Recently Google’s AdWords program rolled out the capability to geotarget the ads that appear alongside their search results. Up until now, advertisers have only been able to restrict advertising distribution by city, state, or country. Advertisers now specify an address (or map location) and a radius within which ads should appear. For instance, a restaurant in Denver could create an ad campaign that shows ads to people who live within 5 miles of their location. For direct marketers, this enables the development of search engine advertising campaigns that complement geotargeted direct mail.
This may sound like a great opportunity to provide targeted promotions to a particular region, but there are limitations. First, the target region is always circular, thus it would be difficult to take into account for geographic or political irregularities like waterfront residents in particular area or the cities that lie upon state of national borders. The online documentation indicates that advertisers can specify a region by clicking on points on a map, however this feature was not active at the time of this writing.
The second, and more important problem is that it is frequently impossible to correctly identify the location of web user. The most common sources of this problem are Internet Service Providers (ISPs) that route subscriber traffic through proxy servers. For instance, all AOL users appear to live in Virginia which is where all of AOL’s proxy servers reside. As a result, target regions that don’t include AOL’s headquarters will not include any AOL users. This problem is more common for home users than businesses who often have their own IP address with correct address information, although large organizations with offices far apart may have similar limitations.