Return on Ad Spend for Home Services Businesses
Return on ad spend is the revenue attributed to advertising divided by what was spent on the ads. A return of 5:1 means $5 in revenue for every $1 of ad spend. For a home services business, it’s most useful when it’s calculated from actual job revenue and read alongside the cost of delivering that work. At Riley Summers, we use the client’s verified job revenue where they share it. Where they don’t, we evaluate advertising on leads and booked jobs instead.
Same return on ad spend. Different result for the business.
Illustrative figures only, not a benchmark.
Return on ad spend is one way to evaluate advertising, and it measures revenue, not profit. Two campaigns can earn the same ratio and leave the business with very different amounts, which is why a higher return on ad spend doesn’t automatically mean a better result.
On this page
- How Return on Ad Spend Is Calculated
- What Return on Ad Spend Is and Isn’t
- Reported vs. Verified Return on Ad Spend
- Three Tests of a Return on Ad Spend Figure
- Return on Ad Spend by Type of Work
- How We Measure Return on Ad Spend
- Return on Ad Spend Mistakes We See
- Return on Ad Spend Across Home Services Trades
- Related Resources
How Return on Ad Spend Is Calculated
Return on ad spend = revenue attributed to advertising ÷ ad spend, for the same campaigns and period.
Illustrative figures only, not a benchmark.
$30,000 in attributed revenue ÷ $6,000 in ad spend = a 5:1 return on ad spend, also written as 5× or 500%.
Three rules keep the figure honest.
The revenue is what the advertising produced. Only revenue from jobs credited to the ads being measured counts. How jobs are credited, and how repeat work is handled, is covered in revenue attribution.
The spend is the ad spend alone. As with cost per lead and cost per booked job, agency fees and other costs are left out. They belong in the broader measures, customer acquisition cost and marketing return on investment.
The rules stay the same every time. The way jobs are credited, the period covered and the point at which revenue is counted must be consistent from one report to the next, or the figures can’t be compared.
That last point matters more than it sounds. Revenue can be counted when a job is sold, when it’s completed, when it’s invoiced or when it’s paid, and each gives a different figure for the same campaign. Where a client shares their job values, we use the invoiced amount, in line with how we report revenue elsewhere.
Scope matters too. Return on ad spend can be calculated for a single campaign, a whole channel or all advertising together. A campaign’s figure and a channel’s figure can only be compared when they count revenue and spend the same way.
What Return on Ad Spend Is and Isn’t
Return on ad spend answers one question for a business owner: how much revenue is each advertising dollar bringing in? It’s the first measure on this path that puts money coming in beside money going out, which is why it’s so widely used, and so often overread.
| Return on ad spend tells you | Return on ad spend doesn’t tell you |
|---|---|
| How much revenue each dollar of ad spend brought in | How much of that revenue the business kept |
| Which campaigns bring in the most revenue for their spend | What the work cost to deliver |
| Whether revenue is keeping pace with ad spend over time | What it cost, all in, to win each new customer |
Each of those gaps is covered by a different measure:
- Revenue attribution supplies the revenue figure itself and decides which jobs count.
- Cost per booked job shows what the work cost to win, whatever it turned out to be worth.
- Customer acquisition cost adds every cost of winning a new customer, not just the ads.
- Marketing return on investment sets all marketing costs against what the business actually earned, and answers the profit question return on ad spend can’t.
Return on ad spend is one way to evaluate how well advertising is working, not the only way. It’s a revenue measure, well suited to comparing campaigns against each other and less suited to deciding on its own whether advertising is making the business money. In Mark Riley’s experience in legal marketing, the firms he worked with never evaluated advertising on a return multiple. It was always cost per signed case, set against what an average case was worth. Owners who think the same way, in cost per job rather than dollars back per dollar spent, are just as well served by cost per booked job, which we report alongside return on ad spend wherever both are available.
Reported vs. Verified Return on Ad Spend
Google Ads can show a return on ad spend figure of its own, and it’s easy to take that number at face value. How much it can be trusted depends entirely on where the revenue behind it came from.
Google Ads can import offline conversions, so a business can measure what happens after an ad produces a click or a call, such as a sale made at the office or over the phone. That means the platform’s figure can rest on very different inputs:
| Reporting method | What the figure actually reflects |
|---|---|
| Assigned values | An estimate, based on values assigned to each lead in advance |
| Imported job revenue | Real job values sent back to the platform, only as accurate as the connection that sends them |
| Verified revenue | Job revenue checked against the business’s own records, using consistent crediting rules |
Only the last one is verified return on ad spend. The first is a forecast, and the second is only as reliable as the data flowing into it. Where a client shares their job values, we report return on ad spend from their verified revenue, and treat the platform’s figure as a guide rather than a result.
