Google Ads Radius and Location Targeting: The Setting That Quietly Wastes Local Budget

If you run ads for a local business, the single most expensive setting in your account is not a keyword or a bid. It is a location option most advertisers never open, and Google leaves it on by default.

We audit a lot of local Google Ads accounts, and this setting is wrong in most of them. It quietly serves ads to people who are not in your service area and never will be, and the usual fix people reach for, adding location exclusions, does not actually work. That last part is the piece almost nobody knows.

This guide covers what the setting does, how to fix it in about ninety seconds, how to size a radius properly, and how to verify where your ads really showed. If you want the wider picture first, start with our guide on how to rank in local search.

The two location settings, and what they actually mean

Google Ads gives you two ways to interpret the locations you target. The difference between them is the difference between advertising to your service area and advertising to the internet.

In Google's own documentation, the options are:

• Presence or interest, described by Google as "Reach people in, regularly in, or who've shown interest in your targeted locations." This is the default, and Google labels it as recommended.
• Presence, described as "Reach people in or regularly in your targeted locations."

Google explains that someone can show "interest" in a location through the terms they use in their searches, because they were recently in that location, or through content they view related to it. So under the default, a person sitting hundreds of miles away who searches for "plumbers in Leeds" counts as interested in Leeds, and a Leeds plumber can pay for that click.

For a national ecommerce brand that is often fine. For a business that can only physically serve a twenty mile radius, it means paying for researchers, tourists, people planning a move, competitors checking prices and lead-generation scrapers.

The trap: you cannot exclude your way out of it

This is the part that catches experienced advertisers, and it is the reason so many accounts keep leaking budget even after someone has "cleaned up the locations".

The instinct, when you see irrelevant locations in your reports, is to add them as exclusions. That does not work the way you expect, because exclusions only ever apply to presence. Google's exclusion setting reaches "people likely to be located in your excluded locations", and nothing else.

In March 2023 Google removed the presence-or-interest exclusion option entirely, on the grounds that it was confusing and had low impact. Google's API documentation confirms the same thing: presence is the recommended and effectively only supported type for negative geo targeting.

Put those two facts together and the consequence is uncomfortable. If your targeting is set to presence or interest, someone physically located outside your area who merely shows interest in your area is reachable by your ads and cannot be excluded by any exclusion you add. The only real fix is to change the targeting option itself.

There is a second, quieter cost. Every out-of-area click that never converts still feeds your bidding model. If you are running Target CPA or Target ROAS, the algorithm is learning from traffic that was never going to buy.

How to fix it, in about ninety seconds

This is the highest return-per-minute change available in most local accounts, and it is free.

• Open your campaign and go to Settings, then Locations.
• Expand Location options.
• Under Target, select Presence: people in or regularly in your targeted locations.
• Save, and repeat for every campaign. New campaigns will default back to presence or interest, so this needs checking whenever you build something new.

Google warns that "most campaigns will notice a decrease in impressions when switching away from the default targeting option." That is the point. You are removing impressions you could never have served. Watch conversions and cost per booked job, not impressions.

How radius targeting actually works

Radius targeting, which Google also calls proximity targeting, lets you draw a circle around an address and target inside it.

Per Google's documentation, you can target countries, areas within countries such as regions, cities and postal codes, or a radius around a point. Setting one up takes a minute: Campaigns, then Locations, edit, choose Radius, enter the address, set the distance, check the map, save.

Two limits matter more than people realise:

• The minimum radius is 1 km. Google applies a population floor alongside it, which its Display and Video 360 documentation states explicitly as a minimum radius of one kilometre containing at least 1,000 people. You cannot target a single building or a single competitor's front door.
• A radius cannot be excluded. Google's API documentation states plainly that proximity targeting cannot be excluded. If you need a doughnut shape, for example a city catchment minus its centre, you have to build it from named locations, not circles.

That second point is why we usually prefer named locations, towns and postcode districts, for anything where reporting and exclusions matter, and reserve radius targeting for genuine service areas that do not map onto administrative boundaries.

