Hidden in the “location options” drop-down of your campaign location targeting lies an important setting that deserves careful consideration. It’s part of a bigger question that needs answering: “what is the best way to use location targeting to reach my target market?”. The setting in question here, is whether to use the “Presence or interest” (default) setting for targeting, or whether to use the “Presence” setting. Here, I’ll talk through what they mean, why the differentiation is important, and different strategies when it comes to setting up effective location targeting.
Before I get into it, let’s just say that there’s no absolute right way to do this. The fundamental theory of big data PPC, which we embrace here at PPC Assist, is that it’s better to cast a wider net and allow AI to use conversion and performance signals to optimize performance. And while we believe in that approach, we also have another fundamental belief when it comes to launching campaigns:
Don’t waste money.
That is to say, it takes time and money for algorithms to optimize campaigns. If we can reduce wasteful spend at the onset and speed along the testing process, everyone wins. Using effective location targeting is one of the ways that we like to give campaigns a head start and avoid poor quality spending, even on new accounts.
Note that throughout this article I’ll say “Google” as it’s the most popular, but Microsoft Ads (Bing) uses the exact same targeting logic.
Let’s take a look at a few plausible strategies for setting up location targeting:
Option 1: Presence or interest default targeting
Let’s go over search engines’ default targeting: Presence or interest. The exact text as of now is:
Presence or interest: People in, regularly in, or who’ve shown interest in your targeted locations (recommended)
Here is the more detailed explanation of it if you investigate the ? button near the option:
By default, your ads can show to people in, regularly in, or who’ve shown interest in your targeted locations. For example, if you own a bakery in Paris and choose Paris as a targeted location, your ads can show to people located or regularly in Paris, or to people who have expressed interest in Paris bakeries (now or in the past). Alternatively, you can use other location options to limit the location types you target.
The bold part is what keeps me and other paid media managers up at night. What does “expressed interest in Paris bakeries now or in the past” actually mean? How do we define “interest”. How far back does “in the past” go? This presumably intentionally vague wording arguably gives Google the plausibility to run ads for your Parisian bakery to anyone in the world who has searched for or engaged in content about croissants at some point in their life.
You would hope that’s not all the signal would require, but it technically (and perhaps legally) wouldn’t need to.
My description above shows plausible but (very) weak interest in Paris, and someone in Paris searching for “bakery open now” would be showing (very) strong interest. Everything else, of course, would lie somewhere between these two in terms of quality for your Parisian bakery.
That would include me. I visited Paris in October of 2015, and I’ll be the first to admin I love a bakery. I visited several while I was there, but I haven’t been back since. I’m actually punching these keys from Vietnam, half a world away. And yet, in the past I’m a person who has expressed interest in Parisian bakeries. Is the search engine going to advertise your bakery to me?
If the rhetorical nature of that question didn’t quite land, the answer is “it’s possible.” And the fact that it’s possible, is a little worrisome.
Examples of how “presence and interest” targeting can go wrong
In practice, we’ve seen this situation play out. Not in Parisian bakeries, but in many other cases. For example, A LOT of people around the world are “interested in” the United States. That gives search engines a blank check to show your ads to people in India or Bangladesh even though you’re trying to sell to people in the US (we’ve seen this happen in the Tech and SaaS industry multiple times).
Another situation where we’ve seen it wreak havoc is in targeting for local businesses close to a border. A prospective client came to us about getting tons of leads from Canada – 100s of clicks, despite being located on the US side of Lake Ontario. When we figured out what happened, we sent in a support ticket asking for a refund and explanation. The person from Microsoft Ads simply said that those Canadians showed interest in that city or went there sometimes (despite it being across a lake, 3-4 hours by car), which is a long ways to go to visit a mom and pop retail store.
While those are more extreme (yet common) examples, the most common effect of using this setting is that it expands your targeting radius just a bit more than you might want. If your targeting area is a 10 mile radius around your business in Round Rock, TX, Google is going to expand that targeting to a larger portion of Austin, as well as more area North. If you’re running a specialty or high-end business, like selling wedding gowns or offering personal injury legal services, that’s probably perfectly fine. But if you’re a hairdresser or breakfast diner, that’s probably a waste of money.
Pros:
- Maximizes reach
- Lowers CPC
Cons:
- Lower quality traffic
- Wasteful spend
- Targets users outside of the location area
- Targets users no longer interested in the product/service
- Can spend large budgets very quickly
- Slower testing and optimization
The above discussion provides what I believe a pretty compelling argument against using “presence and interest” blindly, maximizing clicks, and then not checking it again.
That doesn’t mean you can’t use this “presence and interest” option. It just means that if you do use it, we need to pair it with some additional tactics. Let’s take a look at those next to see how this default targeting can be improved upon.
