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Why Is ROAS No Longer Enough in Google Ads? Here’s What to Do Instead

Caleb Turner on June 10, 2025

The world of Google Ads is changing. While ROAS—Return on Ad Spend—has been the go-to performance metric for years, savvy advertisers are now realizing its limitations. ROAS gives a narrow view of campaign efficiency, but it doesn’t tell the full story when it comes to profit, scale, or long-term growth. Today’s smart marketers are moving beyond this metric to embrace outcome-based strategies rooted in actual business value.

Key Takeaways

  • ROAS often masks the true profitability of campaigns
  • Smart Bidding now prioritizes real business results
  • Demand Gen campaigns reach customers across YouTube, Gmail, and Discover
  • AI is powering not just bidding—but creative and insights too
  • First-party data is now a strategic advantage
  • Strategic scaling wins over sudden budget spikes

Detailed Guide

What’s new in Google Ads?

Google has made major updates to streamline and empower campaign performance. Smart Bidding has been simplified—you now choose “Maximize Conversions” with optional Target CPA, or “Maximize Conversion Value” with optional Target ROAS. This means you’re optimizing for actual results, not micromanaging bid settings.

Demand Gen campaigns are another big leap. They replace Video Action campaigns and run across YouTube, Discover, and Gmail. These formats are built for both brand engagement and conversions, making them ideal for full-funnel strategies. AI also now supports you at every step—from writing headlines to discovering new keywords—giving you predictive power that helps you stay ahead of trends.

Why is ROAS misleading?

ROAS feels like a clear performance metric, but it’s often deceptive. Imagine two campaigns:

  • One spends $1,000/day at 2× ROAS, generating $30,000/month in profit
  • Another spends $100/day at 5× ROAS, but only nets $12,000/month

Which would you choose? The 5× ROAS might look better on paper, but the first campaign brings in over twice the profit. ROAS ignores volume and real economic impact. And that’s why it’s no longer enough.

What should you measure instead?

Start tracking POAS—Profit on Ad Spend. Unlike ROAS, POAS factors in cost of goods sold, transaction fees, and overhead. This gives you a more accurate view of how your ads are really performing. You can even push this data back into Google Ads using server-side tracking, helping the algorithm optimize based on what actually drives profit.

How should you think about attribution?

The buyer’s journey is no longer a straight line. People interact with your brand across devices and platforms before they buy. That’s why last-click attribution is outdated. Modern advertisers are moving to data-driven attribution through GA4. This lets you understand which touchpoints actually influence conversions and make better decisions across your entire funnel.

How do you use first-party data effectively?

With third-party cookies on the way out, your own customer data is more valuable than ever. Tap into your CRM and purchase history to build audience segments based on real buyer behavior. Then, use Google’s Customer Match and Enhanced Conversions to connect this data to your campaigns. This not only improves targeting but also boosts conversion rates significantly.

How important is creative strategy now?

With AI doing more of the heavy lifting behind the scenes, creative is one of your biggest competitive advantages. Dynamic creative testing lets you see which copy, visuals, and CTAs resonate with different segments. Messaging should be tailored—what works for cold leads probably won’t work for warm retargeting audiences. Winning ad creatives are intentional, not generic.

What role do Demand Gen campaigns play?

Demand Gen campaigns give you a unique way to build both brand and performance. They’re immersive, visual, and appear where people are most engaged—YouTube, Gmail, and Discover. These formats are great for building top-of-funnel awareness and generating remarketing audiences that are more likely to convert later. They’re not just about clicks; they’re about presence.

How do you scale effectively?

Many brands rush to increase budgets once they see success—but that can backfire. Controlled scaling is a smarter approach. Increase your ad budget by no more than 20% every 3–5 days. Use Google’s campaign experiments to test changes before committing fully. Try new geos or devices to tap into fresh audiences. Smart scaling is strategic, not reactive.

A Simple Comparison That Says It All

Let’s look at two scenarios:

Scenario A

  • 2× ROAS
  • $1,000/day ad spend
  • $60,000 monthly revenue
  • 50% margin = $30,000 profit

Scenario B

  • 5× ROAS
  • $100/day ad spend
  • $15,000 monthly revenue
  • 80% margin = $12,000 profit

Even with a lower ROAS, Scenario A generates more than twice the profit. That’s why volume and context matter far more than a single efficiency ratio.

FAQs

What does POAS mean in digital advertising?
POAS stands for Profit on Ad Spend. It’s a smarter metric that factors in your costs to reveal true campaign profitability.

How do I implement POAS in Google Ads?
Use server-side tracking or offline conversion uploads to send profit-per-transaction data back into Google Ads for better optimization.

Are Demand Gen campaigns worth it?
Yes. They’re highly effective for reaching new users and warming them up for conversion with immersive, cross-channel engagement.

Can I still scale if I have a small budget?
Absolutely. Just scale slowly and watch key metrics closely. Start with controlled experiments before rolling changes out broadly.