Sizing a radius properly

The most common radius mistake is setting it by ambition rather than by economics.

The geometry is unforgiving. As WordStream points out, a ten mile radius is four times the area of a five mile radius, because area scales with the square of the radius. Doubling your radius roughly quadruples the population you are bidding into, and therefore the budget you need to stay visible in any of it.

For storefronts

Start tighter than feels comfortable, then let the data widen it. Use the distance report described below to find the mile band where conversion rate falls off a cliff, and cut there. In dense cities, remember that a circle is a poor model of a real catchment, because it ignores rivers, motorways, congestion zones and public transport lines.

For service-area businesses

If you are a plumber, an electrician, an HVAC business or a cleaner, the variable that matters is drive time and job margin, not distance. Google Ads has no native drive-time targeting, so in practice we either build several overlapping radii of different sizes, or approximate the drive-time shape with a set of postcode districts.

Bias tighter than instinct. A job forty minutes away at the same price is a worse job once you count the van time. Your radius should encode your margin, not your ambition.

Location bid adjustments barely work under Smart Bidding

If you are using automated bidding, the location bid adjustments you carefully set are probably doing nothing.

Google's bid adjustment documentation allows location adjustments from minus 90% to plus 900%. But the same page states that with Smart Bidding strategies including Target CPA, Target ROAS, Maximize conversions and Maximize conversion value, "you don't need to make manual bid adjustments", and that if you do make one, "it won't be supported."

So under Smart Bidding your real geographic levers are only these three:

• The targeting itself. Presence versus presence or interest, and which locations you include.
• Campaign segmentation. Separate campaigns, with separate budgets, for genuinely different geographies. This is the actual replacement for location bid adjustments.
• Exclusions, remembering they are presence only.

One caution on segmentation: splitting by geography multiplies your campaigns and thins the conversion volume in each one, which is exactly what Smart Bidding needs most. Segment only where the volume genuinely supports it. Over-segmenting a small local account is its own kind of waste.

How to verify where your ads actually showed

There is a reporting trap here too, and it hides the exact problem you are looking for.

Google's location reporting has two views. Targeted locations shows performance for the locations you targeted. Matched locations sounds like it shows where people were, but Google defines it as the locations that matched your ads, and notes these "could be users' physical locations or locations of interest."

Google's own example makes the problem obvious: someone in New York searching for restaurants in Paris shows up as Paris. The searcher's real location is not visible in that view at all. To see true physical location you need to build a user location report in Report Editor.

The distance report is the other tool worth knowing. For Search and Shopping campaigns using location assets, it reports the distance between the location that triggered your ad and your nearest business location. It is the correct, empirical way to size a radius rather than guessing.

Local Services Ads work differently, and this surprises people

If you also run Local Services Ads, do not assume your Google Ads fix carries over. It does not.

Local Services Ads is a separate product with its own geography model, set as service areas by county, city or postcode rather than by radius. More importantly, Google states that your ads can show to people estimated to be located in your area at the time of their search, and also "to people who are interested in businesses like yours in your geographic area, even if they're not estimated to be located in that area at the time of their search."

In other words, Local Services Ads has no presence-only toggle. There is no equivalent setting to fix. It is worth knowing before you go looking for one.

The audit checklist

If you do nothing else with this guide, run these five checks on your account this week.

• Confirm Location options is set to Presence on every campaign, including any built recently.
• Run the Matched locations report over 90 days and look for anything outside your service area.
• Build a user location report in Report Editor to see where people physically were.
• Run the distance report and find the band where conversion rate collapses. That is your real radius.
• Check your country-level rows for the classic worldwide-targeting leak on newer campaigns.

One last thing worth saying: not every out-of-area conversion is waste. Occasionally it is a genuine expansion signal telling you your catchment is bigger than you assumed. Look before you exclude.

If you would rather someone else went through all of this, that is what our Google Ads management service does, and the audit is free.