Google's Home Service Ads are a Stroke of Evil Genius

Google's Home Service Ads are a Stroke of Evil Genius
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This afternoon, Brandon, the owner of Simpson Plumbing in Tracy, emailed me to say that he was on the phone with someone from Google Services who wanted to sign him up for ads. I laughed and told him that Google doesn’t just call small businesses out of the blue like that—he was talking to a scammer, and he shouldn’t give them the time of day. He called me just a few minutes later and said they were setting up home service ads in Tracy in about a month.

That probably doesn’t sound like big news, but it is. Not just for me, or for him, but for everyone, whether you use Google or not. To understand why, you need to know just a little about how Google‘s ads work.

If you don’t click on Google’s ads, you’re in good company. Studies have shown that the top ad on a typical desktop Google search gets clicked on by about 9% of users, versus about 29% for the first organic result.

The reason isn’t much of a secret: right or wrong, users trust organic results more than they trust ads. That’s not to say that people trust Google’s ads less than anyone else’s. If anything, users just trust Google’s organic results so much that the ads pale in comparison.

Part of the reason for that is, versus some of the search engines that came before them, Google has historically drawn a hard line between their organic search results and their ads. Google’s ads have always appeared in predictable places with hard to miss labels. From the beginning it was a clear signal to users that a website couldn’t just pay to rank better in organic results—they had to earn the right.

The strategy worked, but since Google’s advertising platform is still their biggest revenue generator by a long shot, it’s been a bittersweet victory for them.

One of the sorest spots for Google has always been in local searches. If you search for a local business on Google, chances are good that you’ll pick one of the local businesses that appear just below the map, in the “map pack.” That means chances are worse than usual that you’ll click on an ad.

Since this kind of search result has always been difficult for them to monetize, Google has long neglected the quality of their local search results. This in turn led to the rise of platforms like Yelp, TripAdvisor, and Zomato, which have gone on to become direct competitors to Google in several high-volume verticals.

In 2015, Google decided to try something bold. The home service Ad was a new kind of ad block available to businesses in only a few home service industries, like plumbers, in a very limited geographical area. Nothing about them look particularly unique, but functionally they were a game changer.

First, the new ad type replaced all of the other ads on the page, as well as the map pack. This was the first time that a Google ad had outright replaced another element. While it’s visually different form the map pack and includes a somewhat conspicuous “sponsored” label, it’s ultimately a replacement for the map pack wherever it appears. That means that any businesses that had earned their way into the map pack by investing in their SEO was suddenly screwed. Moreover, since Google reviews only show in the map pack and home service ads only display verified reviews, any business that had taken the time to earn good reviews on Google was suddenly out of luck, too.

The only way to get a spot on the new block was, naturally, to pay.

For a plumber, this could get expensive pretty quickly. In the test market’s most expensive city, San Francisco, a user who searched “plumber” could cost the business $33 with a single call. If they searched for “drain cleaning”, that cost could balloon up to $51. Have a “plumbing emergency”? That could cost the plumber about $47.

(note: the real cost structure of these ads, and all of Google’s ads, is a lot more complicated.)

Of course, that’s only if users click on the ad, which they typically don’t. But that leads to the second big difference with home service ads: this is the first Google ad type with built-in trust signals.

Unlike the regular map pack, home service ad profiles show each plumber’s license number, whether they’ve gone through a background check, and whether or not they’re insured. Since Google verifies these details themselves, there isn’t any room for map spam, either. On top of that, all the reviews shown have to be earned through the platform, which means they’re verifiable. It seems that Google finally found a way to develop an ad that’s more trustworthy than their organic results.

While it may sound like home service ads are a win for consumers and a loss for service providers, that’s not the whole story. Since plumbers have to pay to play, some of the best plumbers—the ones who can earn a ton of business through referrals—are much less likely to buy into the platform. That means you might have to dig around through the organic results, or continue on to Yelp, to find the ones who don’t need to advertise.

If home service ads take off, that also means there will be less demand for SEO services by plumbers. Above board local SEO often involves things like sponsoring charities, joining the chamber of commerce, offering free resources and demonstrations, and offering scholarships. Given how expensive home service ads can get, could you blame your plumber for spending that money on more service calls instead of sponsoring your son’s little league team?

If home service ads really take off, plumbers may have to start passing some of those new costs to their customers. Say goodbye to free on-site estimates, no additional service charges on weekends, and anything resembling a reasonable rate.

I told Brandon that he should go ahead and sign up for the home service ads because, at least for his market, they were inevitable. If he didn’t, a competitor could come along, get five stars, and knock him out of first place in his hometown.

In reality, there isn’t much stopping Google from eventually deploying home service ads to every applicable industry, anywhere in the world. Users will gain the trust signals they never had from other ads or organic results, Google will gain a lucrative new revenue stream, businesses will get screwed into spending huge amounts of cash on advertising, customers will get the costs passed on to them, and Google will come away from it all looking like the good guy.

Really, I’m just jealous that I didn’t think of it first.

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