Whether those values should drive bidding is a separate question. Google itself advises that, before adopting target ROAS bidding, a business should include the new values in its conversion reporting and wait six weeks for the campaign to receive them at a steady rate.
Mark Riley’s experience is mixed at best. Adding job values to Google Ads didn’t meaningfully improve results. On one personal injury law account, the campaigns were switched to return-on-ad-spend bidding at the urging of a specialist from a far larger, high-volume lead-generation background, where the approach can work. For personal injury, it didn’t. Costs spiked, clicks dropped and the campaigns lost direction, and it took a month or two to bring them back to normal. Bidding on values tends to need a steady volume of conversions with reliable values behind them, and an account with fewer, harder-to-value outcomes may not give it enough to work with. That’s why we treat it as something to test carefully, not a default.
How Riley Summers helps: A platform figure built on estimated values can make a campaign look far more profitable than it is, and switching bidding to chase it can set an account back for months. We report return on ad spend from verified revenue where the client shares it, and only test value-based bidding where the account has the volume and data to support it.
Three Tests of a Return on Ad Spend Figure
A return on ad spend figure only means something once it’s been tested. Before we draw any conclusion from one, we put it through three questions.
Is the revenue verified?
The first test is where the number came from. A figure built on values assigned in advance is a forecast. One built on imported revenue is only as good as the connection sending it. Only revenue checked against the business’s own records tells the owner what the advertising actually produced. If the revenue isn’t verified, the figure can still show direction, but it shouldn’t drive a budget decision on its own.
Is it revenue, or what’s left after job costs?
The second test is what the revenue represents. Return on ad spend counts every dollar the jobs brought in, but the business only keeps what’s left after the cost of doing the work. As the two campaigns at the top of this page show, the same 5:1 return can leave $15,000 or $5,000 behind. Where a client shares their job costs, we read return on ad spend alongside the value after job costs, in line with how we report revenue attribution.
Does it clear break-even?
The third test is whether the return is high enough to pay for the advertising at all. That depends on how much of each revenue dollar is left after job costs.
Break-even return on ad spend = 1 ÷ share of revenue left after job costs
Illustrative figures only, not a benchmark.
If 40% of revenue is left after job costs, the break-even return on ad spend is 1 ÷ 0.40 = 2.5:1. Below that, the ads are costing more than the work they bring in leaves behind. This covers ad spend only. Once agency fees and other acquisition costs are included, the return needed to break even rises.
A business with thin margins needs a much higher return on ad spend than one with healthy margins, which is why no single figure is “good” for every business. The margin behind this calculation is the business’s own, and the wider economics are covered on Gross Margin & Marketing.
A return on ad spend figure that passes all three tests is worth acting on. One that hasn’t been through them can look impressive and still be costing the business money.
Return on Ad Spend by Type of Work
The same ad spend can produce very different returns depending on the work it brings in. That doesn’t make one kind of work better than another. It means each needs to be read on its own terms.
| Type of work | What shapes its return on ad spend |
|---|---|
| Repair | Revenue arrives quickly, but each job is modest, so returns tend to be steady rather than large |
| Replacement and high-ticket | A few large jobs can produce a very high return, but revenue arrives weeks or months later, and job costs are often higher too |
| Recurring | The first visit understates the return, because most of the revenue comes from the service that follows |
Two cautions follow. A high return on replacement work doesn’t automatically mean better economics, because larger jobs often carry larger costs, so the second test matters most there. And for recurring work, the return on the first job and the return over the months that follow are different figures. We report them separately where the client shares repeat revenue, so a recurring campaign isn’t cut for a low first-month return.
Is your return on ad spend telling you the whole story?
Riley Summers will review your Google Ads and Local Services Ads, show you where the platform’s return figures come from, and, if you can share your job revenue, how they compare with what your advertising actually brought in.
How We Measure Return on Ad Spend
Where the client shares their job revenue, these are the figures we report. Without it, we report the platform’s figure as a guide and evaluate the advertising on leads and booked jobs.
| Metric | How it’s calculated | What it tells the owner |
|---|---|---|
| Reported return on ad spend | The platform’s conversion value ÷ ad spend | What the ad platform believes the ads produced |
| Verified return on ad spend | Verified job revenue ÷ ad spend | What the ads actually brought in |
| Value after job costs | Verified revenue minus job costs, where the client shares them | How much of that revenue the business kept |
| Share of revenue with a known source | Revenue credited to a source ÷ total revenue | How much of the business’s revenue these figures describe |
Worked example
Illustrative figures only, not a benchmark.
