Look at your own data before deciding anything. In Search Console, compare impressions and clicks by query across the last year. The pattern most local sites see is stable or rising impressions with falling clicks on how to and what is style queries, and much steadier clicks on service, pricing, near me and brand queries. If your blog traffic dropped while your service pages held, that is the Overview effect rather than a penalty.
The strategic response is to stop treating informational blog traffic as an end in itself and start treating it as a way to be the cited source. Being named in an Overview still builds familiarity, and people do come back later and search your name directly. Meanwhile, put real effort into the pages only you can answer: your prices, your service areas, your availability, your process, and photos of your actual work.
Do not rewrite your whole plan off one scary month either. Seasonality, algorithm updates and your own site changes all muddy the picture, and it takes a few months to see the real line. Be careful with loud claims in both directions too. Nobody outside Google has clean data on how much traffic Overviews absorb for a local service business, so treat confident percentages as estimates dressed up as facts.
Send the site over. We will tell you what is broken, what you could rank for, and whether AI search knows you exist. No charge and no pitch deck.