Option 2: Presence or interest targeting + conversion-based bidding
So if the default “Presence or interest” alone isn’t a very efficient way to operate, how can we fix it? One way to improve this targeting is to implement conversion-based bidding.
To do this, you’d set your bidding strategy to “maximize conversions” or “maximize conversion value” (if you are an ecommerce store, or have values assigned to conversions).
This is really only effective if you have sufficient conversion data points. If you’re running a lot of volume, you can probably get this from sales, leads, and phone calls alone. If you have a smaller budget and don’t get a lot of hard conversions, you may want to consider a usability-based conversion such as spending 5 minutes on the site. The goal is to give the algorithm sufficient data to exclude low-performing clicks.
How does this address the “cons” of “presence or interest” targeting alone?
The first four “cons” listed above can be simplified to “results in traffic which provides poor value relative to its cost”. Worse quality for the price, in other words.
Using a conversion-based bidding model empowers the AI to focus on providing value, rather than just traffic. If users in India, across the lake, or on the other side of the city aren’t “converting” and providing value to your website, the AI should quickly marginalize that traffic and focus on users who do provide value.
In theory, forcing the AI to optimize for conversions or conversion value will penalize it for any ideas it gets about wasting your money on irrelevant traffic.
Pros
- Focuses on clicks that drive value to the business
- Still allows for greater reach
- Should reduce clicks with low probability of converting / driving value
Cons
- Increases CPC
- Doesn’t restrict locations
- Puts a lot of faith in conversion-based bidding
- Requires large numbers of conversions to be effective
This option pushes the optimization algorithm to be more value-driven. That’s a large step in the right direction, and with sufficient data and honest AIs it should be enough to run campaigns effectively.
Once sufficient data is collected, the automated bidding strategies should be able to successfully avoid poor-quality traffic that Option 1 was prone to.
One caveat here is that the accuracy of your conversion reporting is very important. If you’re an e-commerce store or optimize based on leads (preferably with lead scoring or a way to only count quality leads), and get sufficient quantity, then you’re probably safe with Option 2. But if you use weaker conversion metrics like time on site, form fills and click to calls without any quality metrics, or something like resource downloads, you may want to take extra steps to ensure quality.
Option 3: Presence or interest default targeting + location negatives
If you’ve decided that the “presence or interest” default targeting is too dangerous for you, but you don’t have the adequate conversion tracking in place to use Option 2, then there is another option for you. Not as in-line with our methodology as the conversion-based bidding, but it can certainly cut down on wasted spend.
And that’s to make extensive use of the negative location exclusions. Since the default settings open up the potential targeting to anywhere “interested in” the targeted location, it’s advantageous to add negative locations (that operate as “presence” negatives – anyone in those locations). In other words, you’re saying “show my ads to anyone interested in my target location, BUT don’t show it to users in {these} locations”.
How to define {these} will depend on the type of business you run and location – basically where users are most apt to be targeted that you don’t want.
So for those SaaS clients that target the United States, you may want to add negative targets for countries heavily involved with the tech industry that you don’t want to sell to. You can also add negatives after campaigns collect some data – so if you’re seeing a lot of traffic from Vietnam and Senegal and decide that isn’t really your target market, you can add those negatives after observing traffic.
Similarly, you can add negatives for regions that are a bit closer that you don’t serve. If you’re an attorney operating on the Pennsylvania/Ohio border but just have a license to practice in Ohio, you may consider excluding Pennsylvania from your targeting. Or you can exclude Canada or Mexico if you’re operating in the US and close to either border.
As long as your business isn’t operating in a restricted industry (such as those subject to fair housing laws, employment, etc), you can also add undesirable areas within your city to the negative targeting list. This could be due to socioeconomic backgrounds that differ from your target audience, because that area is saturated with companies like yours, or it’s just farther than someone would realistically travel for your products/services despite potentially being “interested in” your area.
For example, if you’re in a larger metropolitan area where travel can take a long time despite a relatively small geographic distance, you may want to be aggressive with negative targeting.
If you’re running an ecommerce company, you’d want to add negative location exclusions for any countries that you don’t ship to. The same goes for B2B lead generation companies.
Pros
- Excludes people from known areas of poor value
- Still allows for greater reach
Cons
- Increases CPC
- Doesn’t optimize for quality
- Excludes qualified searchers from excluded areas
The cons list is shorter for this one, but they’re big ones. Optimizing for quality is important, and in some cases excluding users who are searching for services in a particular area despite not being present there can be a mistake. It’s a situation that requires consideration about the buyer’s journey to determine how likely these Type II errors would be.
