According to Google, location targeting (also called geo-targeting) has lowered paid search cost-per-click (CPC) by as much as 36%. This drastic increase in performance must be why Google has announced that they are revamping how their Locations setting works within in the Adwords interface.

To make geo-targeting easier for advertisers Google has connected the location targeting feature with Google Maps. Tapping into that well of information allows the feature to be more accurate, provide location recommendations, and provide more details about locations. That’s the backend; frontend users should find that the interface has become smarter, easier, and well… more useful.

Read on to find out what these changes are and how they’ll impact you:

Instant Location Targeting Suggestions

Similar to when you type a search query into google, the targeted locations box will now instantly provide location search suggestions. This should make it easier to find relevant locations where you should be advertising. See below:

Location Targeting Changes in Google Adwords Interface

Reach Numbers by Targeted Location

Tired of guessing at which geo-target is right for you? Notice the “Reach” column in the screenshot above? Now the Location Targeting feature will display reach numbers. Because of this, you’ll know if the location(s) you are selecting are small or large. And you can modify your paid search strategy accordingly.

Increased Target Location Limits

You used to be restricted to 300 location targets. Now you can have up to 10,000 locations and 500 additional targets per campaign. It’s hard to imagine anyone capping out with such a high limit, but if you do/might, leave us a comment and let us know!

Warning for Current Location Targeting Advertisers

Polygon targeting is going away by 2012. If you use this feature, you need to get into your account and change to the new “Target a Radius” feature. Have no fear; according to Google you will be able to “selectively add locations within your radius target.” So after the time investment in re-setting things up, your account shouldn’t be any worse for wear.

The changes to the interface are now live. Jump into the settings tab on one of your campaigns, go to Locations, click edit and you’ll be on your way. And leave us a comment and tell us if you have increased an account’s performance through the use of location targeting.