How to Optimize Google Ads by Location: A Step-by-Step Guide for Marketers and Agencies

TL;DR: Location optimization in Google Ads means adjusting bids, targeting settings, and negative locations based on where your actual conversions are coming from—not just where you assume your customers are. This guide walks you through exactly how to do it, step by step.

If you've ever looked at your Google Ads spend and wondered why a city you never intended to target is eating a huge chunk of your budget, you're not alone. Location targeting is one of the most underutilized levers in Google Ads—and one of the easiest ways to cut wasted spend and improve ROI without touching a single keyword.

Here's the thing: most advertisers set their location targeting once during campaign setup and never revisit it. Meanwhile, clicks keep rolling in from places that will never convert, and the geographic report sits untouched under Insights & Reports.

Whether you're running campaigns for a local business, a regional service, or managing multiple client accounts at an agency, getting your geo-targeting right can make a meaningful difference in your cost per conversion. This guide covers everything from auditing your current location data to applying bid adjustments and excluding underperforming areas—all within the Google Ads interface. No spreadsheets required.

Let's get into it.

Step 1: Audit Your Current Location Performance Data

Before you change a single setting, you need to know what's actually happening. This is the step most advertisers skip—and it's exactly why they end up optimizing based on assumptions instead of data.

Start by navigating to Insights & Reports > Geographic Report in your Google Ads account. This is different from the basic Locations tab under Campaigns, and the distinction matters. The Geographic Report shows you where your users actually were when they clicked your ads—not just the locations you're targeting.

What you're looking for here is the gap between your intended targeting and your actual traffic sources. In many accounts I audit, there are locations generating meaningful spend with zero conversions. Those are your first targets for exclusion.

Key metrics to pull for each location:

Cost: How much are you spending in each area? Even small amounts add up across dozens of irrelevant locations.

Conversions and Conversion Rate: Which locations are actually driving results? These are your high-value areas worth bidding up on.

CPA (Cost per Acquisition): Compare each location's CPA against your campaign average. Locations converting at well below your average CPA are undervalued. Locations converting at significantly above it are draining your budget.

Now here's a nuance that trips up a lot of advertisers: within the Geographic Report, you can segment by User Location vs Location of Interest. User Location tells you where someone physically was when they searched. Location of Interest tells you what location their search was about—even if they were somewhere else entirely.

For most campaigns, you want to focus on User Location data. This tells you where your actual paying customers are coming from.

One practical tip: set your date range to at least 30 to 90 days before drawing conclusions. Location data at the weekly level often doesn't have enough volume per area to be statistically meaningful, and you'll end up making decisions based on noise.

What usually happens here is that advertisers are surprised by how many locations outside their intended service area are generating clicks. That's your baseline. Now let's fix the settings that allow it.

Step 2: Fix Your Location Targeting Settings Before Anything Else

This is where most Google Ads location optimization guides gloss over the most important detail—and it's costing advertisers real money.

Go to Campaign Settings > Locations > Location Options. Look at what your targeting is set to. If it says "Presence or interest"—that's the default, and it's almost certainly not what you want for most campaigns.

Here's what "Presence or interest" actually means: Google will show your ads to people who are physically in your targeted location AND to people who have shown interest in that location through their search behavior—even if they're physically somewhere else entirely. So if you're running ads for a plumber in Austin, Texas, someone in New York searching "plumber in Austin" could see your ad. They're not going to call you.

For the majority of campaigns, you want to change this to "Presence: People in or regularly in your targeted locations." This restricts your ads to people who are actually there.

That said, there are legitimate cases for keeping "Presence or interest" turned on. Tourism businesses, relocation services, travel companies, and destination-based hospitality brands all benefit from showing ads to people planning a trip or move—even if they're not there yet. Know your use case before you change it.

Once you've fixed that setting, think about how you're defining your locations. Google Ads lets you target by:

Country, State/Region, or City: Good for broad campaigns or when your service area maps cleanly to geographic boundaries.

ZIP/Postal Code: Useful when your service area doesn't follow city lines—common for local service businesses in suburban areas.

