The quick answer: Google Ads defaults your location targeting to Presence or interest, which shows your ads to people anywhere in the world who merely search about your area. For a local service business that is money spent on people who will never become customers. Change it to Presence, which restricts delivery to people actually in your target locations. The setting lives under Campaign settings, Locations, Location options, and it is collapsed by default so most advertisers never see it. In markets near a major tourist destination it is frequently the single most wasteful setting in the account.
This is the most common expensive mistake we find in local Google Ads accounts, and it is not the advertiser’s fault. The option is hidden behind a collapsed menu, the default is the aggressive one, and nothing in the interface warns you that it is spending your budget on another state.
What the Setting Actually Does
Google gives you two meaningful choices for how location targeting works.
| Option | Who sees your ads |
|---|---|
| Presence or interest (the default) | People in your locations, people who regularly visit them, and people anywhere who show interest in them through their searches or activity. |
| Presence | People currently in, or who regularly visit, your target locations. |
Read that first row again. “People anywhere who show interest” means a searcher in Ohio typing a query about your city can trigger your ad, click it, and spend your budget. For some businesses that is the entire point. For most local service businesses it is pure waste.
Google frames the default as the reach maximizing option, and in that narrow sense it is. It simply does not distinguish between reach that can convert and reach that cannot.
Why It Costs More in Some Markets Than Others
The size of the problem depends on how much out of area interest your city generates. A market nobody searches about from elsewhere loses very little to this setting. A market next to a major destination can lose a large share of budget.
Knoxville is a useful illustration because the effect is so pronounced. Great Smoky Mountains National Park recorded more than 11.5 million visits in 2025, more than any national park in the country, and it charges no entrance fee. The Gatlinburg and Pigeon Forge corridor sits thirty to forty five minutes from downtown. The result is a continuous, year round stream of people in Ohio, Michigan and Florida searching with East Tennessee intent.
For a cabin manager or an attraction, those searchers are the whole business and the default setting is correct. For a Knoxville plumber, dentist or law firm, they are budget spent on people who are five hundred miles away and will never be customers. Same city, same setting, opposite outcomes.
The pattern repeats anywhere with a strong visitor economy, a large university, or a well known destination nearby. If people search about your city for reasons unrelated to buying what you sell, this setting is quietly charging you for it.
How to Change It
The path is short but genuinely buried.
- Open the campaign, then Settings.
- Expand Locations.
- Click Location options. This is the collapsed section almost nobody opens.
- Under Target, choose Presence: People in or regularly in your included locations.
- While you are there, set Exclude to Presence: People in your excluded locations.
Do this per campaign. It is not an account level setting, which is why accounts often end up with a mix, one campaign correct and four wrong.
Check Where Your Money Actually Went
Before and after you change it, look at the report that shows the truth. In the campaign, open Insights and reports, then Report editor, and build a report on Geographic view. Segment by Location type to separate physical location from location of interest.
What you are looking for is spend attributed to areas you do not serve. Most advertisers seeing this for the first time are surprised by how much of it there is, and by how far away some of it comes from.
If you want to see the effect on your economics rather than just your click counts, our PPC Budget Calculator will show you what happens to cost per acquisition when a share of clicks can never convert. Cutting wasted clicks does not just save that spend, it improves every downstream number in the account.
The Exception That Matters
Some businesses genuinely need out of area searchers, and switching to Presence would cut off their best traffic. Hotels, cabins and vacation rentals. Attractions and tours. Event and wedding venues. Specialty medical practices people travel for. Anything where the customer is planning a trip.
The right structure for those businesses is not to leave everything on the default. It is to separate them. Run your local service campaigns on Presence, and run a distinct campaign with interest based targeting for the travel audience, with its own budget and its own goals.
Kept in one campaign, the two audiences compete for the same money and their performance is blended into a single set of numbers you cannot read. Separated, you can see what each is actually worth and fund them accordingly.
Radius Targeting Deserves the Same Scrutiny
While you are in the location settings, look at how the geography itself is drawn. A radius is easy to set up and it assumes something that is often false: that distance and drive time are roughly the same thing.
In a flat, evenly connected metro, that assumption mostly holds. In a city split by a river, a ridge line or a major interchange, it falls apart. A twenty mile circle drawn from downtown Knoxville takes in Oak Ridge, most of Maryville, Lenoir City and the edge of Sevier County. That is four distinct markets in four different counties, with different competitors and very different drive times back to a Knoxville address.
Building your geography from the ZIP codes your customers actually come from, or from drive time areas, matches the real service footprint far more closely. It is more work to set up once and it stops you paying for two kinds of mistake at the same time: traffic from places customers will not drive from, and missing places they will.
What to Expect After You Change It
Impressions and clicks will fall. This alarms people, and it should not. You have removed traffic that was never going to convert, so volume goes down while conversion rate, cost per acquisition and return on ad spend all improve.
Judge the change on cost per conversion and revenue, not on click volume. If you have been reporting on traffic, this is a good moment to stop.
Give it two to four weeks before drawing conclusions, longer in a lower volume market where it simply takes time to accumulate enough conversions to compare fairly. Automated bidding will also need a short adjustment period as it relearns on cleaner data, and that relearning is the point: the system was previously optimizing partly toward people who could not buy from you.
Frequently Asked Questions
Why does Google default to Presence or interest?
Because it maximizes reach, and reach is the metric the default is built around. It is not a trick, but it is not neutral either. The default suits advertisers who genuinely want anyone with an interest in a place, and it quietly penalizes local service businesses who want only the people who are physically there. Google leaves the choice to you and puts it behind a collapsed menu, which is why so few advertisers ever make it.
Will switching to Presence hurt my performance?
Your click and impression volume will drop, and your efficiency should improve. If a meaningful share of your clicks were coming from people who cannot become customers, removing them lowers cost per conversion even though it lowers traffic. The businesses that should be careful are the ones whose customers genuinely travel to them, and those should separate the audiences into different campaigns rather than leaving everything on the default.
How do I tell how much budget I am losing to this?
Build a Geographic view report in the campaign and segment it by location type, which separates people physically present from people showing interest. Then look at spend by region and compare it against where you actually serve. The number that matters is spend in places you could not deliver to, and for most local advertisers seeing it for the first time it is larger than expected.
Does this setting affect Performance Max campaigns?
Location targeting applies to Performance Max as well, and getting it right matters more there rather than less. When the system is choosing placements and audiences automatically, it will optimize toward whatever converts, and if out of area conversions are being counted as successes it will find more of them very efficiently. Setting geography correctly is a prerequisite before launching automated campaign types, not a refinement afterwards.
The Short Version
Open your campaign settings, expand Location options, and check what Target is set to. If it says Presence or interest and you sell to people who have to be physically near you, change it. It takes about a minute per campaign, and in the right market it is the highest leverage minute available in the account.
If you would rather have someone look at the whole account, our PPC management team does this as part of every audit, and the Knoxville paid search guide covers the local dynamics in more detail. It is also worth reading alongside the other common Google Ads mistakes that cost local advertisers money.