How do I use location targeting to improve lead quality in Google Ads?

1. Radius and City-Level Targeting

Google offers three location targeting methods: Country, Region/City, and Radius.

For local service businesses (plumbers, accountants, HVAC), use the Radius Targeting option. Navigate to your campaign settings, click Location, and select "Enter another location". Type your business address and set a radius (e.g. 20 miles). This ensures your ads only serve to searchers physically located within your service delivery area.

Critically, change the Location Options setting from "Presence or interest" to "Presence only". This prevents Google from showing your ads to users in other cities who have previously searched for services in your target area.

2. Location Bid Adjustments

After running campaigns for 60 days, open the Locations Report and sort by CPA.

• For locations where CPA is 30% below your target average, apply a positive bid adjustment (+15% to +25%) to increase ad visibility in high-converting zones.
• For locations consuming budget with zero conversions over 60 days, apply a -100% bid adjustment (effectively excluding them) to stop wasteful spend.

This data-driven geo-bidding strategy reallocates your daily budget automatically toward the neighbourhoods, cities, or regions that generate the highest quality leads.

3. Segmenting Campaigns by Territory

If you operate across multiple cities or regions, create separate campaigns per territory rather than combining all locations into one. This gives you independent budget control, location-specific ad copy, and clean per-territory CPA reporting without geographic data blending.

For example, run a dedicated Sydney CBD Campaign and a separate Melbourne Campaign with tailored ad copy and localised landing pages. This segmentation strategy consistently outperforms single blended campaigns by 30% to 50% in conversion rates for multi-city service businesses.

4. Presence vs. Interest: The Setting That Quietly Wastes Budget

Buried in campaign settings is a location options control that decides whether your ads reach people physically in your target area, or also people merely showing interest in it from anywhere in the world. The default has historically favoured the broader interpretation, and for a local service business that means paying for clicks from other countries because someone searched with your city name attached.

For any business that serves customers in person, set targeting to presence — people in or regularly in your included locations — and set the exclusion to presence as well, so that you are not excluding people simply for having shown interest in a place you do not serve. Then verify it worked: the geographic report under locations shows where clicks actually came from, and it is the only way to catch the mismatch. An account spending a fifth of its budget outside its service area is common and almost always traceable to this one setting.

5. Choosing a Radius That Matches Real Travel Behaviour

Radius targeting is usually set from a map rather than from evidence, and the number chosen tends to reflect optimism about how far customers will travel. Pull your last two hundred customers from the CRM, plot their postcodes against your location, and you will typically find that a large majority sit inside a much tighter band than the radius you are paying for — with a thin tail of outliers who found you for reasons that had nothing to do with an ad.

Set the core radius to where the density actually is, and treat the outer band as a separate, lower-budget campaign with its own cost-per-lead expectation rather than folding it into the main one. Distance behaves differently by category too: people will drive an hour for a specialist consultation and fifteen minutes for a routine service, so a radius that works for one line of business is frequently wrong for another in the same account.