joined:Apr 1, 2016
Adsense ads are served based on two main targeting methods, interest based ads (personalized) and contextual ads.
Contextual ads are ads that are relevant to the content of your website. Thus if your website is very local centric, these ads should in principal also be targeting local businesses that are related to your content. Take note, say your site is about flying kites in your area (as an example) and there are no local businesses that sell kite supplies, then it may be difficult for Adsense to match your site with local business in your niche. To my knowledge Adsense will not start advertising local pet stores on your site (contextual based ads) as they are completely unrelated to your content.
Interest based ads on the other hand are served based on the browsing history of the users that visit your site. These ads can be and are about virtually anything and thus you may see ads for a pet store in San Fransisco when you site is about kites in Vermont. This is not a bad thing, as not all your users will be interested in clicking ads about your niche. You may have users from outside of your local coming to the site to read about some topic, if your ads are too targeted to just your niche in your local then the potential value of these users will be lost.
So that is the theory. Now what is really going on?
What kind of ads is Adsense actually serving? Go to your Adsense account, performance reports, then select a relatively long date span at least a month or quarter. In the left side bar click on Advanced report and then targeting types, then you will see the breakdown of targeting types (personalized == interest based). During September 73% of my ads were contextual.
The other thing you might want to check is how much of your traffic is in fact local.
One last thing:
the Adsense ads always seem to advertise places far across the country and not the local events and places.
How are you determining what ads appear on your website? It is nearly impossible to get an accurate picture of ad placements. The ad-review center lets you see the individual ad-units but the view you get is may be biased. If an advertiser's ad appears frequently on your site, you may only see it once in the ad review center, whereas one-off ads will appear continuously. This may lead you to think that these ads are appearing more frequently than they actual are. If you are going to your own site and simply looking at what ads are displayed, this is not accurate at all.
So say 25% of you traffic is not local, then it is possible that Adsense serves these users on-off non local ads, that when reviewing ads in the ad-review center will lead you believe that the non local ads are dominating.
All this said, if you have a very targeted niche with sufficient traffic, it could be a good strategy to sell ads direct, to other local businesses. It is not mutually exclusive, you can serve your ads and Adsense together using a service like, Doubleclick for Publishers (DFP). If you audience is right this can be porfitable but it seems like a lot more work. Maybe other with experience using DFP can chime in.