Google Ads Location Targeting: The Setting Most People Get Wrong
There’s a single setting in Google Ads that determines whether you pay for clicks from people in your city — or people anywhere who once Googled your city. Most accounts have it set to the wrong option. Google quietly made that the default.
Here’s how to find it, why it matters, and how to fix it in two minutes.
The Default Setting Nobody Reads
When you set a location target in Google Ads, you choose a city, region, or radius. What most advertisers miss is the second option that appears below: Location options.
Google’s default is:
Presence or interest: People in, regularly in, or who’ve shown interest in your targeted locations.
Read that again. “Shown interest in.” That means someone in New York who searched “Phoenix plumbers” two weeks ago can trigger your Phoenix plumbing ad. They have no intention of calling you. They’re not moving. They Googled Phoenix once.
You’re paying for that click.
This isn’t a bug or an oversight. Google’s documentation describes it as a feature that “maximizes reach.” For a national retailer or a tourism board, it might be. For a local service business, it’s a budget leak.
Why Google Made This the Default
The charitable read: for some businesses — relocation services, vacation rentals, real estate, national brands — interest-based targeting genuinely adds value. Someone in Chicago researching “Miami condos” is a real lead for a Miami developer.
The less charitable read: broader targeting means more auctions, more impressions, more clicks, more spend. Google is an advertising platform. Their defaults favor reach.
Neither interpretation should make you angry. It should make you check the setting.
How to Change It (Exact Path)
This is a campaign-level setting. You need to do this for every campaign that serves a local area.
- Go to Google Ads → select your campaign
- In the left menu, click Settings
- Scroll to Locations
- Click the Location options dropdown (it’s easy to miss — it sits below your location list)
- Under Target, change from Presence or interest to:
Presence: People in or regularly in your targeted locations
- Save.
That’s it. One dropdown. You’re now only showing ads to people physically in your service area.
Do this for every campaign serving a local market. It takes 90 seconds per campaign.
What This Costs in Real Numbers
A home services company in Phoenix — let’s say HVAC — was spending $4,200/month on Google Ads. After pulling location reports, they found 23% of clicks came from outside Arizona. Some were neighboring states. Many were from cities like New York, Chicago, and Atlanta.
That’s roughly $966/month on clicks from people who cannot become customers.
Annualized: $11,592.
The location report is easy to pull: Reports → Predefined reports → Geographic → User locations. Run it for 30 days. Sort by clicks. Look for states or cities you don’t serve.
If you see significant spend outside your area, that’s not a targeting strategy — it’s a configuration error.
When “Presence or Interest” Is the Right Choice
To be clear: there are businesses where the default setting makes sense. You should use Presence or interest if:
- You’re a destination business. Hotels, vacation rentals, tourist attractions, ski resorts. The customer is researching from somewhere else and will travel to you.
- You sell to relocators. Real estate agents targeting people moving to their city. Corporate relocation services. Moving companies in a destination market.
- You run a national brand. If you ship anywhere or sell digitally, interest signals are legitimate demand.
- You’re doing brand research or awareness campaigns. Not every campaign is direct response. If you’re building top-of-funnel awareness, wider reach may be intentional.
Outside these cases, local businesses almost always benefit from switching to Presence.
Radius Targeting vs. Location List Targeting
Once you’ve fixed the targeting mode, the next question is how to define the area. You have two main options:
Radius targeting draws a circle around an address. You set the center point and the radius in miles or kilometers.
Best for:
- Service businesses with a clear drive-time limit (“we serve within 25 miles”)
- Businesses in suburban or rural areas where zip codes don’t align neatly
- Testing: start tight, expand if performance holds
Location list targeting lets you add specific cities, regions, zip codes, or metro areas by name.
Best for:
- Businesses that serve specific cities but not the full surrounding area
- Multi-location businesses where each campaign maps to a different market
- Situations where you want to include high-value suburbs but exclude low-converting areas
You can combine both in a single campaign — for example, radius around your store plus specific zip codes in nearby areas. The location report will tell you where your actual conversions come from, which helps you tighten or expand over time.
The Exclusion Side: Blocking Locations You Don’t Serve
Fixing the targeting mode is step one. Adding location exclusions is step two — and most accounts skip it entirely.
Even with Presence targeting, Google can occasionally show your ads in locations that are geographically adjacent to your target area but outside your service zone. Adding explicit exclusions gives you a hard boundary.
How to add exclusions:
- Go to Settings → Locations
- Click + Add locations
- Use the search field to find the location
- Instead of clicking Target, click Exclude
Common exclusions to consider:
- Neighboring states you don’t serve
- Specific cities within your state that are too far to service
- International countries (if your campaign isn’t geo-restricted and you’re seeing international traffic)
Check your user location report monthly for the first few months after any targeting change. The data will tell you where the edge cases are. Add exclusions based on what you see, not what you guess.
One More Thing: Location Bid Adjustments
After you’ve fixed targeting and set exclusions, bid adjustments let you put more budget toward your highest-converting locations.
If your location report shows that customers in one neighborhood convert at twice the rate of another, you can bid higher there. Or bid lower in areas that convert but at a higher cost per acquisition.
In Settings → Locations, you can add a bid adjustment (positive or negative percentage) to any individual location target. This doesn’t override the targeting — it layers on top of it.
This is a refinement step, not a priority one. Get the targeting mode right first. Then use bid adjustments to optimize within that boundary.
The Quick Audit
Run these three checks right now:
- Location options setting — is it set to Presence or Presence or interest? Change it if needed.
- User location report — pull 30 days of click data. Are you paying for out-of-area traffic?
- Location exclusions — are there areas you can’t serve that should be blocked?
If your account has multiple campaigns, each one needs to be checked individually. The setting doesn’t carry over from campaign to campaign.
This is the kind of configuration issue that’s invisible if you’re looking at aggregate performance numbers. Your cost-per-click looks normal. Your CTR looks fine. But a meaningful percentage of that spend is going to people who physically cannot hire you.
If you want a full account review — location settings, keyword structure, match types, bid strategy, conversion tracking — that’s what the SalesPathPro audit covers. One flat fee, delivered in five business days, with specific changes and projected impact.