Geographic Location Targeting is a great way to further refine your PPC campaigns, as long as it is implemented properly. You can set specific geographic locations in both Google Adwords and MSN Adcenter (However Google's geographic targeting is much more accurate and reliable than MSN Adcenter).
Q: But Google Adwords already identifies geo-locations that work with your campaign and bids accordingly.
A: Precisely, Google will begin lowering bids (even stop showing ads) in specific geographic locations that you are not beating your competitors in Ad Quality (or CTR). The only way to confirm that you are showing your ads to a specific geographic location (on a consistent basis) is to create a campaign and then identify your Impression Share. Just because CTR is low doesn't mean conversion rate is low (or ROAS for that matter). By segmenting by geographic location you can better control your visibility, CPC, CTR, Conversion Rate & ROAS in the geographic locations that you perform best in.
Setting up new Campaigns with Geographic Settings
Many PPC experts will just create a few campaigns by brand or product line and decide to geo-target the campaigns with the geography that has the best CTR or the most conversions. This is a good idea but when segmenting your PPC accounts, make sure to have a national campaign and then start a new campaign for each geo-location. Geographic settings can only be set at the campaign level so each geographic location should have its own campaign.
Set the campaigns up by geographic location plus individual brand. This set up will help you better isolate the geographies that are performing better and you are able to increase your keyword bids by geography. The better your Click-Through-Rate the lower your Cost-Per-Click (CPC).
Caution: If you set up your campaigns by brand and added all the geographies that the brand converts well in, you won't be able to identify which geo-locations do better than the rest. This set up segments by brand not by geo-location. Make sure to create a unique campaign for every geo-location (New York, Southern California, Northern California, Chicago Metro, etc).
Make sure to exclude any locations in your specific geo-location PPC campaigns from the national campaign. Even though Google will choose the keyword with the best Quality Score (if that keyword appears twice in the same account for multiple campaigns), Google likes to test different combinations about 10% of the time (they are always testing something). This will show the national campaign version approximately 1 out of 10 times, hurting your CTR (plus is counter productive).
Choosing a Geographic Area
You have many choices when using Google Adwords to Geo-Target. Bundle, choose a country, state, or specific city; plus you can choose a metro area. If you want to get creative, you can make a custom area using multiple map coordinates.
I have tried them all and the choices that worked the best are choosing specific country, state, city and metropolitan areas. Why? Google is not as sophisticated in identifying search traffic with the custom map coordinates as it is with standard locations. The custom map works better when Google can identify an IP address, however Google also uses Google account registration information and identifies searches by intent so the search queries with geo-location specific keywords (e.g. Seattle Apartments) may not trigger your ad if you use a custom mapping.
Consider using head terms and mid-tail terms in your geographic specific campaigns. I have tried to dump all keywords from a brand campaign (long-tail included) into multiple geo-targeted campaigns and it becomes unmanageable. Furthermore, the National campaign should already offer a good CTR for long-tail keywords, its the head terms and mid-tail terms that would benefit the most from segmentation.
Geographic Segmentation Tools
Google Ad Preview Tool - "With the Ad Preview and Diagnosis tool, you can search for your ad just like you would on a regular Google search results page, without accruing any impressions. Use the drop-down menus below to configure additional options for your search (including geographic location)."
Google Insights for Search - "With Google Insights for Search, you can compare search volume patterns across specific regions, categories, time frames and properties."
Google Adwords Keyword Tool - Get new keyword ideas based on your current keyword list, plus use Advanced Options and Filters to identify specific keyword usage by Geography and Device (desktop, mobile phone, etc)