How the targeting setting works
Every audience, demographic, topic or placement list you add to a Google Ads campaign is applied in one of two ways. The targeting setting is the restrictive one: ads become eligible only for people who match. Its counterpart, observation, leaves reach untouched and only reports.
What surprises people is how criteria of different kinds combine. Two audiences of the same kind behave as “or”, so belonging to either qualifies you. An audience and a demographic and a placement list behave as “and”, so a person has to satisfy all three. Stack a few restrictions and the campaign is left serving into the narrow overlap where they all meet, which can turn out to be almost nobody.
The setting also exists at campaign level and at ad group level, and where the two disagree the ad group decides.
Why the targeting setting matters
It is the difference between a campaign that reaches a market and one that reaches a sliver of it. Used deliberately it is exactly the right tool: a campaign that serves only to past visitors, a message written for parents, an offer that makes no sense to anyone who is not already a customer. Used by accident it shows up as an unexplained collapse in impressions that nobody can trace.
It also changes cost. A restricted campaign is bidding into a thinner set of auctions, so the price of that slice can be dearer than the account average, and the daily budget may never fully spend no matter how the bids are set.
Common mistakes with the targeting setting
Choosing it because it sounds more precise is the first mistake. Precision that removes people who would have bought is not precision, it is loss, and no report can show you what never had the chance to happen.
Stacking is the second. Each restriction feels reasonable on its own, and the effect of three together is rarely what anyone pictured when they added the third.
The third is the unknown group. Platforms cannot classify everybody: age, gender, parental status and household income are simply unknown for a great many users. Restricting to particular bands removes the unclassified people as well, and they are not a rounding error — for some businesses they are the bulk of the market.
How to act on it
Default to observation and earn your way up to targeting. Add the audience, let it report, and restrict only when either the data or the message makes restriction obviously correct.
When you do restrict, restrict on one thing. If a campaign genuinely needs to reach past visitors alone, build it as a dedicated remarketing list for search ads campaign with its own budget rather than tightening the campaign that carries your volume. Put the reason in the campaign name, so the next person to open the account understands why the reach looks small.
Then audit for it. Whenever impressions fall away with no obvious cause, open the campaign and every ad group inside it and check what is set to target rather than observe. It is one of the quickest checks in an ads account and one of the most frequently skipped.