HVAC Demand Trends: Google LSA Revenue Performance - September 2024
With Year-over-Year Trends
👋 Hey, Jon here! This week, we’re reviewing Google LSA performance for September with new year-over-year data!
Note: This data is from a sample of ~25 businesses across the US. Shout out to Josh Crouch and his team at Relentless Digital, who partnered with us to measure lead-to-revenue from their organic and GLSA management services, enabling us to share these trends with you.
As a refresher, below is a summary of August’s performance:
Spend: -23%
Conversions: -20%
Customer Acquisition Cost: $329.21
ROAS Potential: 15.9x
ROAS Closed: 9.8x
Note that spend on GLSA decreased 23% from August to September.
PS - if you’ve gotten any value from this newsletter over the last 2 1/2 years, I’d greatly appreciate it if you could head over to our fancy new landing page and e-mail me with any feedback you have on my Overview Video. So many of you have now signed up with us to track data like the metrics/trends below for your business, and I am always looking for feedback on how to improve the communication of what we do to contractors like you. I’d be forever grateful for the 2 minutes of your time to do that :)
Unique Leads from GLSA Decreased by 30% From the Prior Month
After three consecutive months of lead growth from Google Local Service Ads (April, May, June), we now have three consecutive months of lead volume decline (July, August, September):
63% increase from March to April
19% increase from April to May
44% increase from May to June
10% decrease from June to July
20% decrease from July to August
30% decrease from August to September
In addition to the decline in lead volume, booked customers (-23%), matched/run customers (-21%), and paying customers (-32%) were all down.
However, the book rate (+6% and match/run rate (+8%) were up, signaling better efficiency with the reduced lead volume.
Looking year-over-year (from a smaller sub-set of contractors who have been live on GLSAs for 1+ year), unique lead volume is down 32%, along with booked customers (-31%), matched/run customers (-31%), and paying customers (-30%).
I’ve been saying it for a while, but Google Local Service Ad performance has been more volatile for the past 1+ year than in the past.
GLSAs generate tremendous revenue volume for some brands at a very efficient rate, but it has been an up-and-down experience for many others.
As we’ll see, ROAS performance was still profitable despite month-over-month and year-over-year top-of-funnel declines.
Still, this data is important to monitor closely for your business to ensure you have proper diversification of ad channels to meet your revenue targets.
Google LSAs Drove a 16x Return on Ad Spend Potential in September
The total revenue opportunity from GLSAs increased by 74% from January to September, with a slight bump from August (15.9x—> 16x).
That means for every $1 spent on GLSA, the contractors in this sample had the opportunity to earn $16.
Given the lead volume, booked customers, matched customers, and paying customers declining from August, this is a strong positive trend.
If you’re thinking, “How could ROAS potential increase when every other metric is in decline?” there are two reasons for this:
(1) Spend declined by 23% - ROAS is a function of spend. Spending $100 makes it really easy to yield a high ROAS, because just one $10,000 installation gives you a 100x return.
Spending $1,000 makes it harder because to get the same 100x, you’d need ten $10,000 installs. Because spend decreased 23%, you’d need 23% less total revenue opportunity to maintain the same ROAS potential as the prior month.
(2) Lead Carry-over—leads that came in late August likely wouldn’t convert to revenue opportunities until September. If I call your business on August 30th, set up my appointment for September 5th, and convert on September 8th, my revenue isn’t recognized until September.
This does tend to even out throughout the year, because late September leads wouldn’t get their revenue recognized until October (and so on), but the trend is more pronounced during shoulder season with sharper lead drop-offs.
Looking year-over-year, however, ROAS potential declined by 25%.
Google LSAs Drove an 8.5x Return on Ad Spend (Closed Revenue) in September
For every $1 spent on Google Local Service Ads in September, $8.50 of closed revenue was generated, a nice (profitable) return all things considered.
LSAs have also bounced back from poor performance to start the year, with a 136% growth in ROAS closed.
However, after peak ROAS closed performance in July, Local Service Ads have been steadily declining (as expected) while we roll into the shoulder season.
Note: ROAS closed remained unchanged year-over-year.
It Cost $252.28 to Acquire a Paying Customer from Google LSAs in September 2024
GLSA customer acquisition cost has been a bit all over the place in 2024.
Yes, we saw expected declines leading up to the summer months, but the peak in April was surprising, and even more unexpected (although pleasant) is that CAC declined noticeably from August to September ($77 less expensive).
Customers also spent 32% less month-over-month, which negated the less expensive customer acquisition costs.
However, it was 17% less expensive year-over-year to acquire a paying customer from Google Local Service Ads:
CAC is a valuable metric for any advertising channel, but it is essential to pair that data with average tickets and overall revenue volume.
It’s more difficult to “dial up” GLSAs through budget increases/strategy, so it can be challenging to act on less expensive paying customers from GLSAs other than adjusting budget allocations for other channels.
In this case, the year-over-year CAC decline didn’t matter much because customers spent 29% less in that same time frame, so what you saved on acquiring those customers was less than what those customers spent this year vs. last year.
In summary, GLSA volumes are down, and it’s time to look at filling the gaps with your existing customer database and other ad channels so that your business isn’t dependent (at least in large part) on GLSAs to drive a high percentage of your revenue target volume.
Until next time . . .
-Jon