In one quarter, a campaign spends $6,000. Based on values assigned to its leads, Google Ads reports $48,000 in conversion value, a return of 8:1. The client’s booked-jobs list shows $24,000 in verified revenue from the same campaign, a return of 4:1, and 80% of the business’s revenue could be traced to a source.
The reported figure isn’t wrong so much as optimistic. It assumed every lead was worth its assigned value, and many weren’t. The verified figure is half as high and far more useful. It’s also a floor rather than a ceiling, since a fifth of the business’s revenue couldn’t be traced to a source.
We report monthly, using the jobs known at the time. At quarterly reviews, we look back over the full quarter, when slower, higher-value jobs have had time to come in, before recommending any budget changes.
Return on Ad Spend Mistakes We See
These are the mistakes we most often find when a business evaluates its advertising on return on ad spend. Several of the fixes depend on the business sharing its job revenue and costs, so we apply them wherever it chooses to.
| Mistake | Why it costs the business | What we do instead |
|---|---|---|
| Treating the platform’s figure as verified revenue | A forecast built on assigned values can make advertising look far more profitable than it is | Where the client shares job revenue, we report verified return on ad spend and treat the platform’s figure as a guide |
| Treating return on ad spend as profit | A strong ratio can hide work that leaves little behind after job costs | Where the client shares job costs, we read return on ad spend alongside value after job costs |
| Switching to value-based bidding without reliable values | Costs can spike, clicks can drop and campaigns can take months to recover | We test value-based bidding only where the account has the volume and data to support it |
| Comparing figures built on different rules | Sold revenue in one report and invoiced revenue in another make the comparison meaningless | We keep the revenue stage, crediting rules and scope the same in every report |
| Chasing the highest return regardless of job costs | Budget moves toward large jobs that can carry large costs, while leaner, more profitable work is cut | We evaluate returns by type of work and apply the break-even test before recommending a shift |
| Evaluating recurring campaigns on the first job | Campaigns that win long-term customers look weak and get cut | Where the client shares repeat revenue, we report first-job and follow-on returns separately |
| Using one target return for every campaign | A single target ignores the different margins behind different kinds of work | We set expectations against the break-even point for each kind of work, where the client shares its margins |
| Cutting long-cycle campaigns before their revenue arrives | Replacement and high-ticket campaigns look poor for weeks before their jobs close | We hold budget recommendations for quarterly reviews, when slower jobs have had time to come in |
Return on Ad Spend Across Home Services Trades
| Trade | What changes in return on ad spend |
|---|---|
| HVAC | Repair revenue arrives quickly, while replacement revenue can take weeks and carries heavy equipment costs, so a high return on replacement work needs the second test most |
| Plumbing | Most revenue comes from jobs completed within days, so the figure settles quickly and reflects the advertising closely |
| Electrical | Many jobs go through a site visit and quote first, so part of each month’s revenue arrives after the month’s spend |
| Roofing | A handful of large jobs can swing the return sharply from month to month, and revenue can take weeks or months to arrive |
| Pest control | The first visit understates the return, because most revenue comes from ongoing service |
| Pool service | Repair revenue and maintenance revenue behave very differently, so the figure depends heavily on the mix |
| Lawn care | Revenue builds over a season of recurring visits, so a spring campaign’s return isn’t clear until well into the year |
Two patterns stand out. Where most revenue comes from the first job, as with plumbing, repair work and most roofing, return on ad spend settles once the job is invoiced. There, the test that matters most is what the job cost to deliver. Where much of the revenue comes from service that follows, as with pest control, pool maintenance and lawn care, the first-job figure understates the return. There, it only becomes clear once the follow-on revenue is counted.
Related Resources
About The Author
Mark Riley is a marketing executive and the founder of Riley Summers Marketing Group, where he leads customer acquisition strategy for home services businesses across paid search, Google Local Services Ads, local SEO and paid social media. He rose to VP of Digital at a national legal-marketing agency, where the digital programs he led generated a significant share of its revenue. Over a 15+ year career, he has managed more than $70 million in digital advertising spend, much of it in one of the most expensive and competitive advertising categories in North America. He measures marketing by what it costs to win a booked job, not by traffic or lead volume.