Radius Targeting: Set a radius around a specific address. This is the go-to for local businesses like restaurants, dental practices, and home service companies. For dense urban areas, a 5 to 10 mile radius often makes sense. For rural service businesses, you might need 25 to 50 miles depending on the market.

For agencies managing multi-location clients, the standard recommendation is to set up separate campaigns per region. It feels like more work upfront, but it gives you clean budget control, location-specific reporting, and the ability to write ad copy tailored to each market. Trying to manage five cities inside one campaign is a reporting nightmare.

Step 3: Apply Location Bid Adjustments Based on CPA Data

Now that your targeting is clean and you have performance data from Step 1, you can start making your budget work harder in the right places.

Navigate to Campaigns > Locations. You'll see a column for bid adjustments. This is where you tell Google to spend more or less aggressively depending on where someone is located.

The logic is straightforward: if a location converts at a lower CPA than your target, you can afford to bid more to capture more volume there. If a location converts at a higher CPA than your target, you pull back before eventually excluding it.

Here's a simple way to calculate a starting bid adjustment. Take your target CPA and divide it by the actual CPA for a specific location. If the result is greater than 1, you have room to bid up. If it's less than 1, you need to pull back.

For example: if your target CPA is $50 and a specific city is converting at $30, that location is performing well. A bid adjustment of +20% to +30% is a reasonable starting point to push more volume there. If another area is converting at $80 CPA, a -20% adjustment makes sense before you consider excluding it entirely.

A few practical rules when applying bid adjustments:

Don't make drastic changes at once. Incremental adjustments of 10% to 20% let you measure the impact before going further. Jumping to +50% on limited data is a fast way to blow your budget on a statistical outlier.

Wait for enough conversion data. The mistake most agencies make is applying bid adjustments to locations with only 2 or 3 conversions. That's not enough to be confident in. As a rough guide, wait until you have at least 15 to 20 conversions from a location before making significant adjustments. If you're unsure how much data is enough, this guide on how many conversions Google Ads needs to optimize is worth reading.

Revisit adjustments regularly. A location that performed well three months ago may have shifted. Markets change, competition changes, and seasonality affects different regions differently.

Bid adjustments are one of the fastest ways to improve your Google Ads campaign optimization without restructuring everything. Think of them as a volume dial for each geography.

Step 4: Exclude Underperforming and Irrelevant Locations

Bid adjustments throttle spend in weak locations. Exclusions stop it completely. Knowing when to use each is important.

Go back to your Geographic Report from Step 1. Look for locations that have generated meaningful spend over your review period with zero or near-zero conversions. These are your exclusion candidates.

To add location exclusions: go to Campaigns > Locations > Excluded tab > Add exclusions. You can exclude at the campaign level or the ad group level.

Campaign-level exclusions apply across all ad groups within that campaign. Use these for locations that are clearly outside your service area or that have consistently shown zero value.

Ad group-level exclusions give you more nuance. If you have different products or services within the same campaign that serve different areas, you can exclude specific locations for certain ad groups while keeping them active for others. This is more complex to manage but useful for campaigns with varied offerings.

One connection that doesn't get made often enough: irrelevant locations and irrelevant search terms often go hand in hand. When you're excluding bad locations from your Google Ads spend, pull up your search terms report at the same time. You'll frequently find that the locations generating junk traffic are also triggering off-topic search queries. Cleaning up both simultaneously is more efficient than treating them as separate problems.

A word of caution here: don't exclude locations too aggressively before you have enough data. If a location has had 50 clicks and no conversions, that's a signal. If it's had 5 clicks and no conversions, that's just noise. Premature exclusions can cut off areas that might have performed well with more volume.

Also, don't forget to exclude locations outside your service area that are still generating clicks due to broad or phrase match keywords. This is especially common in service-based businesses where keywords like "near me" or "in [city]" can pull in traffic from unexpected places.

Step 5: Build Dedicated Campaigns for Your Top-Performing Locations

Once you've identified your highest-converting locations through the audit process, it's worth asking whether those areas deserve their own dedicated campaigns.

The answer is usually yes—if the volume and value justify it.

Here's the case for location-specific campaigns: tighter budget control, the ability to write ad copy that directly references the city or region, and much cleaner performance reporting. When a top market is buried inside a catch-all campaign, you're always fighting for budget allocation and you can't easily tell how it's performing in isolation.

