Introduction to Google’s New LIA Updates
Google is rolling out a significant update to how retail advertisers manage their Local Inventory Ads (LIAs) within Standard Shopping campaigns. This change marks a transition toward simplified campaign settings, but it also introduces critical shifts in how budgets are allocated between digital and physical storefronts. If you are an advertiser or digital marketer running brick-and-mortar campaigns alongside an e-commerce operation, understanding this update is crucial to safeguarding your marketing spend and ad performance.
Starting August 31, Google will automatically enable Local Inventory Ads by default for all eligible Standard Shopping campaigns linked to a Merchant Center account that has the Local Inventory Ads add-on active. To streamline this transition, Google is removing the legacy “Local products” setting and replacing it with a more structured “Inventory filter” mechanism. This means that if you currently manage independent, segregated budgets for online sales and local foot-traffic generation, you must proactively audit and adjust your campaign configurations before the August deadline to avoid unexpected changes in campaign behavior and budget distribution.
What Are Local Inventory Ads?
To understand the implications of Google’s latest update, it is helpful to first look at the mechanics of Local Inventory Ads (LIAs). Unlike standard Product Listing Ads (PLAs) that drive traffic to an e-commerce store for home delivery, LIAs are designed to drive physical foot traffic to brick-and-mortar locations. They display real-time inventory availability, store hours, pricing, and directions to searchers who are physically close to a retail outlet.
When a consumer searches for a product nearby—for example, “running shoes near me”—Google serves an LIA showing that the item is currently in stock at a store just a few miles away. Clicking the ad takes the user to a Google-hosted local storefront or the retailer’s own website featuring local store availability. This bridge between digital search and physical retail has become an indispensable channel for omnichannel retailers trying to maximize the value of their local footprint.
The Technical Shift: Replacing Legacy Settings with the Inventory Filter
Historically, advertisers controlled whether their Standard Shopping campaigns displayed local products using a specific checkbox located under the “Other settings” menu in Google Ads. This toggle was known as the “Local products” setting. It allowed marketers to quickly opt in or out of showing offline products within their main e-commerce campaigns.
Google is deprecating this legacy setting entirely. In its place, Google is elevating the “Inventory filter” as the primary control mechanism. The transition streamlines the interface by eliminating redundant settings that could cause conflicts in campaign behavior.
Under the new system, the channel through which products are sold will be determined by the Inventory filter using two distinct values:
- Channel = Online: Restricts the campaign to displaying products that are available for purchase online and shipped directly to the customer.
- Channel = Local: Restricts the campaign to displaying products that are available in physical retail stores, serving exclusively as Local Inventory Ads.
By default, if a Merchant Center account has the LIA add-on enabled, any linked Standard Shopping campaign will automatically opt in to serve both online and local products, unless the advertiser explicitly configures the Inventory filter to separate them.
Why Google is Changing Default LIA Behavior
Google’s shift toward auto-enabling Local Inventory Ads is part of a broader, industry-wide trend toward automation, simplification, and omnichannel convergence. In the early days of digital marketing, e-commerce and physical retail operated in silos. Advertisers managed separate budgets, distinct teams, and isolated campaign strategies for online sales versus in-store visits.
Today, consumer behavior is fluid. Modern buyers research online and buy in-store (often referred to as ROPO: Research Online, Purchase Offline) or purchase online and pick up in-store (BOPIS). Google’s strategy is designed to reflect this reality by making omnichannel the default experience. By consolidating the setting under the Inventory filter, Google aims to reduce the friction of launching local campaigns while helping retailers capture nearby demand that they might otherwise miss with online-only campaigns.
The update was first spotted and shared publicly by PPC specialist Arpan Banerjee, who received a notification email sent to affected Google Ads manager accounts. The announcement was shared on LinkedIn, alerting the search marketing community to prepare for the transition ahead of the August 31st deadline.
What This Change Means for Retail Advertisers
The automated enablement of LIAs carries several strategic and financial implications for retail brands, search engine marketing (SEM) agencies, and independent e-commerce managers.
