Key takeaways
- Local customer optimisation gives Performance Max a stronger steer towards nearby users with immediate local intent.
- Merchant Center product feeds are not supported, so retailers need separate store-goal and product-led campaign structures.
- The biggest risk is false local efficiency, where directions or calls rise but qualified leads, sales or branch profit do not.
- Advertisers should clean conversion actions and offline imports before enabling the setting.
- UK multi-location advertisers need location-level values, not flat national assumptions, if Smart Bidding is to make profitable trade-offs.
Local customer optimisation is not a cosmetic Performance Max setting. It gives Google a clearer instruction to chase people who are close enough, motivated enough and mobile enough to visit or contact a business now. For UK advertisers with branches, showrooms, clinics, dealerships or high-value local enquiries, that changes where budget is pulled.
The important point is control. Local campaigns have been folded into Performance Max, and advertisers have had limited ability to tell the system, “prioritise the person near the location who is looking for directions, not the person browsing products from the sofa.” That distinction matters. If you run regional campaigns, our practical guide to location based advertising covers the local intent problem in more depth.
Our view is direct: treat this as a bidding and measurement change, not a new placement toy. If your store visit value, call tracking or location conversion setup is weak, Local customer optimisation will simply optimise harder against weak signals.
What Local customer optimisation actually changed
Google has added Local customer optimisation to Performance Max campaigns with store goals. The setting is designed to prioritise people who are nearby and showing local intent across Google Maps, Waze and local formats on Google Search.
It is available when advertisers create Performance Max campaigns using offline conversion goals such as store visits, directions or store sales. Existing campaigns can find the setting under Budget and bidding optimisation in campaign settings.
The hard limitation is Merchant Center. Performance Max campaigns using Merchant Center product feeds, or campaigns with online conversion goals, are not eligible. Retailers using product feeds need a separate store-goal campaign, or they need to remove the feed from the campaign that uses the local setting.
Why this matters for advertisers
Local customer optimisation changes the budget argument inside Performance Max. Standard Performance Max already allocates spend across inventory based on predicted conversion outcomes. With this setting, Google has an extra steer towards nearby users doing high-intent local actions. That means a store-goal campaign will compete more aggressively for people asking for routes, searching local business categories, or moving through map-led journeys.
Here is the money mechanism. If Google sees a user close to one of your locations, looking for a service you provide, and likely to request directions or call, it has stronger permission to bid harder. That raises your chance of winning the impression at the moment closest to the visit. It also means poor location value modelling becomes expensive faster. A direction request to a low-margin branch should not carry the same value as a booked appointment at a high-margin clinic.
Multi-location advertisers need to stop treating every branch as commercially equal. A campaign serving London, Manchester and Cardiff under one national budget will not produce a clean answer if each location has different close rates, stock, call handling and lifetime value. Google will optimise towards the conversion values you feed it. If those values are flat, the system learns flat economics.
Lead-gen advertisers face a slightly different risk. The “local” conversion is often a phone call or form enquiry, but the real business value sits later in the sales process. If Smart Bidding sees every call as equal, it will favour volume from nearby users rather than booked work, qualified appointments or profitable jobs. That is how a campaign looks busy whilst the sales team complains about lead quality.
This is where offline conversion quality becomes decisive. Import only the first enquiry and you are teaching Google to buy enquiries. Import qualified leads, attended appointments or closed sales with location-level values and you are teaching Google to buy commercial outcomes. That is the difference between local traffic and local profit.
It also explains why product-led retailers must be careful. Merchant Center is not supported, so do not assume this is a cleaner version of local inventory inside Performance Max. It is a store-goal play. If ecommerce revenue, Shopping feeds and local visits are mixed together in one reporting story, the campaign will become harder to diagnose. Feed-led sales and footfall-led goals need separate structures. Our guide to structuring ecommerce PPC campaigns is a useful starting point if you sell products and drive footfall.
Our own account data underlines the broader control issue. A PPC Geeks keyword-CPA analysis across 49 UK accounts in Q2 2026 found the median account put about 24% of search spend into keywords not pulling their weight on last-touch, meaning keywords that converted nothing or cost more than three times that account’s own average. That figure rests on each account’s own conversion data, which is distorted in many accounts, and some of that spend is legitimate brand defence, testing or assist activity. Even so, the like-for-like movement shows the risk: in the 42 accounts measurable across both quarters, median waste rose about 2 points, with 20 accounts getting worse and 13 improving. Accounts with trustworthy tracking sat at a median of 36%, so weak measurement understates the problem.
The lesson for Local customer optimisation is blunt. Automation magnifies the signal you give it. Better local intent targeting does not rescue bad conversion definitions. It spends faster against them.
The PPC Geeks’ View
The specific problem advertisers will face is false local efficiency. Campaigns will report more store-goal conversions, but the board will ask why revenue, bookings or branch-level profit has not moved in the same direction. The gap comes from counting directions, calls and visits without applying real commercial value.