Checklist

  • Move from ROAS to POAS for better insights
  • Simplify Smart Bidding strategy
  • Launch a Demand Gen campaign for top-of-funnel reach
  • Sync your CRM data using Customer Match
  • Test creative variations regularly
  • Use GA4 to move beyond last-click attribution
  • Scale budget in controlled, data-driven steps

Final Thoughts

Google Ads success today requires more than chasing high ROAS. It requires thinking strategically—measuring profit, understanding the customer journey, and scaling sustainably. Automation has taken care of the mechanics. Now, your job is to align data, creative, and business outcomes. When you focus on the metrics that actually drive growth, you’re not just managing campaigns—you’re building a business.

Forget vanity metrics. Focus on real profitability. Your bottom line will thank you.

Stop Burning Money on Google Ads: Why LSAs Are the Smarter Choice

Caleb Turner on November 22, 2024

It’s 2025 and if you’re still overlooking local service ads, then your business is already falling behind!

Right now, over a dozen of your competitors are taking up Google searches for the right keywords in your industry. They are getting all the customer attention and beating you before you have a chance.

But the good news is: that could be you.

Local services ads to rule local service market

Those competitors aren’t waving some sort of magical wand; they only know how to use local service ads (LSAs) to make this possible. But with this article, you can beat most local businesses at this game and be the front and center for eager, ready-to-book customers.

Here, we’ll give you all you need to know about how LSAs work, why they are a game changer, and how to set up and optimize them to undoubtedly crush your competition. You can also checkout this video to see them in action.

Table of Contents

What Are Local Service Ads (LSAs)?

Google local services ads

LSAs are a special type of Google ad that connects local businesses with people who are actively looking for their services.

LSAs are different from regular Google Ads because they are made to directly meet local needs. That means you’ll find it really useful if you’re a dentist, plumber, lawyer, or other service provider.

LSAs are pay-per-lead rather than pay-per-click (PPC), meaning you only pay when you receive a real, qualified lead. This targeted approach not only saves businesses money but also makes sure they get real questions from people who are truly interested in potentially using your service, not just clicks.

How Do Local Service Ads Work?

When people search for services “near me” in their city, LSAs are right at the top of the local search results. Customers who see your ad can click or tap on it to call you or send you a message.

The Local Services Ads app and email will let you know when they get in touch. From that point on, it is up to you to turn the lead into a customer.

The best thing about them is that they come with extra perks that will help you build trust, like the green “Google Guaranteed” badge from Google, customer reviews, and star ratings. These all help establish credibility right away.

Here’s how LSAs differ from regular ads:

  • Priority Placement: LSAs appear above organic search results and other types of paid ads to give your business the topmost visibility.
  • Better Engagement: They show important business details like location, phone number, reviews, and business hours. This way, potential customers can quickly and easily learn about your services before even clicking.
  • Pay-Per-Lead: LSAs let businesses avoid click-based costs. So you only get charged for valid leads (if you sponsor it).

The Pay-Per-Lead Model

Google local services ads return 10X more than traditional lead flow

Why pay for clicks when you can pay for leads? The brilliance of LSAs lies in their pay-per-lead model. With LSAs, you only pay when you get a real lead, not for every random visitor. This gives you total control over your ad spend and guarantees a better return on investment (ROI).

If you run a service-based business, LSAs deliver actual inquiries from people ready to take action. So every dollar you invest goes toward landing real customers.

Google’s Automated System for Handling Low-Quality Leads

If you’re sick of wasting money on bad leads, then Google’s got you covered!

One of the biggest frustrations with online ads? Paying for low-quality leads. But with LSAs, Google’s automated system now flags and disputes invalid leads in real time.

This tool has been made open to all LSA users since July 2024. That means you can say goodbye to manually disputing bad leads.

Instead of charging you for unqualified leads, Google will give you credit automatically. You can even see which leads Google returned to your account by looking at their report on disputed leads. This gives you a clear picture of how much you’ve spent on ads.

However, if Google’s system fails to catch an invalid lead, you can still dispute it manually! This way, you’ll always be in charge and never have to pay for leads that don’t meet your needs.

At the end of the day, it’ save you time and money in the long run. It’s a better and easier way to make sure you only pay for real customers.

Google’s Automated System for Handling Low-Quality Leads

Benefits of LSAs

1. LSAs put your business right at the top!

With LSAs, your business isn’t just another search result; it becomes the first thing potential customers see.

This top spot is a big advantage, especially if you’re a small business owner, where being seen first can mean the difference between getting a customer and losing them to a competitor.

2. Pay only for real leads!

Are you sick of shelling out cash for clicks that don’t turn into sales? Let’s just say that you’re only charged when there’s genuine engagement, that is, when someone calls or sends you a message.

3. Google's 'Guaranteed' badge boosts credibility!

Nothing builds trust faster than Google’s green “Google Guaranteed” badge. This badge means Google has verified your business, which sends a message of credibility and security to your potential customers.

