Marketing Agency vs. Lead Buying Services: What's the Difference for Contractors?

If you've been in the trades long enough, you've probably tried HomeAdvisor, Angi, or Thumbtack at least once. Maybe you're still using them. Some contractors swear by these lead buying services and get solid work from them. Others feel like they're throwing money away, competing with four other contractors for the same job while watching their margins shrink.

The truth is, there's a big difference between buying leads and building your own lead engine. And understanding that difference could change how your contracting business grows over the next five years.

How Lead Services Work

Let's start with the basics. Lead buying services follow a simple model: A homeowner fills out a form saying they need a new roof, kitchen remodel, or HVAC repair. That lead service then sells that same lead to three, four, sometimes five contractors in the area. You all get a notification at the same time. Whoever responds fastest and quotes the lowest usually gets the job.

What you're actually paying for is access to leads you don't own. That homeowner doesn't know your company name. They know Angi or Thumbtack. And tomorrow, that same lead service will sell another lead to your competitor down the street. You're essentially renting access to potential customers.

The math looks something like this: You pay anywhere from $30 to $150 per lead depending on your trade and market. You're sharing that lead with multiple competitors. Your typical close rate on these shared leads runs around 10-20% if you're doing well. So if you buy ten leads at $50 each, you've spent $500 to close one or two jobs. For some contractors, that works. For others, it feels like expensive lottery tickets.

The Hidden Costs of Lead Dependency

But the price per lead isn't the only cost. There are hidden costs that add up over time, and most contractors don't realize they're paying them until it's too late.

First, there's no ownership. You're not building brand equity. When that homeowner thinks back on their project, they remember they found you through Angi. They don't remember your company name. They probably won't call you directly for the next job. They'll go back to the lead service and start the process all over again. You never actually own that customer relationship.
Second, shared leads create a race to the bottom. When homeowners know they're getting multiple quotes automatically, they're trained to price-shop. They're not evaluating you on quality, reputation, or expertise. They're looking at who's cheapest and who can start tomorrow. This dynamic puts pressure on your margins and turns your skilled trade into a commodity.
Third, lead quality varies wildly. Some leads are legitimate homeowners ready to hire. Others are tire-kickers doing research with no real timeline. Some have already hired someone and forgot to cancel the request. You're paying the same price for all of them. There's no way to filter out the bad ones until you've already spent the money and made the call.

Finally, there's dependency risk. If the lead service raises prices next month, you have two choices: pay more or watch your phone stop ringing. If they change their algorithm and start sending leads to newer contractors first, your business takes the hit. You've built your entire pipeline on rented land, and the landlord can change the rules anytime they want.

What Building Your Own Lead Engine Looks Like

Now let's talk about the alternative: building your own lead generation system. This is what contractor marketing agencies focus on, and it's a completely different model.

Here's how it works: A homeowner searches Google for “roofing contractor near me” or “kitchen remodeling in Atlanta.” They find YOUR business directly through your Google Business Profile, your website, or your ads. They read your reviews. They look at your project photos. Then they contact YOU. Not you and four other contractors. Just you.

What you're building with contractor digital marketing is a system that brings leads directly to your door. This includes optimizing your Google Business Profile so you show up in local searches, building a website that actually converts visitors into calls, developing a strong review reputation that makes homeowners choose you, and running targeted ad campaigns that speak to your ideal customers.

The difference in lead quality is massive. These leads are YOURS. They called your company specifically. They've already done some research on you. They've seen your reviews and looked at your work. They're warmer and more likely to close. Instead of competing with four other contractors on price, you're often the only one they're talking to.

But here's the real power: Every dollar you invest in building your own lead engine creates an asset you own. Your Google reviews stay forever and keep working for you. Your website ranking compounds over time. Your brand recognition grows in your local market. Three years from now, you'll still be benefiting from the marketing services for contractors you invest in today. That's not true with lead buying services where you're starting from zero every single month.

When Each Makes Sense

So which approach is right for you? The honest answer is: it depends on where you are and what you're trying to build.

Lead buying services make sense if you're brand new and need work THIS WEEK. When you have zero online presence and no reviews, paying for leads can get your phone ringing while you build everything else. They also work as a supplement to fill gaps during slow seasons or when you have extra crew capacity.

Building your own lead generation system makes sense if you want sustainable growth, better profit margins, and you're tired of renting your pipeline. It takes a few months to build momentum, but once it's running, you own it. No one can raise prices on you or change the algorithm overnight.

The smartest contractors often do both. They use lead services tactically to fill immediate gaps while investing in contractor marketing solutions that build their own engine. Over time, they rely less on paid leads and more on their owned channels.

The question isn't whether lead buying services are good or bad. For some contractors, at certain stages, they work fine. The real question is: Do you want to build a business that depends on renting leads every month, or do you want to own your lead generation?

Stop throwing money at leads you'll never own. Start building a lead engine that works for you 24/7, even while you're on the job site.