll indulge me today, here are six things that make me call LSAs a racket.

1. Direct Business Search

Do you remember this? It's a setting in your LSA profile right now. Go to the "Profile and budget" tab, and you should see this:

If you have that turned on, Google will insert your LSA at the top of the search results when someone searches for you by name. Your website should already show up at the top for a search like that, and you should get that click for free. But Google wants to dupe you into paying for a click that should be free. So, please, turn that setting off.

Why would Google do this? Because they need more $$$ and want to charge you for branded searches. 😡 At least it's optional.

2. Lead costs are unclear.

If you're spending money on ads, it's nice to know what to expect a lead to cost. For our business, LSA leads have cost as little as $8-10, and as much as $50-60. It's probably different for you because Google doesn't really give any clarity about what a lead will cost:

Lead prices may vary depending on your location, the job type, the type of lead, or your bidding mode, but each lead received will count towards your budget.

To Google's credit, the LSA system does a good job of honoring your monthly budget -- at least it did back in the day when we regularly got leads. But now, it seems that no matter how high we set our monthly budget, leads are few and far between. That's because...

3. There are too many advertisers.

LSAs were great if you got in at the start when there weren't a ton of agents advertising. Then Google signed on "partner affiliates" like HomeSnap, who resold LSAs to thousands of agents and contributed to the glut we have today.

Google itself makes matters worse by encouraging advertisers to run ads outside their primary markets. Every time I log in to our LSA dashboard, I get a message like this:

You've probably seen a similar message in your dashboard.

Each of those towns/cities is a good hour away, and outside where Cari does business, so we don't want to run ads to people there. But other agents don't seem to care where their ads run, and...

4. Google no longer enforces "proximity" as a ranking factor for LSAs.

It used to be that Google would only show Local Services Ads to local customers. That's the whole idea of "local," isn't it? It's in the name of the advertising product.

But it's not in the rankings anymore. Earlier this year, Google removed "proximity" as one of the factors that affect LSA rankings.

The result? In our market, you get things like this:

Neither of those is a local real estate agent. They work in very different markets from ours. They may not even be part of our MLS, for all I know. And yet there they are -- the #1 and #2 ranked advertisers.

I did a little digging yesterday, and 40% of the agents whose LSAs rank in the top 20 locally aren't local! Five are from the west side of the state (200-300 miles away), two are from Spokane (~150 miles away), and one seems to be based in Houston, TX. (Part of a national agent finder organization??)

Ridiculous. 🙄

5. Lead quality is often terrible.

Because LSAs are usually the first thing people see when they search, we get contacted by "leads" that aren't really leads. We've had "leads" this year who were trying to sell us property and services. We've had "leads" who were other agents asking questions about the area for a client. We've had "leads" who seemed legit, but ghosted Cari even when she responded within one minute.

Low-quality leads are a problem in other industries, too. I remember Andrew Shotland's plastic surgeon client calling LSAs "a gigantic rip-off" and telling him a few months ago, "The calls that come through are not looking for elective surgery."

Making matters worse...

6. You can't dispute leads anymore.

You used to be able to tell Google, "Hey, this wasn't a real lead. Please don't charge us." And Google was good about not charging you for disputed leads.

You can't do that anymore. Now, you have to trust Google's automated systems to not charge you for all the bad leads that come in. (Given Google's history with automation in GBP verification, reviews, etc., I don't put much trust in their automated systems.)

Cari got a lead a month ago from someone who texted, "I am a first-time home buyer looking for a house no more than 350,000. Looking for a 3bdrm with garage and front and back yard." She replied 30 seconds later, but he disappeared, and the conversation died there. Google charged us, and we can't dispute it. 😡

Len Raleigh, whose agency works with attorneys, points out that Google's automated dispute system won't offer credit for "job type not serviced" and "geo not serviced" ads, so now you have attorneys complaining that they're getting charged for leads in practice areas that they don't do business...and they can't dispute those leads. It sounds like if you get a lead for someone looking for an apartment to rent, but you don't work with renters, you can't dispute the charge for that lead.

All of this is why I say Google LSAs are a racket, especially in real estate.

And yet...

Despite all of the above, we still advertise with Google LSAs. I'm soooo tempted to turn it off. But there's always the hope that the next lead will be legit and turn into a client, isn't there?

Ugh.

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