Roto-Rooter’s Free Leads Fell 13% Last Quarter. Yours Are Falling Too.

Most contractors have a feeling that leads got more expensive. Almost nobody can prove it, because private companies do not publish their marketing costs.

Roto-Rooter does. It is a subsidiary of Chemed Corporation and the only publicly traded plumbing contractor with a residential business, which means four times a year it has to tell shareholders exactly what is happening to its lead flow. Its second quarter 2026 numbers came out this month, and they are the clearest public picture available of what the last eighteen months have done to contractor marketing.

The short version: the free leads are draining away, and paid is not replacing them at the same price.

The numbers

Residential revenue at company-owned branches rose 1.7% year over year. Underneath that:

• Excavation up 11.1%
• Plumbing up 3.3%
• Drain cleaning up 1.3%
• Water restoration down 6.7%

Through the first six months, total revenue was up 1.1%. Now the lead side:

• Total leads down 1.6%
• Free leads, meaning organic search, down 13.1%
• Paid leads up 7.3%

And the number that tells the whole story. Paid leads were 59% of the mix this quarter. A year ago they were 54%. Eighteen months ago they were 44%.

That is fifteen points of a company’s lead flow moving from free to paid in a year and a half. Not because they wanted to buy more leads. Because the free ones stopped showing up.

The line almost everyone will miss

Roto-Rooter’s gross margin went up, from 49% to 50.4%. They got better at doing the work. Better pricing, better efficiency in the field, 140 basis points of real operational improvement.

Their adjusted EBITDA margin still declined. The reason given was increased internet marketing costs.

Read that twice, because it is the actual finding. A company with 122 company-owned locations and 345 franchises improved its operations and still lost ground at the profit line, because customer acquisition ate the gain. The work got better. The cost of getting the phone to ring got worse, and it got worse faster.

What the CEO said out loud

Chemed CEO Kevin McNamara described lead generation and customer acquisition costs as having “remained a challenge,” and then said the part most vendors will never say to your face:

“Google hates the idea of free leads.”

He added that the situation has “largely stabilized.” CFO Mike Witzeman was more precise about what stabilized means:

“We believe it’s not going to deteriorate from here... I would also really hesitate to say that we think it’s going to significantly improve from here either.”

That is not a forecast of recovery. That is a company telling its shareholders the new cost of a customer is the permanent cost of a customer. Plan around it.

Why you cannot budget your way out of this

Here is the uncomfortable part for a shop doing $2M to $20M. Roto-Rooter has a national brand, decades of domain authority, a dedicated marketing department, and enough spend to get a Google rep on the phone. If any advertiser in the trades could negotiate their way to cheaper clicks, it is them.

They could not. They are paying more and taking less margin for it.

So when your paid cost per lead climbs, the instinct to fix it with a bigger budget is backwards. You are bidding into the same auction as the company that just told the public markets this problem does not have a spending solution. More budget buys you more of the same expensive lead.

What actually moves the number

If the cost of a click is fixed and rising, there are only three levers left. All three are things you control and Google does not.

Convert more of the traffic you already paid for. This is the one almost nobody works on, and it is the cheapest money in the building. If you are paying $40 a click and 2% of those visitors call, taking that to 3% cuts your cost per lead by a third without touching your budget. Every point of conversion rate is a discount on every click you will ever buy. Most contractor sites I open are sending expensive paid traffic to a homepage with a phone number in the corner and a contact form that emails nobody.

Own the channels Google cannot tax. Your Google Business Profile, your review velocity, your past-customer list, and your referral flow. Roto-Rooter’s free leads fell 13.1% because the free part of the search results page keeps shrinking. The map pack, your database, and the people who already paid you once are not subject to an auction.

Get visible where the answers are being written. A growing share of “who should I call” now gets answered by an AI summary instead of ten blue links. That surface is being built right now, and the businesses being cited in those answers are not paying per click for the privilege. It is the closest thing to free leads left, which is exactly why it is worth working on before it gets priced.

The bottom line

Roto-Rooter published what every contractor already suspected. Free leads are drying up, paid leads cost more, and the shift is structural rather than seasonal. Their own CFO declined to promise it gets better.

The response is not a bigger ad budget. It is getting more out of every lead you already pay for, and building the channels that do not have a meter on them. That work is less exciting than launching a campaign. It is also the only part of this you control.

All Roto-Rooter and Chemed figures in this article are second quarter 2026 results as reported by Homepros News on August 3, 2026. Quotes are attributed to Chemed CEO Kevin McNamara and CFO Mike Witzeman as published in that report. Verify against Chemed’s own filings before relying on any single figure for a business decision.