A common structure that works well for agencies managing multi-location clients:

Dedicated campaigns for top metro areas: Your highest-volume, highest-converting markets get their own campaigns with their own budgets and location-specific ad copy.

A catch-all campaign for smaller regions: Remaining targeted areas share a campaign with slightly more conservative bids. As smaller areas prove themselves, they can graduate to their own campaigns. Understanding how to set campaign budgets in Google Ads correctly becomes especially important when you're splitting spend across multiple location-based campaigns.

On the ad copy side, mentioning the city or region in your headlines and descriptions improves relevance and typically lifts CTR. "Emergency Plumber in Austin" outperforms "Emergency Plumber Near You" for someone searching in Austin—it feels more relevant and trustworthy.

Google Ads also supports dynamic location insertion using the {LOCATION(City)} parameter, which automatically inserts the user's city into your ad text. This can work well for campaigns covering many locations without the overhead of writing individual ads for each. The tradeoff is less control over the exact phrasing. For your top markets, static location-specific ads usually perform better. For the long tail of smaller locations, dynamic insertion is a reasonable efficiency tool.

If you're layering in audience targeting alongside location segmentation—in-market audiences, demographic adjustments, customer match—dedicated location campaigns make that much easier to manage and measure. Trying to apply audience layers across a campaign that serves 30 different cities creates a reporting mess.

Step 6: Build a Recurring Location Review Into Your Monthly Workflow

Location optimization isn't a one-time task. Markets shift, seasonal trends affect different regions differently, and new underperforming areas emerge over time. If you set your location targeting in January and don't look at it again until December, you've almost certainly been wasting budget somewhere.

For active campaigns, a weekly check on location performance is reasonable—especially in the first few months after making changes. For stable, well-optimized campaigns, a monthly review is usually sufficient.

Here's what to look for in each review cycle:

Shifts in CPA by location: Has a previously strong area started converting at a higher cost? Has a location you'd written off started showing results?

New underperforming locations: Broad match expansion and changing search behavior can introduce new geographic traffic sources over time. Check your Geographic Report for locations you haven't seen before.

Seasonal geographic trends: Some businesses see meaningful shifts in where their best customers come from depending on the time of year. Ski resorts, seasonal tourism, and weather-dependent services are obvious examples, but even B2B campaigns can show regional seasonality.

If you're managing campaigns across multiple client accounts, the time cost of running through this review manually adds up fast. Tools that let you speed up Google Ads optimization directly inside the interface—without jumping between external dashboards and spreadsheets—make a real difference to how quickly you can get through your account reviews.

A/B testing location-specific ad copy is also worth building into your cadence. If you have dedicated campaigns for top markets, rotate in new headline variations and track CTR and conversion rate by location. Small copy improvements compound over time.

Putting It All Together: Your Location Optimization Checklist

Optimizing Google Ads by location comes down to six repeatable steps: audit your geographic data, fix your targeting settings, apply smart bid adjustments, exclude wasted spend locations, build dedicated campaigns for top areas, and review regularly. None of these steps are complicated on their own—the value is in doing all of them consistently.

Here's a quick checklist you can run each month:

Geographic report reviewed (last 30 to 90 days, segmented by User Location)

Location options verified (set to "Presence" unless intent-based targeting is needed for your use case)

Bid adjustments applied based on CPA data for locations with sufficient conversion volume

Underperforming locations excluded at campaign or ad group level as appropriate

High-value locations have dedicated campaigns or ad groups with location-specific ad copy

Monthly review scheduled and on the calendar

The biggest mistake in geo-targeting Google Ads is treating location settings as a "set and forget" task. The second biggest is making changes without first understanding where your conversions are actually coming from. This guide gives you both the foundation and the workflow to avoid both.

If you're spending time jumping between spreadsheets and external dashboards to manage your Google Ads optimization—location settings, keyword cleanup, match types, negative lists—there's a faster way to work. Start your free 7-day trial of Keywordme and handle all of it directly inside your Google Ads interface, without leaving the platform. Then just $12/month after that.