Google has been beta testing it's local AdWords ad program for a decent number of months. Originally the product was primarily set to test a few state level and metropolitin level ad display networks.
Now there are a whole boatload of additional options. Instead of selecting a metropolitin area you can type in what specific towns you want your ads to appear in or how far away from your business the ads appear. These changes are highly important for helping small businesses compete and improving the relevancy of ads.
You can enter specific towns or cities if you want to target that way, or you can specify a maximum number of kilometers (min 35) or miles (min 20) the person must be within your business. This option allows you to enter your latitude and logitude setpoints or your physical address.
Google targets these ads based upon user IP address. In the event Google can not determine the IP of the computer they will display national or global ads.
Now with the ability to target by language, target pinpoint locations, split test, have accounts running within 5 minutes, psychographically profile based on keyword, and have built in ROI tools this system is becoming more and more of a direct marketers dream.
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