Geo targeting or Location Targeting within Google adwords has always been a bit of a contentious issue in regards to Googles ability to accurately determine the location of the user searching. Google look to identify the location of the user based on the ip address they are on. However there are a number of instances where your ip address is actually the ip address of the internet service provider and could actually be somewhere completely different to where you are!
That being said, although it is not 100% accurate (which would be nearly impossible to achieve given data protection laws) it can provide a useful tool to target particular customers especially if your service or product is only available in certain parts of the world and you are working to a limited budget. For example there is no point selling boat trips on the Thames to someone who is 500 miles away. If you are a local business looking to get the best performance out of your adwords spend then Geo Targeting should be a serious consideration. But, be careful you don’t exclude people who are not in your selected region as they maybe traveling to your area shortly and researching ahead of their trip. There is a way to get the best of both worlds which I have explained in my “Effective use of Geo targeting in Adwords” post which will be live shortly.
You are able to target people by post code, pick regions on a map, exclude regions on a map. This can be done on a campaign level and is within the campaign settings tab in adwords.