I am running a campaign locally for my business... I sell a service...insurance sales. The same type of advertisers are advertising the same services...locally vs. nationally. I noticed from a previous test that the Bids on a national basis were MUCH LOWER than a local trageted Area. Why is this? PS. i am in a large metro area.
Even if you are targeting a local market you are competing nationally. Just look at some of the ads. Most of your competition is using broad match which is going to trigger ads in your area as well as nationally. If you use geo targeting and using those keywords in your ad copy, you should be able to get your click throughs/and conversions up. Good luck.