Ive written here a few posts about the new Adwords Enhanced Campaigns and proclaimed just how cool it was to now be able to bid by location at the most specific level available, usually, zip or suburb. This is particularly useful where physical or other boundaries might mean someone living in zip code x is twice as likely to convert as someone a couple miles away. I reported earlier that functionality seemed to have dissapeared and can now confirm its gone after just a few weeks in service.
Googles response to me was that bid adjustments will be based on what triggered the ad and not where the user was located i.e. raising the bid for zip code x wont necessarily affect the position of the ads for searchers in that zip code as the ‘what’ the searcher searched for might be different e.g. someone searching in Westminster for flights out of Heathrow – the heathrow terms being the ‘what’ can overide the bid adjustment made for westminster. Im not sure I understand that myself, but it does seem to me that bid adjustments at the most location specific point possible makes an awful lot of good marketing sense.