If you don’t have sufficient conversion data and your campaign volume is being throttled when using Presence targeting (Option 5 below), then this is your best option to drive more volume.
So not ideal, but this strategy has its uses in select situations.
Option 4: Presence or interest default targeting + location negatives + conversion-based bidding
The next option combines Option 2 and Option 3. You’ll keep using the default location settings, but set campaigns to optimize for conversions as described in Option 2. Then, layer on negative location exclusions for any places you definitely don’t want people appearing.
In this case, since effective conversion-based bidding is in place, we recommend being less aggressive with negative locations than you would be if implementing just Option 3. This should reduce Type II error (when you exclude people you shouldn’t), excluding people you can’t work with, rather than those you find unlikely to be a good fit.
Adding negative location exclusions for foreign countries you don’t work with, places you don’t ship to, etc, are welcome additions to these campaigns.
By excluding these people, you can speed along the optimization process and reduce initial spend by excluding searchers that have a very low probably of being customers. In theory, the conversion-based model would do this too, but it can take a while and isn’t as fool-proof as using exclusions. When in doubt, we don’t like to give Google more leash than we need to.
Pros
- Focuses on clicks that drive value to the business
- Still allows for greater reach
- Should reduce clicks with low probability of converting / driving value
- Excludes people from known areas of poor value
Cons
- Increases CPC
- Puts a lot of faith in conversion-based bidding
- Requires large numbers of conversions to be effective
If you have enough data to use Option 2, then you might as well layer on additional negative placement exclusions and speed up your process.
This is the setup we recommend for a lot of local businesses. It allows you to be tight with your targeting, but expands your reach based on what Google knows about users and their habits – their likelihood of doing business given your location. It isn’t as restricting as presence-only targeting and can provide considerably more volume.
Still, location monitoring is important, and evaluating the quality of users based on their location is very important. For example, if you notice lead quality is much weaker coming from certain geographic locations but aren’t bidding based on conversion value, the AI won’t know the difference. So some user intervention can be advisable to help the AI improve quality.
Option 5: Presence targeting
Now that we’ve covered some strategic variations for the default location targeting method, let’s take a look at the other option: presence targeting.
Presence: People in or regularly in your targeted locations
There isn’t a large disclaimer defining this one, so we can take it that it means the user must physically be in the targeted location, or be there often, to be eligible to see your ad. And from the data available to us through all our client accounts, we can say that this targeting option does tighten user locations a lot to the specified location.
Which seems pretty solid. You can proceed with a lot of confidence that if you’re using presence targeting for your bakery in Paris and have it set to a 1 mile radius (or kilometer, as a European bakery would probably prefer). People searching for bakeries in that area are almost certainly a potential customer, so all those dollars should be spent pretty well.
That seems to make a lot of sense. Why wouldn’t everyone just use the presence targeting method?
Well, because it’s not always quite that simple. Or at least that’s what search engines would like you to believe.
If you buy me a drink, this is where I’d go on a 10-minute, conspiracy-filled rant about how the real reason Google does this is to artificially expand its targeting however they want, making more ad accounts eligible for each search, which pushes CPCs up, most notably for small-market clients with little competition. But you didn’t buy me a drink, so let’s save that for another day.
Let’s take them at their word, which does make sense in theory, that not only the people physically in your targeted location should be shown ads for your location. The amount of sense it makes varies by industry and business. If we’re advertising an adventure tour agency, then people looking for tours of Paris from all around the world are likely to be potential customers. If we’re advertising that bakery we keep talking about, then it’s possible it’s relevant, but less so (maybe I want to find some nice bakeries to frequent before going on my trip). But if we’re advertising a lawn care service, it’s pretty unlikely someone living in Chicago who has shown an interest in Paris is going to want landscaping services while she’s there.
In other words, it’s plausible that someone could be a potential customer without physically being in the right place at the moment (or frequently). Since this campaign targeting is much more rigid with its location targeting, the risk of Type II errors discussed earlier (incorrectly excluding a good target) increases.
For an account running a small budget, has infrequent conversions or poor conversion data, and doesn’t want to invest a lot of time into ongoing management, presence targeting can be an effective way your money is spent well, with minimal location-related waste even upon launch.
But that Type II risk is high, and for some clients – especially those operating in areas of low population, that choose a targeting radius that is very small, and/or target keywords with low volume – clicks and impressions can be throttled significantly by this setting. We’ve launched some campaigns with this setting for clients and had only a few clicks trickle in despite higher and higher maximum CPCs, and only opening up in volume when we changed targeting settings.
