Google is rolling out a significant update to how retail advertisers manage their local products within Google Ads. Starting August 31, Google will change the default behavior for Local Inventory Ads (LIAs) in Standard Shopping campaigns. This shift will automatically enable LIAs by default for any campaigns connected to Google Merchant Center accounts that have the Local Inventory Ads add-on active.
Alongside this automatic activation, Google is phasing out the legacy “Local products” setting under the “Other settings” menu. Instead, advertisers must now manage local inventory visibility using a consolidated inventory filter. This filter allows advertisers to explicitly segment traffic using the “Channel” attribute, designating inventory as either “Local” or “Online.”
For search engine marketing (SEM) specialists, digital storefront managers, and retail brands, this update marks a major shift in budget control, bidding strategy, and campaign organization. Failing to adapt to this change before the late August deadline could lead to unexpected budget allocation shifts, altered campaign performance, and cross-channel inefficiencies.
Understanding Local Inventory Ads (LIAs)
To understand the implications of this update, it is important to review what Local Inventory Ads are and why they are vital for modern retail strategies. LIAs are designed to bridge the gap between digital search and physical, in-store sales. When a consumer searches for a product on Google (for example, “running shoes near me”), LIAs showcase products that are physically available in a nearby store location.
Clicking on a Local Inventory Ad typically directs the shopper to a Google-hosted local storefront page or a merchant’s own landing page featuring local store inventory details. This page provides essential physical-store information, such as current in-store stock levels, store hours, address, and directions. For omnichannel retailers, LIAs are highly effective at driving foot traffic and local sales from high-intent online searchers.
Historically, managing these ads required opt-ins and separate configurations to ensure that digital budgets did not inadvertently merge with budgets allocated strictly for physical store inventory. This upcoming structural change eliminates those dual pathways, making local availability a default feature of Standard Shopping campaigns.
The Technical Breakdown: What is Changing?
Until this update, retail advertisers running Standard Shopping campaigns had granular control over whether they wanted to display local products. The configuration lived within the “Other settings” tab of a campaign under a toggle option labeled “Local products.” If you wanted to show local inventory, you checked the box; if you wanted a purely digital, e-commerce-focused campaign, you left it unchecked.
Beginning August 31, Google is making the following operational changes:
- Automatic Opt-In: If your Google Merchant Center account has the Local Inventory Ads add-on enabled, any linked Standard Shopping campaign will automatically have LIAs enabled by default.
- Removal of Legacy Settings: The “Local products” setting under “Other settings” will be permanently removed from the Google Ads interface.
- Unified Inventory Filter: To control where and how your inventory displays, you will now use the “Inventory filter” setting. Using this filter, you can configure your campaigns using the following channel definitions:
- Channel = Online: Restricts the campaign to only promote products available for purchase on your website.
- Channel = Local: Restricts the campaign to only promote products physically available in your local retail stores.
The update was first brought to light by PPC specialist Arpan Banerjee on LinkedIn, who shared a screenshot of the official notification email sent by Google to Ads manager accounts. The announcement has since prompted active discussion among search marketing professionals regarding the strategic and financial impacts of the change.
Why Google is Consolidating These Settings
Google’s decision to remove the legacy “Local products” setting and replace it with the “Inventory filter” is part of a broader effort to streamline the campaign creation process. Previously, advertisers faced redundant and overlapping configurations when attempting to segment their local and online inventory. Having a “Local products” checkbox in one menu and an “Inventory filter” in another created potential for conflicting settings, resulting in unintended ad delivery behavior.
By moving entirely to the “Inventory filter,” Google is centralizing catalog management. This shift aligns Standard Shopping campaigns with the structure used in other advanced campaign types, such as Performance Max, where inventory source and channel filters dictate asset distribution. While the change simplifies the backend architecture, it places the responsibility on advertisers to actively verify that their active campaigns are configured correctly before the system migration goes live.
The Impact of the Default Shift on Retail Advertisers
This structural change carries notable implications for campaign management, budget allocation, and reporting. Advertisers should consider several key areas of impact as they prepare for the transition:
1. Unexpected Budget Allocation Shifts
Many retailers manage online e-commerce and physical brick-and-mortar stores under separate business units, each with its own designated marketing budget. If you run Standard Shopping campaigns meant strictly for e-commerce, and your Merchant Center has the LIA add-on enabled, those campaigns will automatically begin serving local inventory ads on August 31.
This automated change could lead to online e-commerce budgets being partially diverted to drive local foot traffic. For businesses with strict divisions between online and offline marketing spend, this automated change can cause accounting and campaign management issues if not addressed proactively.
2. Bidding and ROAS Strategy Disruption
Online sales and offline conversions often carry different values and performance metrics. A brand’s target Return on Ad Spend (ROAS) for e-commerce may differ significantly from its omnichannel ROAS target, which factors in store visits and offline purchase value. When local and online inventories are combined into a single campaign by default, automated bidding algorithms (such as Target ROAS or Maximize Conversions) must adapt to a different mix of conversion signals. This can lead to temporary fluctuations in bidding efficiency and overall campaign performance.
3. Reporting and Attribution Complexity
With local products enabled by default, distinguishing between online-only performance and in-store driver performance will require a closer look at segment reporting. Advertisers will need to lean heavily on the “Click Type” and “Store Visits” reporting dimensions to accurately measure the return on their ad spend, making campaign analysis more complex for teams accustomed to simple e-commerce dashboards.
Step-by-Step Guide: How to Prepare Your Account
To avoid disruptions to your campaign performance and budget allocation, it is highly recommended to review and update your Google Ads settings before the August 31 deadline. Follow these steps to ensure your account is prepared:
Step 1: Check Your Merchant Center Add-Ons
First, verify whether your Google Merchant Center account has the Local Inventory Ads add-on enabled. If you do not use LIAs and do not have this add-on active, your Standard Shopping campaigns will not be affected by this default change. However, if the add-on is active, you must review your active Google Ads campaigns.
Step 2: Identify Campaigns Requiring Segmentation
Audit your active Standard Shopping campaigns. Identify which campaigns are designed exclusively for online e-commerce sales, which ones are dedicated to in-store promotions, and which ones are meant to be hybrid (omnichannel) campaigns.
Step 3: Implement the Inventory Filter
For campaigns that you want to keep strictly online or strictly local, navigate to the campaign settings and apply the “Inventory filter”:
- For e-commerce-only campaigns, set the filter to Channel = Online.
- For store-only campaigns, set the filter to Channel = Local.
- For unified campaigns where you want to promote both online and in-store products using a shared budget, you can leave the filter open or include both channels.
Step 4: Monitor and Adjust Budgets
If you choose to run hybrid campaigns under the new default setting, closely monitor your daily spend. Watch for shifts in traffic patterns to ensure that your local inventory ads are not exhausting the budget at the expense of your online e-commerce products, or vice versa. Adjust your daily caps and bidding targets to reflect the dual-purpose nature of the campaign.
Navigating the Future of Google Shopping
Google’s update to Local Inventory Ads reflects a larger trend toward automation and simplified campaign management. By automating options that were previously opt-in, Google encourages advertisers to adopt an omnichannel approach that presents consumers with the most relevant purchasing path, whether that occurs online or in a physical store nearby.
While automation can improve campaign efficiency, it requires continuous oversight from digital marketers. Advertisers who take a proactive approach to auditing their Standard Shopping campaign structures, updating their inventory filters, and aligning their budget allocations before the August 31 deadline will be best positioned to maintain stable campaign performance and capitalize on both digital and physical retail opportunities.