Understanding the Shift in Google’s Retail Search Ecosystem
In a move designed to streamline campaign setup and push advertisers toward a more unified omnichannel approach, Google is changing how Local Inventory Ads (LIAs) are managed in Standard Shopping campaigns. Beginning August 31, Google will automatically enable Local Inventory Ads by default for any Standard Shopping campaign connected to a Merchant Center account that has the Local Inventory Ads add-on active.
Alongside this default activation, Google is deprecating a long-standing legacy setting. The “Local products” checkbox, traditionally found under the “Other settings” menu in Google Ads, will be permanently removed. Moving forward, advertisers will control their local product visibility using a redesigned inventory filter. This filter allows advertisers to explicitly segment their campaigns using two primary designations: Channel = Local or Channel = Online.
For search engine marketers, retail brands, and e-commerce agency leads, this change marks a significant shift in how ad budgets are allocated between digital-only store shelves and physical, brick-and-mortar locations. Failing to prepare for this transition before the August deadline could result in unintended changes in campaign delivery, budget distribution, and performance reporting.
What Are Local Inventory Ads (LIAs)?
Before diving into the mechanics of this update, it is helpful to understand the role Local Inventory Ads play in the modern retail landscape. LIAs are highly effective ad formats that appear when searchers near a physical store look for products on Google. Instead of pointing the user to a standard e-commerce product detail page, LIAs showcase product availability, local pricing, store hours, and distance to the nearest physical storefront.
When a user clicks on a Local Inventory Ad, they are typically directed to a Google-hosted local storefront page or an omnichannel landing page on the retailer’s website. This format serves as a digital bridge, driving foot traffic to physical retail locations by assuring consumers that the product they want is in stock nearby and ready for immediate pickup.
Historically, managing these ads required advertisers to manually opt in by checking the “Local products” box within their Shopping campaign settings. This configuration allowed brands to run dedicated, localized campaigns with distinct budgets, separate from their pure e-commerce initiatives.
The Technical Mechanics of the Update
The transition away from the “Local products” setting simplifies the underlying architecture of Google Ads, but it introduces a new workflow for PPC managers. The update was first brought to light by PPC specialist Arpan Banerjee, who shared a notification email sent by Google to manager accounts on LinkedIn.
Under the new system, if you have the Local Inventory Ads add-on enabled in your Google Merchant Center, Google will assume that any Standard Shopping campaign you build or run should, by default, display both online and local products. If you wish to separate these experiences—as many enterprise and mid-market retailers do—you must utilize the unified inventory filter.
The New Channel Filters Explained
To maintain control over where your budget goes, you will need to apply the inventory filter within your campaign settings. The filter relies on the Channel attribute, which can be defined in two ways:
- Channel = Online: This setting restricts the campaign to showing only products that can be purchased online and shipped to the customer’s address. It mirrors the classic e-commerce shopping ad experience.
- Channel = Local: This setting forces the campaign to focus exclusively on local inventory, showcasing products available for in-store purchase or curbside pickup at physical retail outlets near the searcher.
By using these filters, advertisers can recreate the clean separation of online and local budgets that they previously managed via the legacy checkbox settings.
Why Google is Consolidating Settings
The decision to retire the “Local products” toggle in favor of the inventory filter is part of a broader, multi-year effort by Google to simplify its ad platforms. Over time, the Google Ads UI has accumulated overlapping and sometimes redundant settings. By routing all inventory segmentation through a single, centralized filter system, Google reduces configuration friction and simplifies campaign creation.
Additionally, this move reflects Google’s strategic push toward default omnichannel marketing. By making Local Inventory Ads the default state for accounts with active LIA feeds, Google encourages advertisers to showcase local inventory without needing to navigate complex menu hierarchies. For retailers with robust brick-and-mortar footprints, local availability is a major competitive advantage over pure-play online marketplaces. Making LIAs the default setting ensures that more businesses take advantage of this asset.