Knowing that they’re dealing with a trusted service provider makes them more likely to reach out. The guarantee that Google backs your business can tip the scale in your favor, especially in competitive markets.

4. Simplify customer contact

One of the best parts about LSAs is how easy they make it for customers to contact you.

Prospective customers can call or text your business right from the ad with just one tap. Your potential customers will take a lot fewer steps between finding your website and getting in touch with you now that the process has been streamlined.

The easier it is to reach you, the faster you can close the deal.

5. Understand your customers better with valuable insights!

The first thing an LSA does is find new leads, but they also give you real insight. They allow you to see what demographic is responding to your ads, what services they’re interested in, and how they generally prefer to connect with you by keeping track of their interactions.

If you want to refine your marketing and make your services better fit the needs of your customers, these insights are like pure gold.

6. Flexible budgets, easy setup, and total control!

Worried about how to set up your ads? It’s easy with LSAs. In fact, it’s so fast and easy that you can start using them almost right away.

Also, if you have a flexible budget, you’ll find it easy to adjust how much you spend.

7. Target your neighborhood or the whole city

With LSAs, you can precisely target the places that are most relevant to your business.

They help you get in touch with local customers in places where you’re most wanted. You can also reach people in more than one area or zip code.

8. Mobile-first design

These days, everyone reaches for their cell phone when searching for services or handling everyday tasks.

How to See if a Local Service Ad Is Available

Before you start using LSAs, you should make sure they are available in your industry and area. Here’s how:

  1. Use Google’s LSA Availability Tool. Type in your business type and zip code to see if your area can have an LSA.
  2. Testing LSAs in Different Zip Codes: If your main zip code is not supported, try testing nearby zip codes to broaden your search. You can use this to widen your service area and capture leads from nearby locations to maximize your leads.

Setting Up Local Service Ads for Your Business

“Ready to get more leads now? Here’s how to set up LSAs in just a few key steps to bring in leads:

Google LSA set up page

1. Create an Account and Enter Business Details

Head to the Local Service Ads setup page, create an account, and fill in your basic business information.

2. Optimize Your Profile

Remember to keep it simple and strong. Simply put, you need to include the essentials, like the name of your business, its address, a phone number, and a detailed explanation of the services you offer. Do not stop until you have uploaded videos and photos that show off your work in the best way.

3. Encourage Customer Reviews

Positive reviews are like gold for your LSA rankings, so actively encourage satisfied customers to leave feedback.

4. Master the Art of Response

Set up instant notifications to quickly address customer inquiries. Since you don’t want to keep prospects waiting, you need to respond promptly, as that will improve your visibility and conversion rates. Then go further by showing genuine care and attention to each customer.

Understanding LSA Ranking Factors

Getting your local service ads (LSAs) to rank high on Google isn’t magic. You just have to manage a few key factors that can push your business to the top spot. Here’s what you need to pay attention to:

Local service ads ranking factors.

1. Customer Reviews and Ratings

The more positive reviews you get, the better!

2. Proximity to Searchers

LSAs are meant to connect customers with businesses in the area. You will rank higher if you are closer to the searcher. Just be sure that your location details are accurate!

3. Fast Response Time

Google really likes businesses that reply quickly. You’ll really be helping yourself by setting up real-time notifications. And since you get notifications, you can respond to inquiries as soon as they come in, which will in turn improve your ranking.

4. Complete Profile

Google rewards businesses that have complete profiles that list their services, hours, photos, and how to contact them.

How to Maximize ROI from Local Service Ads

To get the best return on your LSA investment, track and optimize performance metrics that matter:

  1. Track key performance metrics: Focus on cost per lead, conversion rate, and customer satisfaction. High ROI comes from closely monitoring these indicators and adjusting campaigns based on performance.
  2. Handling Disputes for Low-Quality Leads: If you receive unqualified leads, you can manually dispute them, ensuring you only pay for legitimate leads.
  3. Tips for Budgeting Your LSA Campaign: To get the most out of your advertising budget, plan how to spend it based on your service area, competition, and seasonal demand.

Bottom Line

You need local service ads more than anything else in your marketing arsenal if you want your business to stand out from the rest in 2024 and beyond. There’s almost no better way to rank high at the top of Google’s search results, especially if you don’t want to overspend.

The nicest thing about this is you are attracting “ready-to-purchase” prospects.

Think about it! You could be at the top of local search results, closing deals, and growing your business while your competitors are still spending money on old-fashioned ads or waiting months for SEO to work.

The question isn’t whether you should start using LSAs—the question is, how fast can you start?

Get ahead of your competitors now by setting up your profile and optimizing it for success. The earlier you start, the sooner you’ll see results.

For expert guidance in maximizing your LSA marketing efforts, your best and, we must say, only option is SEO Rank Media. Rest in the power of a supercharged team that lives and breathes LSAs!

Seo Rank Media

We help companies get more customers through cross-channel marketing strategies.

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