If you run a local service business and you search your own category in Google right now, you'll likely see a cluster of listings sitting above everything else on the page. Above the regular Google Ads. Above the map pack. Above organic results. Those are Local Services Ads, and they work differently from every other ad format Google has ever built.
Understanding exactly how they work, and what changed recently, matters before you spend a dollar on them.
The basic model and why it's different
Every other Google ad product charges per click. Someone sees your ad, clicks it, goes to your website, and whether they book or disappear, you already paid. Local Services Ads charge per lead, specifically per call or message about a service you actually offer. A click that goes nowhere costs you nothing. That single difference changes the risk profile of the channel dramatically, and for service businesses where a single booked job often covers a meaningful chunk of monthly ad spend, it's the reason LSAs tend to produce better ROI than traditional search ads when the setup is right.
What changed: one badge, no guarantee
If your information about LSAs is more than a year old, one significant thing has changed. In October 2025, Google retired the Google Guaranteed and Google Screened badges and replaced them with a single unified Google Verified blue checkmark. The formal money-back guarantee that came with Google Guaranteed was discontinued in November 2025.
The badge still matters for trust signals, but the $2,000 consumer protection guarantee no longer exists. Every verified advertiser now shows the same checkmark regardless of industry. If you were advertising based on the "guarantee" as a sales point to customers, that language needs to be updated.
The adoption picture has shifted
In 2021, roughly 28% of contractors in most markets were running LSAs. That number is now around 70%. The channel that used to feel like a competitive edge because most of your competitors weren't on it looks different when most of them are. Lead costs have climbed 40% in competitive markets since 2023, and the dispute process for bad leads, once fast and reliable, now takes longer.
This doesn't mean LSAs aren't worth running. They still put your business above everything else on the page. It means the economics require more scrutiny than they did three years ago, and starting fresh in 2026 means budgeting for three to six months while you accumulate reviews and train the algorithm before expecting positive ROI.
The hidden factor: your phone
Here's the thing most businesses don't realize about LSA rankings. Google's algorithm explicitly measures your responsiveness rate. Businesses that answer calls faster and miss fewer leads rank higher and get charged less per lead over time. The businesses paying the most per lead on LSAs are often the ones with the worst call handling, not the ones in the most competitive markets.
This connects directly to your Google Business Profile too. Since mid-2025, your GBP reviews feed directly into your LSA profile. There's no longer a separate LSA review system. A strong, active Google Business Profile isn't just good for organic visibility. It's load-bearing for your LSA performance.
Whether it makes sense for you
LSAs are available for a specific set of service categories, not every business qualifies, and verification requires background checks, license verification, and insurance confirmation that can take two to four weeks to process.
For businesses in eligible categories with strong reviews, fast call handling, and a service area with enough search volume to justify the spend, LSAs are still one of the highest-ROI channels available. For businesses with thin review counts, slow response times, or tight margins where a single unbooked lead is a real problem, the math is harder.
The right question before signing up isn't "do LSAs work?" They do drive calls. The question is whether your current review count, your call handling speed, and your cost-per-job margin make the unit economics favorable in your specific market right now.