Local advertising on platforms like Google, Meta, and more is essential for reaching potential customers and expanding your audience. But as ad costs continue to rise, local businesses are looking for ways to diversify their strategies and optimize their campaigns to get the biggest bang for their buck.
We took a look at some common reasons local advertising costs are increasing and what businesses are doing about it to see the best results for their budgets in 2025.
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Why local advertising costs are increasing
Why are local ad costs climbing? Here are a few reasons.
- Increased competition. More competition on Google Ads and Meta Ads is driving higher costs per lead (CPLs), especially in high-demand industries like legal, home services, and healthcare.
- Audience targeting challenges. Recent privacy changes, including iOS updates and data-protection measures, are limiting audience targeting, which is making it more costly to target your local audience, and in some cases making local ads less efficient.
- New(er) AI-powered campaigns. Not using AI-powered strategies like Google Performance Max or Meta Advantage+ in the right ways can lead to increased ad costs.
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4 ways to cut local advertising costs in 2025
What can you do to keep your local ad costs as low as possible this year? Here are some tips.
1. Invest in AI-driven local advertising strategies
AI-driven tools can help your local business reduce wasted ad spend by improving lead quality and engagement. Here are a few ways automated AI tools are helping businesses like yours optimize local ad campaigns:
- Google’s Performance Max adapts campaigns across Search, Display, YouTube, and Maps. This allows you to maximize your budget based on what’s driving the best results for your campaign goals.
- Meta Advantage+ uses AI to automate and optimize campaigns, and in many cases is improving conversion rates for businesses.
- AI-powered chatbots and lead management automation give businesses a way to automate lead follow-up, which can increase lead-to-customer conversion rates.
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2. Run Google Local Services Ads
Google Local Services Ads (LSAs) are ads specifically for service-based businesses that are pay per lead rather than pay per click. LSAs are helping service-based businesses manage cost per lead volatility more effectively. Here are some reasons why:
- Because Google LSAs offer a pay-per-lead model, CPL can become more predictable, which can help businesses plan and allocate their budget better.
- LSAs appear at the top of search results, offering you maximal visibility for your business.
- Verification and Google-backed “Google Guaranteed” or “Google Screened” badges improve trust and conversion rates.
3. Look into local social strategies and community marketing
Social media has long allowed businesses to connect with potential customers, but online communities have grown in popularity and provided another platform for businesses to connect directly with consumers. And these strategies are paying off: Businesses investing in community-driven marketing are seeing lower CPLs and higher engagement.
Here are some reasons why:
- Platforms like Nextdoor and Facebook Groups are proving cost-effective for lead generation. These free marketing strategies give businesses a way to directly engage with prospects.
- User-generated content (UGC), local influencer partnerships, and community-based engagement are helping brands build trust without high CPLs.
- TikTok’s localized content strategy is offering a new, lower-cost alternative to traditional paid ads.
4. Shift toward organic and first-party lead generation
Many local businesses are diversifying their marketing strategies and investing in long-term, owned media over rising ad tactics.
These include:
- SEO and local listings like Google Business Profiles and Yelp to reach potential leads on search engines.
- Content marketing strategies including blogs, video, and social media engagement to educate prospects and build awareness.
- Email and SMS marketing to nurture leads at a lower cost directly in their text or email inboxes.
- Word-of-mouth and referral programs to drive lower-cost leads from their existing best customers.
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Lower your local ad costs in 2025 with these tips
Paid advertising tactics like PPC and social ads are always going to be effective at reaching local customers. But by optimizing your local ad strategy and investing in cross-channel marketing, you can keep ad costs low without sacrificing results. For help maximizing your local ad costs, reach out to schedule a demo.
Thanks to Kendall Cagle, LocaliQ product manager for social and display advertising products, and Jake Cox, LocaliQ product manager for lead gen products, for their contributions to this article.
