Google Raises Minimum Budgets for Certain Local Ad Verticals

According to recent reports, Google has quietly altered how minimum budgets function within certain local advertising formats, triggering renewed debate around rising ad costs and platform saturation.

Advertisers monitoring Google Ads and Local Service Ads (LSAs) noticed that budget enforcement mechanisms appear inconsistent across verticals, particularly in highly competitive categories such as legal services.

While Google has not officially confirmed the change, early observations suggest a meaningful shift in how local advertisers can set and manage spend thresholds.

Local Service Ads May No Longer Enforce Minimum Budgets

Earlier this week, digital marketer Anthony Higman highlighted a notable change within LSAs.

He reported that advertisers are now able to save budgets below what was previously shown as the required minimum—something that had been blocked earlier. The observation was shared publicly on X, sparking widespread discussion among paid search professionals.

Previously, LSAs enforced a red “required weekly budget” marker, preventing advertisers from proceeding with lower allocations. That restriction now appears to be missing in at least some verticals.

Google has not clarified whether this is an intentional policy shift, a phased rollout, or a temporary system anomaly.

Industry Reaction: Flexibility or Warning Sign?

The change has drawn mixed reactions from advertisers and agency operators.

Some view the relaxed budget control as increased flexibility for smaller advertisers testing LSAs. Others see it as a deeper structural signal that Google is prioritizing volume expansion over lead quality.

Concerns are especially pronounced in verticals already facing heavy advertiser saturation. Critics argue that lowering barriers does not address the core issue—too many advertisers competing for the same limited local demand.

Search Advertising Costs Continue to Rise Across Industries

This development comes at a time when paid search economics are already under pressure.

A recent analysis by LocalIQ, based on over 16,000 campaigns, shows that search advertising costs climbed significantly year-over-year.

Key findings include:

• Cost-per-click increased across the majority of industries
  
  
• Nearly two-thirds of sectors improved conversion rates
  
  
• Beauty and personal care saw the steepest CPC growth
  
  
• Education-focused advertisers recorded major gains in conversion efficiency
  
  

The data suggests that while costs are rising, improved conversion rates are partially offsetting the impact for performance-focused advertisers.

Are Google Ads Still Worth the Investment in 2025?

The question many businesses are now asking is whether Google Ads still deliver sustainable returns.

Current Market Signals

• Competition is intensifying across local and search campaigns
  
  
• CPC inflation is becoming the norm rather than the exception
  
  
• Conversion efficiency is increasingly dependent on targeting and intent quality
  
  

For local advertisers, LSAs were once positioned as a predictable, lower-friction channel. Budget flexibility without demand expansion, however, may dilute that value proposition further.

What This Means for Local Advertisers

For businesses running local ads, the implications are nuanced.

Lower minimum budgets may:

• Allow experimentation with smaller test spends
  
  
• Increase overall advertiser density within LSAs
  
  
• Reduce lead exclusivity in already crowded markets
  
  

At the same time, rising Google Ads costs reinforce the need for sharper intent targeting, improved landing experiences, and tighter conversion measurement.

FAQs

Are Local Service Ads removing minimum budget requirements?

Google appears to allow lower budgets in some verticals, but has not officially confirmed a policy change.

Is this change limited to specific industries?

Initial observations suggest legal and service-based verticals, though broader rollout cannot be ruled out.

Are Google Ads still effective despite rising costs?

Yes, but success increasingly depends on conversion quality, not just traffic volume.

Will lower budgets improve access for small businesses?

They may reduce entry barriers, but increased competition could offset those benefits.

Final Takeaway

Google’s evolving approach to local ad budgeting reflects broader shifts in the paid search ecosystem—higher competition, higher costs, and greater reliance on efficiency over scale.

Digilogy tracks these industry developments closely to help businesses interpret platform changes through a strategic lens. For ongoing updates and analysis, visit the Digilogy News page.