We see this most often in lead-gen accounts running Performance Max or broad match Search with Smart Bidding, thin offline imports and national budgets covering very different local markets. The system finds cheap local actions, then overvalues them because nobody has fed it the downstream truth. Local customer optimisation sharpens that pattern because it gives Google more reason to chase nearby intent.
Local intent is only valuable when the conversion value reflects what happens after the click. If every branch, call and visit is worth the same in the account, Smart Bidding will make the wrong trade-offs faster.
— Chris S, Managing Director, PPC Geeks
The immediate takeaway is to separate local value from local volume. Before you switch this on, decide which locations deserve budget, which actions deserve value, and which conversions should be excluded from bidding. This is exactly the type of issue we look for in a free Google Ads audit, especially where automation, tracking or campaign structure is dragging on performance.
What advertisers should do next
Split store goals from product revenue
Build a separate Performance Max campaign for store goals if your existing campaign uses Merchant Center. Do not strip a working product feed out of a profitable ecommerce campaign just to test Local customer optimisation. Create a clean store-goal campaign with its own budget, assets, locations and conversion goals.
Clean up the conversion set first
Open Google Ads, go to Goals, then Conversions, and list every action used for bidding. Keep store visits, directions, store sales and qualified calls where they represent real value. Remove soft actions from bidding, including page views, short calls, unqualified form fills and duplicate location events. If a conversion would not make sense in a finance meeting, it should not drive bidding.
Import better offline outcomes
For lead-gen accounts, map the journey from click to sale. Import qualified lead, booked appointment, attended appointment and closed sale stages back into Google Ads. Give each stage a value based on actual close rate and average order value. If offline imports arrive late or incomplete, use the principles in our guide to campaign data import validation to stop Smart Bidding learning from broken data.
Use location economics, not geography alone
Segment locations by commercial quality. A branch with strong call handling, high stock availability or better close rates deserves a different value model from a location that leaks enquiries. Export store visit, call and sale data by location for the last 60 to 90 days, then build campaign groupings around profitability rather than map convenience.
Set a clean test window
Run the new store-goal Performance Max campaign for 28 days with a capped test budget. Compare branch-level visits, calls, qualified leads, store sales and cost per valuable action against the previous 28 days. Do not judge the test on total conversions alone. A rise in directions with no rise in qualified calls or sales is not a win.
For the announcement detail, Search Engine Land’s report on Local customer optimisation confirms the key constraints: store-goal campaigns only, no Merchant Center support, and availability through Budget and bidding optimisation for existing campaigns. Google’s own documentation on Performance Max store goals and offline conversions is worth reading alongside it.
What this means for your campaigns
Local customer optimisation is a useful addition, but only for advertisers prepared to be precise. It rewards accounts that know the value of a visit, the quality of a call and the difference between one branch and another. It punishes accounts that lump everything into one national Performance Max campaign and hope automation sorts out the economics.
UK multi-location and lead-gen advertisers should act before spend shifts. Separate store goals from product feeds, clean up conversion actions, import sales-quality signals, and test against branch-level commercial outcomes. The advertisers who win from this setting will not be the ones who switch it on first. They will be the ones who give Google better instructions than their competitors.
If you want a second pair of eyes on how this affects your account, our team offers a free Google Ads audit, with no strings. If you would rather hand the whole account to specialists, see how our Google Ads management agency works. For context on where UK footfall is heading, the ONS data on high streets and retail areas in Great Britain is a useful reference point.
Frequently asked questions
What is Local customer optimisation in Performance Max?
Local customer optimisation is a Performance Max setting for store-goal campaigns. It tells Google to prioritise nearby users showing local intent, such as people searching nearby businesses, planning trips, requesting directions or preparing to contact a local branch.
Can ecommerce Performance Max campaigns use Local customer optimisation?
No. Campaigns using Merchant Center product feeds are not eligible. Ecommerce advertisers should keep product-led campaigns separate and create a dedicated store-goal Performance Max campaign if they want to test local visit or contact outcomes.
Which UK advertisers should test Local customer optimisation first?
Multi-location businesses with clean store visit, call, booking or store sales tracking should test it first. That includes clinics, dealerships, showrooms, estate agents, local service businesses and retailers where branch visits create measurable commercial value.
What should be fixed before switching Local customer optimisation on?
Fix conversion actions, offline imports and location-level values first. Remove weak bidding signals such as short calls and unqualified forms. Import qualified leads, bookings or store sales wherever possible so Smart Bidding optimises towards real business outcomes.
How should advertisers measure a Local customer optimisation test?
Use a 28-day test window and compare against the previous 28 days. Measure branch-level qualified calls, bookings, store sales and cost per valuable action. Do not call the test successful just because total direction requests or visits increased.
