Google Ads for Local Service Based Businesses: 5-Step Strategy for 2025
Apr 14, 2025For local service-based businesses, having a well-structured Google Ads strategy is critical. With some industries seeing cost-per-click (CPC) rates soaring above $50, even one misstep can result in wasted budget and poor lead quality.
This guide outlines the 5-step Google Ads strategy we use to help local service businesses reduce wasted ad spend, improve targeting, and generate more qualified leads in 2025.
Key Takeaways
- Start with Search campaigns to gather reliable data before using Performance Max.
- Set geo-targeting to “Presence” only to avoid irrelevant clicks from outside your service area.
- Use long-tail broad match keywords and strong negative lists to attract better-qualified leads.
- Write ad copy that filters out bad leads by clearly stating who your services are for.
- Launch remarketing only after hitting 1,000 visitors, and align messaging with your best-performing search ads.
- Scale with PMAX only after search is profitable, using settings that prioritise new, high-quality customers.
Do Google Ads Work for Local Businesses?
Yes, Google Ads can work extremely well for local businesses—but only when set up and managed correctly. Unlike national or ecommerce brands, local service-based businesses face unique challenges like limited geographic targeting, higher CPCs in certain trades, and the need for immediate lead quality over long-term awareness.
Here’s when Google Ads tends to perform best for local businesses:
- High-intent services (e.g. “emergency plumber”, “roof repair near me”)
- Clear local demand based on Google Trends or keyword data
- Defined service areas that allow for focused geo-targeting
- Fast response times — converting leads while they’re still “hot”
And here’s when Google Ads is less effective:
- If your ad copy or targeting is too broad
- If you don’t use negative keywords and location filters
- If your landing page doesn’t match user intent or lacks trust signals
For many local businesses, starting with Search campaigns is the fastest path to ROI. Once you’ve collected enough performance data, you can expand into Performance Max, remarketing, or even Local Services Ads (LSAs) depending on your industry.
When managed with a strategy tailored to local markets, Google Ads is still one of the most profitable ways to generate leads in 2025.
Step 1: Why You Should Start with Search Campaigns
When launching or optimizing Google Ads, always begin with Search campaigns, not Performance Max (PMAX)
Search campaigns give you:
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Greater control over keyword targeting
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The ability to test and refine ad copy
PMAX campaigns are powered by machine learning and require accurate conversion data to perform effectively. Starting with Search allows you to build that foundational data by analyzing:
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Which search terms lead to conversions
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Which ad headlines and descriptions perform best
Once you understand what works, you can scale more confidently using PMAX.
Step 2: Improve Location and Keyword Targeting
Most service-based businesses lose money by targeting the wrong areas or using poor keyword strategies.
Optimize Location Targeting
Set your targeting to “Presence” only. This ensures your ads show only to people physically located in your service area—not to people who are merely interested in it.
Avoid Common Keyword Mistakes
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Don’t rely on short-tail broad match keywords
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Avoid skipping the creation of a negative keyword list
Instead:
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Use long-tail broad match keywords with clear intent
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Create both account-level and campaign-level negative keyword lists
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Review your search terms report weekly to refine targeting and reduce irrelevant clicks
These steps ensure your ads are shown to people actually looking for your specific services in your geographic area.
👉How to Optimise Google Ads Campaigns
Step 3: Use Specific Ad Copy to Pre-Qualify Leads
Your ad copy should serve as a filter. It should attract the right customers and deter the wrong ones before they click.
Real-World Example
An IT support company saw costs per lead of over $100, largely due to calls from residential customers instead of small businesses. By:
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Adding specific negative keywords like “computer help near me”
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Rewriting ads with headlines such as “Small Business IT Support Only”
They cut irrelevant traffic, and their cost per lead dropped from $107 to $59.
If your business has a specific offering—such as installations only or a set price point—make that explicit in your ad copy. This approach minimises wasted clicks and improves conversion rates.
Step 4: Implement Remarketing at the Right Time
Remarketing can boost brand visibility and drive warm leads back to your website—but only if you’re ready.
Key Remarketing Rule
Don’t launch a display remarketing campaign until your website audience exceeds 1,000 visitors. Anything less, and your budget is likely to go to waste.
Remarketing Campaign Setup
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Use “Target” for audience targeting (not “Observation”)
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Exclude mobile app placements
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Align ad messaging with your top-performing Search ads
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Allocate 5–10% of your total Search budget
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Let the campaign run for 60–90 days to measure performance
Focus on View-through conversions, which indicate whether your ad impressions are driving conversions later—even if users don’t click immediately.
Step 5: Scale with Performance Max Campaigns Strategically
Once your Search campaigns are driving consistent results, you can consider scaling using PMAX.
Two Ways to Scale Google Ads
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Increase spend on high-performing campaigns (until CPCs become inefficient)
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Expand reach to new, colder audiences using PMAX
Beware of CPC resistance—the point where increasing your budget raises your CPCs at a faster rate than your return on investment. This is often when it makes sense to introduce PMAX campaigns.
PMAX Settings for Service Businesses
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Use campaign-specific goals linked with offline conversions
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Enable bidding for new customers only
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Exclude branded terms to focus on new traffic
With the right data and strategy, PMAX can help you scale while maintaining or improving lead quality.
Final Thoughts: Making Google Ads Work for Service-Based Businesses
Google Ads continues to be one of the most effective channels for local lead generation—when done right.
To recap:
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Start with Search campaigns to build accurate performance data
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Refine your location and keyword targeting
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Use ad copy that filters out low-quality leads
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Launch remarketing only when your audience is large enough
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Scale with Performance Max once your foundation is in place
FAQ
Do Google Ads work for small local businesses?
Yes, Google Ads can work extremely well for small local businesses—especially service-based ones. The key is setting up the campaign structure properly, targeting the right geographic areas, and using keywords with clear intent. Avoid default settings that waste budget and focus on ads that speak directly to your ideal customers.
What is the best Google Ads campaign type for local service businesses?
Start with Search campaigns. They offer the most control over targeting and help you gather performance data. Once your search campaigns are profitable and consistent, consider adding Performance Max campaigns to scale your reach.
How should I set location targeting in Google Ads?
Use the “Presence” targeting setting—not “Presence or Interest.” This ensures your ads only show to people physically located in your service area, avoiding irrelevant clicks from people outside your region.
When should I use remarketing ads?
Only run remarketing campaigns once your website has at least 1,000 visitors. Launching too early can waste budget. Once ready, use display remarketing with careful targeting and align the creatives with your top-performing Search ads.
What’s the biggest mistake local businesses make in Google Ads?
Many local businesses waste money by targeting broad keywords without negatives, allowing low-quality traffic to click their ads. Another common mistake is launching Performance Max too early, before having any reliable conversion data.