1. Potential for Budget Dilution and Unexpected Spend
If you run a Standard Shopping campaign with a budget dedicated solely to driving online transactions, the automatic activation of LIAs could divert a portion of that budget to driving local store visits. While in-store foot traffic is valuable, it may not align with your immediate digital KPI targets, especially if your physical stores are managed under a separate profit-and-loss (P&L) structure. Without proper adjustment, your online-focused campaigns may experience a sudden drop in direct e-commerce conversions as budget shifts toward local queries.
2. Bidding Strategy Discrepancies
Standard Shopping campaigns rely on bidding algorithms that optimize for specific conversion actions. Online sales are easily tracked via standard conversion tracking pixels, but local actions (such as store visits, driving directions, or local phone calls) require different optimization models. Mixing these two distinct user intents within a single campaign without a deliberate bidding strategy can confuse Google’s Smart Bidding algorithms, leading to less efficient bidding across both online and offline channels.
3. Reporting and Attribution Complexity
When online and local inventory are blended by default, analyzing campaign performance requires deeper segmentation. Marketers will need to rely heavily on segmenting report data by “Click Type” and “Channel” to distinguish between online purchases and local store clicks. Failing to set up these segments can mask performance trends, making it difficult to calculate the exact return on ad spend (ROAS) for digital channels versus physical storefronts.
How to Prepare Your Google Ads Account Before August 31st
To maintain control over your advertising budgets and prevent unwanted campaign changes, you should review and update your Google Ads settings before the August 31st deadline. Below is a step-by-step guide on how to prepare.
Step 1: Audit Your Merchant Center and Google Ads Links
Identify which of your Google Merchant Center accounts have the “Local Inventory Ads” add-on enabled. Next, locate all the Standard Shopping campaigns in your Google Ads account that are linked to these specific Merchant Center accounts. These are the campaigns that will be affected by the automatic transition.
Step 2: Determine Your Omnichannel Strategy
Decide whether your business benefits from a blended budget model or if you need to keep your online and physical store budgets separated.
If your goal is simply to maximize overall sales regardless of where they occur, a blended campaign may be appropriate. However, if you operate with strict, separate budgets for digital e-commerce and local brick-and-mortar marketing, you will need to segregate your campaigns.
Step 3: Configure the New Inventory Filter
For campaigns where you want to maintain a strict separation of budgets, navigate to your campaign settings and set up the Inventory filter as follows:
- To restrict a campaign to online sales only: Apply the Inventory filter and set the rule to
Channel = Online. This prevents the campaign from displaying any local inventory ads or consuming budget on local store searches. - To restrict a campaign to in-store promotions only: Apply the Inventory filter and set the rule to
Channel = Local. This ensures the campaign acts solely as an LIA driver, targeting users nearby who are looking to buy in person.
Step 4: Adjust Bidding and Budgets Accordingly
Once you have configured your filters, review your bidding strategies. Campaigns set to Channel = Local should prioritize local conversion actions, such as “Store Visits” or local actions, and should have budgets set in accordance with physical store priorities. Campaigns set to Channel = Online should continue to optimize for online purchase value and e-commerce ROAS.
Maximizing Your Local Presence Online
Managing your Google Ads inventory filters is only one piece of a successful omnichannel strategy. To convert local search intent into physical store sales, businesses must ensure their overall local search engine optimization (SEO) is robust. This includes managing Google Business Profile (GBP) listings, keeping store hours updated, responding to reviews, and monitoring local map rankings.
To help streamline this process, tools like Semrush offer dedicated features for managing local visibility. For businesses looking to automate local search performance, you can connect your business to access tools designed to optimize GBP listings, dominate Google Maps, and attract more local customers.
Conclusion: Stay Ahead of the Transition
Google’s move to make Local Inventory Ads the default behavior within Standard Shopping campaigns simplifies settings for many, but it introduces immediate action items for sophisticated search marketers. By removing the legacy “Local products” toggle and introducing the “Inventory filter,” Google is forcing a re-evaluation of how online and offline retail budgets coexist.
Ensure that you audit your campaigns, consult with your retail team regarding budget divisions, and implement the necessary Channel filters before the August 31st deadline to keep your campaign performance stable, predictable, and highly optimized.