Recently Google announced the launch of a new location targeting feature - official launch here.
This is a big change to the previous system of only showing your ads to users based on their self-reported location/IP address or by keyword (seperately).
Under the new control settings (screenshot below) you have the option of targeting specific geographic areas based on locations included in the users search query, regardless of the persons actual physical location.
The three targeting options are:
Target users by search intent (search query) - An example of this would be an hotel owner in Manchester advertising to users with keywords such as "hotels in manchester". The searcher could be located anywhere in the UK.
Target users by physical location - An example of this would be an hotel owner advertising to users physically located in Manchester with keywords such as "hotels". The searcher must be located within the intended region regardless of the search query.
NEW - A single campaign combining both of the options above - This option allows you the benefits of targeting specific geographic areas whilst not making you lose out on users searching by intent who arent located in your target area.
Definately more traffic and the increased cost that comes with this!
This new option will be turned on as default so you will have to login and make the changes if this doesn't suit you.
You will have to monitor your numbers closely but it will most certainly open up most AdWords account holders to a greater audience.
You can also use the same options when it comes to location exclusions too.