Solution to Google AdWords City Targeting Flaw

I'd like to see Inside AdWords address this serious Google AdWords local advertising flaw which could be very detrimental to small business. The section in the AdWords Learning Center which describes how to deal with region and city targeting accuracy needs to explain how expanded matching impacts their example:

Campaign 2: National
Location Targeting: United States
Keywords:
- San Francisco car dealer
- San Francisco used truck
- San Francisco used car
- buy pre-owned car in San Francisco

BTW, don't confuse the "-" in their example for negative keywords. The problem with creating a national campaign to work around city targeting inaccuracies is that Google's expanded matching could cause an ad to be displayed for a search without the city. The advertiser's expectation is that having a long keyword phrase like "san francisco used car" in the keyword list means the ad will only show when the city "san francisco" is included in a search query. I've seen a situation where an ad is displayed for a "used car" query, on a national scale. Details in the original post. (I did promise to post a solution.)

There are a couple of ways to work around this problem. The quick fix is to employ embedded matching, to negate these unwanted search queries. Keeping in mind that expanded matching applies to all broad matches in an AdWords ad group, be sure to include both singular and plural forms of a keyword with this technique. For example, the following kinds of embedded match keywords could be added to the above keyword list:

-[used car]
-[used cars]
-[used truck]
-[used trucks]
...

Ironically, it's a high quality score that exposes this expanded matching flaw ("contracted" matching?) in AdWords. Longer term, a better option is to drop broad matches entirely in favor of exact and phrase matches. Here was the response I received from Google after I explained that I'd used embedded match to deal with the massive spike in untargeted (national not local) traffic this flaw caused:

Your strategy of embedded matching is one way to limit your exposure outside of your target area. However, it seems that you are more likely to find the results you want through the use of phrase matching. I recommend that you edit your existing keywords from broad matching to phrase matching. This will prohibit your ad from running on synonyms and related terms, but it will ensure that your ads are only showing on keywords that include local terms. In addition, use the keyword tool to find relevant synonyms and related terms, and consider including those terms under phrase match as well.

I think the best solution is to employ embedded matching to solve the immediate spike in clicks/impressions and then to track the actual keywords from search hits as well as keyword tools to build a solid list of phrase and exact matches. Long term, broad matches can be removed entirely.

Google needs to address this problem on their side, though. Small businesses that follow their advice in the Learning Center could be exposing themselves to spikes in traffic and ad spend that appear to be due to click fraud. That's what I thought when I first saw this kind of traffic spike. At any rate, I hope the above solution helps anyone who experiences this Google AdWords flaw.

Has anybody else seen this type of problem with expanded matching?

NOT Technorati Tags (byo w/ TagBuildr or TagMuse): google adwords, learning center, local ads, small business, search engine marketing, sem, ppc advertising, embedded matching, expanded match