Ask a local business owner why their Google Ads leads are poor and you will often find the same culprit: ads showing to people in another state or country. The cause is rarely a wrong city in the target list. It is usually one quiet setting, buried under "Location options", that most new advertisers never open.
Location targeting decides who is eligible to see your ads based on where they are, where they regularly are, or which places they are interested in. Get it right and every click comes from someone you can actually serve. Get it wrong and you pay for curiosity from people who will never become customers.
This guide explains how Google works out a user's location, the difference between "Presence" and "Presence or interest", how to use exclusions and bid adjustments, and how the AI Max "locations of interest" feature changes things for Search campaigns in 2026.
Key Takeaways
- Google's default location option includes both people physically in your area and people who have shown interest in it.
- Switch to "Presence" if you can only serve people who are actually in, or regularly in, your target area. Expect fewer impressions.
- Location is estimated from signals such as IP address and device location, and Google says 100% accuracy is not guaranteed.
- Exclusions, radius targets and location bid adjustments (from -90% to +900%) let you shape delivery further.
- In AI Max for Search, "locations of interest" works at ad group level, but users must still meet your campaign-level geo targeting.
How Google Decides Where Someone Is
Google Ads uses several signals to estimate location. According to its help page on geographic targeting, location is typically based on the Internet Protocol (IP) address, and, depending on a user's settings, Google may use more precise signals such as GPS, Wi-Fi, Bluetooth or cell data. Searches that name a place, past locations, the content of pages viewed and Google Maps activity can all indicate a location of interest.
That means there are really two kinds of "location":
- Physical location: where a person is, or regularly is.
- Location of interest: a place someone has shown interest in, even if they are elsewhere, such as someone in Leeds searching "hotels in Edinburgh".
Google is upfront that none of this is perfect:
“100% accuracy is not guaranteed in every situation.”
— Google Ads Help, About targeting geographic locations
It also notes that location of interest "isn't restricted to a person's country", so users abroad can see ads for places they are researching. For a travel brand that is useful; for a plumber it is wasted money.
Presence vs Presence or Interest
This is the setting that saves the most budget. In Google's "About advanced location options" page, the default and recommended targeting includes both physical locations and locations of interest. The alternative, "Presence", shows ads only to people who are likely to be located, or regularly located, in your target areas.
| Option | Who sees your ads | Best for | Watch out for |
|---|---|---|---|
| Presence or interest (default) | People in or regularly in your areas, plus people interested in them | Travel, tourism, property, relocation, destination venues | Clicks from people far outside your service area |
| Presence | People likely to be in, or regularly in, your areas | Local services, clinics, restaurants, trades, most local lead gen | Lower impression volume; commuters may be included |
| Exclusion (default) | Blocks people likely to be located in excluded areas | Removing areas you cannot serve | People outside excluded areas may still see ads |
Google lists two situations where "Presence" is worth considering: when your business is in a sensitive vertical with strict targeting limits, and when you only want people in specific locations rather than people elsewhere who are interested. It also warns that "most campaigns will notice a decrease in impressions when switching away from the default targeting option." That drop is usually the point: the impressions you lose were often the ones you did not want.
Targeting Methods You Can Use
- Countries, regions and cities for broad coverage.
- Postcodes or ZIP codes where available, useful for precise service areas.
- Radius targeting around an address or point, ideal for single-location businesses.
- Location groups, such as places of interest or your business locations linked through Google Business Profile.
- Exclusions to carve out areas inside a larger target that you cannot serve.
Be aware that Google may include related nearby areas when you target a larger area, so check delivery reports after launch. If you also want to appear on Maps, read our guide to Google Maps ads, and for pay-per-lead local formats see Local Services Ads.
How to Set Up Location Targeting Step by Step
- Define the real service area. Write down where you can deliver, travel or ship profitably. This is a business decision, not an ads decision.
- Add targets at campaign level. Use cities, postcodes or a radius that match that area. Avoid targeting a whole country "just in case".
