As with many aspects of AdWords and the other paid search marketing platforms, I find that geotargeting for PPC is easy to do quickly and difficult to do well.
In this article we'll walk through a few simple steps for setting up "default" geotargeting options, and then I'll talk through a couple of additional levers that advertisers can pull to both expand and refine their geo targeting  reach.
If you're an advanced user already painfully familiar with how to get a new geotargeted campaign up and running via the AdWords interface, I created a handy anchor link so that you can skip ahead to the meatier stuff.
Setting Up Geo-Targeting
As you create a PPC campaign, you're offered with some initial options for geotargeting:
If you already have a campaign set up, you can go to the Campaign > Settings tab and access this same menu of options.
From there, you can either grab one of the high-level defaults that Google offers up (frequently this will get you into trouble and cause you to structure your campaign so that you're making more money for Google, not for you) or choose the select one or more other location targeting  options:
As you can see there are a lot of potential options here:
- Geotargeting Bundles Tab - Bundles are a nice way to quickly grab related countries and roll them into one targeting option. The US and Canada bundle is particularly useful here for many North American advertisers. The downside to bundles is that they're very imprecise. Be careful to explode the bundle to see what countries are in that bundle and that they make sense for our business.
- Geotargeting Browse Tab - This is a bit like directory-style geotargeting, as you can drill down and see some specific state/town options. Again there's a certain imprecision here for really granular geotargeting.
- Geotargeting Search Tab - If you have a specific town in mind, this is exactly what it sounds like and will allow you to grab that town, state, etc. and target it. Again: this can sometimes be a bit blunt for businesses that want real geotargeting control.
- Geotargeting Exclude Tab - This is a nice feature if you're looking to quickly drill down and create a "custom" geotargeting segment. For instance, if we wanted to target very close to all of Massachusetts and not certain areas, we could start at the state level and include some specific exclusions:
Custom Geo-Targeting Tab
This gets its own section, as it's the most powerful of the AdWords geotargeting tools. With this tool you can input an area code and a surrounding radius, create a custom "shape" which allows you to draw the area you want your ads displayed in on a map, or do a bulk upload of areas you want to advertise in (this is very handy if you're transferring settings across multiple campaigns or dropping in a long list of specific areas you want your ad shown in):
So now you know how to get into the geotargeting interface and create a geotargeted campaign. But there are actually even more controls you can use to focus your campaigns on a specific geographical region.
To walk through the next step in creating profitable geo-segments within your paid search campaigns, we'll use a specific example. Let's imagine we have a company that sells tickets for various live events.
While an event may be local, you might also be interested in attracting people located in other areas. If we want to sell tickets to a comedy show in Boston, we'll want to make sure that our advertisement reaches searchers in California coming to Boston for a weekend and looking for "comedy tickets." We also want people in the Boston area looking for "comedy tickets."
We can accomplish this by setting up two separate campaigns:
- Geo-Targeted - This campaign is geo-targeted to the specific region we're interested in, but can use more aggressive terms like comedy tickets.
- National with Geo Modifiers ("Geotargetifiers") - Here we target the campaign to a broader region (possibly the US & Canada bundle) but force specific modifiers on the keywords (things like town names, zip codes, etc.)
If you're consistently launching new local campaigns (like we are with our ticket company) you'll find that it's very difficult to get good local keyword data (Google Insights for Search  is a useful tool here but often won't give you comprehensive data for your subject). So a great way to get data is to launch with a "mashed-up" keyword list that includes a formula to combine modifiers and target keywords. Often a great way to compile these lists is to identify geo-modifiers you'll want, such as:
- Boston MA
- Boston Mass
And append them to core terms:
- Comedy show
- Comedy club
To come up with a list like this:
- Boston Comedy
- Boston Comedy show
- Boston Comedy club
- Boston MA Comedy
- Boston MA Comedy show
- Boston MA Comedy club
- Boston Mass Comedy
- Boston Mass Comedy show
- Boston Mass Comedy club
You can do this using the concatenate function in Excel, or this tool  is quick and easy and performs exactly this function (and better yet is free!). Also this tool  offers an awesome list of geo-modifiers as output.
You can push these mashed-up keywords live and get real-time data about how searchers interact with your site by leveraging a keyword analytics  tool.
Proactively Limiting Irrelevant Geo-Traffic
One common problem with the nationally targeted geo-modifier approach is that not all locations have a unique town name.
If our concert weren't in Boston but rather were located in Springfield we'll likely be subject to traffic from people looking for Springfield, Illinois comedy tickets. To prevent this we can set Illinois and any other state that has a Springfield as a negative.
If our business is heavily geo-focused, we might consider adding negatives for every state name and abbreviation that we're not advertising to in every single campaign. This lets us be proactive without having to identify every Springfield or other generic town name. By creating a quick list of the fifty states and their abbreviations, we can drop those 100 keywords into our campaigns at the campaign level to quickly create those negatives.
(Hat tip to Matt Umbro for mentioning this tip on Twitter  earlier this month. Matt's Twitter stream is an absolute must-read for anyone in paid search).
Data Mining Isn't Just for Keywords
Much like mining search query data to identify negative keywords  and expand your keyword list is a great means of identifying profitable opportunities and areas where you're wasting spend, reviewing the geographic break-down of your paid search spend can give you some great insights.
Within your account you can get a really nice breakdown of geo-specific data by looking at the campaign level and then drilling down to the dimensions tab, where you can take a look at performance broken down by:
- Metro Area
You can then export this data and identify areas you want to exclude, and in many cases gain insights into which of your geo-campaigns are and aren't working for you.
A Final Word of Caution
Again: as with many things AdWords, while you certainly have a number of tools at your disposal for geotargeting your paid search campaigns, sometimes you'll find that all your hard and careful work is basically ignored by the platform. Google often takes liberties with geotargeted campaigns, such as:
- Showing someone outside of your specified geotargeted range a geo-modified ad
- Showing someone who searched for "Boston chiropractor" from New Hampsire and then "comedy club" your ad when the keyword you specified was Boston Comedy Club or the geo-location you specified (basically the idea here is that they'll use a searcher's previous searches within a session to "guess" at geo-intent)
IP targeting is imperfect, and so is Google, so keep a close eye on your campaigns, monitor performance at multiple levels, and make use of the geographic dimensions report to identify areas for improvement, because the reality is the ability to serve someone a specific ad in a specific location at the exact moment they're searching for a geo-specific location is a hugely powerful advertising opportunity: make sure you make the most of it!