Strategic Implications for Omnichannel Retailers
While simplification is generally positive, automatic opt-ins can lead to unexpected changes in performance if they are not monitored carefully. Retailers must understand how this transition affects their daily operations and overall media mix.
Budget Dilution and Split Issues
If you currently manage separate, dedicated budgets for your online store and your physical retail locations, this update could disrupt your strategy. If a Standard Shopping campaign that was previously restricted to online-only inventory suddenly begins pulling local inventory by default, your budget may begin shifting toward local store visits at the expense of direct e-commerce sales.
This is particularly challenging for businesses where the e-commerce team and the physical retail/trade marketing team operate with separate profit-and-loss (P&L) statements. Without implementing the new channel filters, tracking and attributing spend to the correct internal budget will become incredibly complex.
Bidding and Performance Adjustments
Local Inventory Ads behave differently than online shopping ads. They are optimized for local actions, such as driving store visits, phone calls, and directions requests. Because of this, their conversion rates, average order values, and return on ad spend (ROAS) targets often differ from standard e-commerce campaigns.
When online and local products are combined in a single campaign without filtering, Smart Bidding algorithms will optimize for the overall portfolio. If your primary goal is driving online revenue, a sudden influx of local search traffic could skew your performance data, prompting the bidding engine to adjust bids in ways that may not align with your true business priorities.
Feed Management and Data Accuracy
To run LIAs successfully, your local product inventory feed must be highly accurate and updated frequently—often multiple times a day. If your local feed data becomes outdated, you risk showing ads for items that are out of stock, leading to a poor customer experience and wasted ad spend.
With LIAs enabled by default, ensuring your Google Merchant Center feeds are in sync becomes more critical than ever. PPC managers must work closely with inventory management teams to guarantee that store-level stock levels are updated dynamically and accurately.
How to Prepare Your Campaigns Before the August 31 Deadline
To ensure a smooth transition and avoid performance disruptions, advertisers should take proactive steps to audit and adjust their Google Ads accounts ahead of the August 31 implementation date.
Step 1: Conduct an Account-Wide Audit
Begin by identifying all Standard Shopping campaigns across your accounts. Determine which campaigns are linked to Merchant Center accounts that have the Local Inventory Ads add-on active. Make a list of campaigns that currently have the “Local products” checkbox disabled, as these are the campaigns most likely to experience a shift in behavior once the update goes live.
Step 2: Define Your Budget and Channel Strategy
Decide whether you want to run combined omnichannel campaigns or maintain distinct budgets for online and physical stores.
If you prefer a unified approach, you can allow the default settings to take effect, but you should adjust your bidding strategies to account for the inclusion of local store visit value. If you prefer to keep your budgets separate, prepare to implement the channel filters immediately.
Step 3: Apply the New Inventory Filters
For any campaign where you want to restrict delivery to online-only or local-only inventory, navigate to the campaign settings and apply the inventory filter:
- To keep a campaign online-only, set the filter to
Channel = Online. - To keep a campaign local-only, set the filter to
Channel = Local.
Applying these filters ahead of the deadline ensures that your campaigns will transition smoothly without any sudden shifts in traffic distribution.
Step 4: Update Performance Reports and Bid Adjustments
Review your reporting dashboards and attribution models. Ensure you are tracking “Store Visits” and “Store Sales” metrics alongside online conversions. If your campaigns will now include local inventory, update your Smart Bidding targets (such as target ROAS or Maximize Conversions) to reflect the total value generated by both online purchases and physical store visits.
The Bottom Line
Google’s update to Local Inventory Ads management represents a shift away from legacy settings toward a cleaner, more modern campaign structure. While consolidating controls under the Inventory filter simplifies account management, the automatic activation of LIAs by default means that search marketers cannot afford to take a passive approach.
By auditing your accounts, understanding the differences between online and local channels, and configuring the new inventory filters before August 31, you can maintain full control over your retail ad spend, optimize your bidding strategies, and continue driving measurable results across both your digital and physical storefronts.