When you build a new campaign, one of the major decisions you must make is where your ads will be shown. It surprises me that there are very few comments or group posts on this subject since it really is an important part of building a successful, cost-effective campaign and I wonder how many accounts out there are operating on a default setting of their entire country...
I'm going to refer to this decision as 'geo-targeting', since it's all about targeting your ads to a specific geographical area.
So, why is geo-targeting important? The most obvious answer is that if you're advertising a product or service that is only relevant to a particular region, there's absolutely no point in displaying ads outside of that region. A campaign that advertises the services of a plumber need not advertise outside of 50 mile radius of their premises since a) it's unlikely the plumber will accept a job involving such travel and b) it's likely the customer will chose a company closer to home.
However, it's also important to consider whether you should geo-target your campaigns for other purposes such as keywords, CPCs, ad variations and scheduling. Even within a relative small country like the UK, it is possible that these elements will not be - or should not be - identical across the whole country. For example, a company operating on the web that ships to the whole of the UK may find that CPCs for certain keywords vary regionally and would therefore need to create separate campaigns to handle the budgeting. There may also be additional costs involved in shipping to remote areas or to Northern Ireland so ad copy may need to be varied - perhaps shipping isn't free to these areas. It's also possible that the actual wording of the copy should be varied regionally due to local terms or language structures.
Even if all things are equal, there is still an argument for geo-targeting to control and monitor costs. If your company ships country-wide and you run a single campaign that targets the whole of the UK, you might find that certain areas are not performing well or are performing well without the need for advertising so you need to create several geo-targeted campaigns to have tighter control over costs. For example, if you operated a London-Edinburgh non-stop coach service (with on-board lavaotories hopefully) you might find that you're getting plenty of bookings for the northbound trip but few for the southbound. In this case you'll want to operate two separate campaigns for around the London area and around the Edinburgh area because at this time, London needs little promotion for bookings. At some point in the future this might change, so you want to be able to keep your hand on the controls as it were.
Apply some thought to your targeting options - and there are a lot of them! There's little point in specifying a 50 mile radius of your premises if that 50 miles covers only fields and hills and misses two major towns to the East and the North only 60 miles away. Equally, you might want to stretch your boundary to reach a particular city, but exclude the centre for reasons of access or parking.
Google Analytics is particularly useful for analysing where your clicks are coming from and some quality time spent examining their map may reveal that your campaign could benefit from some targeting.