After some testing I have decided that location based bidding does not work most of the time. Google does not know where people are when an ad is shown. That is why it takes two days to give you that data.
They have tricked us into thinking we had a feature that does not work. When you go to campaign settings and the locations tab Google tells you that you can modify bids according to city.
I had placed a state to target and then added several major cities. I did this so that I could watch the stats for that city so that I could change my bid modifier to improve my average position in a single city.
Come to find out that the data in there does not reflect what is going on when your ad is served. When an ad is served Google does not know where most people are at the city level. They don't figure that data out until two days later in your report.
This tells me that modifying my bid for that city only affects a small percentage of actual ads shown for that city. The data in that report is useless because you can't act upon it.