- Open Location options. Choose "Presence" for most local businesses. Keep "Presence or interest" only if out-of-area researchers are genuine customers.
- Add exclusions for areas inside your targets that you do not serve, such as islands, distant suburbs or competitors' territories you have agreed not to work.
- Split campaigns where budgets or messages differ. If two cities need different budgets or offers, give each its own campaign. Our guide to Google Ads account structure explains when to split.
- Add location bid adjustments where your bid strategy supports them (Manual CPC and Maximize clicks). Smart Bidding strategies already use location as an auction signal.
- Check the location reports after one to two weeks and look for clicks or conversions from places you did not expect.
- Review quarterly and whenever you add a branch, change delivery zones or expand services.
Location Targeting and AI Max in 2026
AI Max for Search adds a "locations of interest" setting at ad group level. Google's targeting page explains that when a query names a location, that location is used first; if it does not, the user's location of presence is used. Importantly:
- Users matched through locations of interest must still meet your campaign-level geo targeting criteria.
- Locations of interest cannot be used for areas excluded at campaign level.
So your campaign-level targets and exclusions remain the guard rails. If you are moving Dynamic Search Ads campaigns over, see our explainer on Dynamic Search Ads and the AI Max upgrade.
Location Settings by Business Type
| Business | Suggested targeting | Location option |
|---|---|---|
| Plumber, electrician, cleaner | Postcodes or radius covering the service area | Presence |
| Multi-location clinic or franchise | Radius per location, separate campaigns where budgets differ | Presence |
| Hotel or attraction | Feeder markets plus the destination itself | Presence or interest |
| National ecommerce | Countries you ship to, with exclusions for non-delivery areas | Presence for most; test interest for gifting |
| Real estate or relocation | Destination area plus key origin cities | Presence or interest |
Common Mistakes With Location Targeting
- Leaving the default on for a local service. It is one of the first things to check in a PPC audit.
- Targeting too wide. A whole country for a business that serves three towns.
- Mixing locations with very different economics in one campaign, so the budget drifts to the cheapest area rather than the most profitable one.
- Forgetting exclusions for areas you cannot serve inside a broad target.
- Never checking location reports. Settings drift and new branches open; the reports tell you what actually happened.
- Relying on ads alone for local visibility. Pair ads with organic local SEO so you are visible in the map pack without paying for every click.
Combining Location With Time and Audience
Location targeting works best alongside the other levers. Combine it with ad scheduling so ads only run when you can answer calls, and with a clean measurement plan using conversion tracking so you can see which areas produce real leads. If you are running social campaigns too, compare results with Meta Advantage+ location controls, which work differently.
Related Guides
- Dynamic Search Ads: Setup, Pros and Pitfalls (and the AI Max Upgrade)
- Google Ads Experiments: How to Test Changes Safely
- Google Ads Lead Form Assets: Capture Leads Without a Landing Page
Frequently Asked Questions
What is the difference between Presence and Presence or interest?
Presence shows ads to people likely to be in, or regularly in, your target areas. Presence or interest, the default, also includes people elsewhere who have shown interest in those areas.
Why are my Google Ads showing outside my target area?
Usually because the default Presence or interest option is on, or because location is estimated and not perfectly accurate. Switch to Presence and add exclusions where needed.
Can I use location bid adjustments with Smart Bidding?
Not with strategies like Target CPA or Target ROAS, which already use location as a signal. Location bid adjustments work with Manual CPC and Maximize clicks.
How accurate is Google Ads location targeting?
Google describes it as a best effort based on signals such as IP address and device location, and says 100% accuracy is not guaranteed in every situation.
What is locations of interest in AI Max?
An ad group-level AI Max setting that can match queries mentioning a location. Users must still meet the campaign's geo targeting, and excluded areas stay excluded.
Conclusion
Location targeting is one of the cheapest fixes in Google Ads. Define your real service area, choose "Presence" unless out-of-area interest genuinely converts, add exclusions and check the reports. If you want a second pair of eyes on your geo settings, our PPC management team can audit them. Get a free quote to start.