Pros
- Very low risk of clicks from users in undesirable locations
- Can be deployed quickly with minimal wasteful spend
Cons
- Increases CPC
- Restricts reach
- Throttles volume
- Frequent instances of Type II error
You may read all that and think that because of the exclusion risk, I’m not really a fan of using presence targeting. That isn’t the case. If anything, I was so long-winded in my attempt to justify Google’s recommended targeting because in many cases, I find it difficult to justify.
The travel and tourism examples are easy ones to provide to show issues with it. But realistically, for most businesses, targeting just users who are in your location or frequently in your location is a perfectly good way of targeting users and eliminating wasteful spend.
Local businesses can avoid pitfalls like the throttled volume by using more generous targeting radii, and consider using bid adjustments based on distance.
For B2B lead generation companies and e-commerce stores just shipping to the US and Canada, there’s really no reason not to use presence targeting. If you don’t do business with people in a swath of other countries, then don’t open up the door to targeting them simply because they shown an interest in one you do.
Presence targeting is extremely useful, but you need to be smart about the location targeting you set up and accurately gauge a low likelihood of users outside your targeting zone being potential customers.
Option 6: Presence targeting + conversion-based bidding
As detailed in Option 2 above, adding conversion-based bidding to any targeting method empowers the AI to reduce exposure to searches that are unlikely to convert and increase exposure to those that are.
Since presence targeting already constricts volume, which is a lot of the risk discussed in Option 5 above, adding on this layer could throttle it even more. But if it’s low-quality traffic, that’s something you’d want to throttle, of course.
So if you have the conversion data to implement it, I always recommend using the conversion-based bidding.
If you are able to optimize for conversions or conversion value, I recommend being even more generous with your targeting radius than you may have been in Option 5. Unleash the power of AI upon the users at the fringes of your targeting area, allowing it to show ads in high-quality situations to users who may be more likely to convert. Who knows, maybe Google’s AI has a “willingness to travel” variable that identifies people who don’t mind a bit of a commute.
The example below shows a pretty generous targeting of the Seattle area. Note the focus hotspots around downtown Seattle and Bellevue, which would potentially have the largest focus. There are additional rings outside of those, followed by very generous 10 mile radius targeting to cover the greater Seattle area. On conversion-based bidding, you wouldn’t be able to add bid adjustments for these, but on a manual bidding model you could. Another option would be to splitting these into multiple campaigns to isolate the targeting you want.
What kind of company do you think would be set up like this?
If you thought of a B2B service company, that’s probably a pretty good guess.
If it didn’t have the concentrated 2 mile targeting around the business centers, this could be a lot of different services that someone might travel for. Perhaps a nice bookstore, wedding gown shop, attorney, or fine dining.
If it didn’t have the outer ringers, you’d be looking at something people aren’t really willing to travel across the city for: barbers, supermarkets, or take-out Chinese food.
No one really knows exactly how the big data formula works (I doubt any single person at Google or Microsoft do either), but best practice is to allow for a larger set of users and allow the algorithm to use its data points to target effectively.
Pros
- Very low risk of clicks from users in undesirable locations
- Can be deployed quickly with minimal wasteful spend
- Focuses on clicks that drive value to the business
- Should reduce clicks with low probability of converting / driving value
Cons
- Increases CPC
- Restricts reach (a little)
- Throttles volume (a little)
- Instances of Type II error (a little)
Note that for the bottom 3 “cons” on the list, if you select a larger targeting radius when using Option 6 compared to Option 5, they will be much less pronounced.
I like this targeting method a lot, and we use it here frequently at PPC Assist. But make no mistake, it is the most restrictive. Taking into account goals and budgets, we advise our clients about the risks and rewards of each option (now they can read this blog instead).
While all methods have their place, our most common deployment is Option 6 while considering a switch to Option 4 if we’re not getting the volume we desire.
Summary
While the targeting options seem pretty simple in Google Ads and Microsoft Ads, there are nuances that can have a dramatic impact on who is clicking on your ads.
- For Ecommerce and SaaS companies, we recommend Option 6 almost all of the time. Companies selling products online typically are only selling to certain geographic areas, and their main focus is maximizing sales.
- For B2B lead generation companies, we also recommend Option 6. Again, you’re generally trying to do business in certain areas, and the goal it to maximize leads or lead value.
- For local businesses, it’s a bit more complicated. We frequently employ Option 3, Option 4, Option 5, and Option 6 depending on the type of business and situation.
Whatever option you choose, the fundamental principles remain the same: minimize wasteful spend, avoid Type II errors, focus on user value, and prioritize efficiency. A skilled Google Ads specialist will help put your account in a good place with an effective setup and provide a roadmap of potential ways to deal with challenges that whatever strategy you select may face. A little ongoing help may be a good idea until campaigns find their groove.
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