Nobody in this industry shows you their lead counts. Not the consolidator buying up your market. Not the franchise down the street. Not the agency that swears your numbers are “trending in the right direction.”
One company has no choice. Chemed Corporation owns Roto-Rooter, and because Chemed trades on the NYSE, it has to stand in front of analysts four times a year and report what actually happened. Last week it reported Q2 2026, and buried in the call was the closest thing the trades will ever get to a public lead scoreboard.
Here is what Roto-Rooter’s lead costs look like under oath. Total leads: down 1.6 percent. Free internet leads: down 13.1 percent. Paid leads: up 7.3 percent, which now makes paid roughly 59 percent of all leads, up from 54 percent a year ago and 44 percent eighteen months ago. Getting there cost about $3.1 million in added marketing spend in a single quarter.
HomePros covered the full quarter here. This piece is a slightly different take: what those numbers mean for the owner whose name is on the checks.
The only lead report in the trades that gets audited
Understand who is saying this. Roto-Rooter is the largest plumbing and drain cleaning operation in North America. It serves roughly 90 percent of the US population, holds an estimated 15 percent of the drain cleaning market, and has spent 90 years building the single most recognizable brand in the trades. If any company on earth could coast on free leads forever, this is the one.
They can’t. Kevin McNamara, Chemed’s CEO, said it plainly on the earnings call: “Google hates the idea of free leads.” He called the shift from 44 percent paid to 59 percent paid “an inexorable change.” His CFO, asked whether it gets better, said he would hesitate to say it significantly improves from here.
That is the most honest paragraph published about trades marketing this year, and it came from a securities filing season, not a vendor blog. When the company with the deepest organic moat in the industry tells Wall Street the moat is draining, believe them before you believe anyone selling you “SEO domination.”
The math they said out loud
Run the numbers the way Roto-Rooter’s own investors did.
Free leads fell 13.1 percent. Paid leads rose 7.3 percent. Net result: 1.6 percent fewer total leads, purchased with $3.1 million of incremental quarterly spend. They spent more to shrink slower. That is the whole story in one sentence.
Now look at what the mix shift does to cost per lead, because this is the part that applies to you whether or not you’ve ever competed with a Roto-Rooter branch. Free leads cost nothing at the margin. Paid leads cost auction price. When paid share moves from 54 percent to 59 percent, your blended cost per lead rises about 9 percent even if Google never raises a single click price. The inflation is in the mix, not the bid. Most owners hunting for the “why is my CPL up” answer never look there, and most agencies won’t point at it, because the mix is the one thing their optimizations can’t fix.
Scale it down. Roto-Rooter’s added $3.1 million is about 1.3 percent of its quarterly revenue, spent just to defend lead flow. Apply that same ratio to an $11 million shop and you get roughly $12,000 a month in new spend to hold the volume you already had. If your budget went up this year and your board count didn’t, you didn’t get worse at marketing. You got repriced.
We wrote about this dynamic before the earnings proved it: doubling your marketing budget won’t double your revenue, because past a point you’re paying more for the same demand.
What Moneyball Marketing™ does with this tape
Moneyball Marketing™ starts from one question: what is the market mispricing?
For twenty years the answer in home services was organic. Free leads from search, maps, and brand recognition were the on-base percentage of this industry: unglamorous, wildly undervalued, and quietly responsible for most of the wins. Roto-Rooter built a $900 million business on exactly that asset.
The market just repriced it. Google’s AI answers, paid map placements, and LSA boxes have pushed the free stuff below the fold, and the auction is where demand gets settled now. Here’s the problem with the auction: every bidder sees the same board, and the biggest wallet sets the floor, and now even the organic slots go to listing sites that sell their top rankings too. When a company that spends like Roto-Rooter moves five more points of its lead flow into paid channels across 122 company-owned territories, the floor rises for every plumber in those markets. You are not imagining your CPCs.
The Moneyball answer has never been “outbid the Yankees.” It’s find the next undervalued asset before the market reprices that too (like lead aggregators). Right now that list looks like: your review base, your repeat customer list, your referral engine, and your branded search demand, the stuff people type when they already know your name. Notice what those have in common. Google can raise the price of a stranger. It cannot raise the price of someone who already chose you.
Where organic discovery goes next is its own fight. For now, the early data says AI answers lean heavily on the same search rankings Google already controls, which means the organic game changed shape. It didn’t end.
The private equity wrinkle
Here’s the part of the deck the earnings coverage skipped. Roto-Rooter is not the victim of consolidation. It’s the original consolidator. Chemed’s own investor presentation lays out the strategy: buy back franchise territories at 6 to 8 times adjusted EBITDA, minimal capital expenditure, focus on earnings and cash flow. That is a private equity playbook, run inside a public company, for decades.
The same presentation shows what lead inflation does to that playbook. Roto-Rooter’s adjusted EBITDA margin was 29.3 percent in 2022. It was 21.8 percent in the first half of 2026. Seven and a half points of margin, gone in four years, with rising customer acquisition cost as a named driver. And a few slides later, in plain text, Chemed lists “Roto-Rooter Divestiture Considerations,” including a tax-free spin-off. When the margin compresses, even the original consolidator starts doing math on the exit.
Now think about the roll-up buying shops in your metro. It runs the same model Roto-Rooter does, except it paid more going in and it’s carrying debt. Its exit depends entirely on the EBITDA multiple, and lead inflation eats the E. On an $11 million shop at an 8x multiple, one point of margin is roughly $110,000 of EBITDA, which is roughly $880,000 of enterprise value. That’s what a structural rise in lead costs quietly removes from every consolidator’s model, every year it persists.
Which tells you how they’ll behave: harder bidding in the short run to defend lead volume, and price increases to defend EBITDA. Both are already visible in most metros. A PE-backed competitor paying retail for strangers while raising prices is not unbeatable. It’s beatable precisely at the assets it can’t buy at closing: reputation, relationships, and a name locals actually know.
Your play
Roto-Rooter files a lead report because the law requires it. Run yours like the law requires it too.
Every month, out of ServiceTitan, not the agency deck: leads by source, split into paid and earned. Track the mix, because you now know the mix is where the inflation hides. Track blended cost per lead across everything, including the agency fee. Then track the only number that settles arguments, blended cost per acquired customer, and watch whether the earned share of your lead flow is growing or shrinking. If it’s shrinking, every future lead costs more than the last one, and no amount of campaign optimization changes that. Reallocating budget toward reviews, repeat, and referral does.
The largest brand in the trades just told the market, on the record, that free demand is being repriced out from under everyone. Most owners will never read that filing.
Chemed publishes its lead numbers because securities law leaves it no choice. Everyone else in your vendor stack gets to choose. It’s worth asking why so few volunteer.
