Geotargeting is a tool that an advertiser can use to control where their ads will be shown through the use of radiuses (normally a mile or more), zip codes, regions, states, or even countries. For example, if an advertiser assigns 5 zip codes to an advertising campaign, their ads will be shown to people physically in those assigned zip codes at that time or people searching about or showing interest in the assigned zip codes. Simply put, if you are in the allotted geo, you will see the ad and if you are not in the allotted geo, you will not see the ad.
Additionally, an advertiser can specify negative geotargeting if they want to make sure that their ads will NOT be shown in a geo, or “blacklisting” certain geographies.
Geotargeting is helpful in ensuring that a relevant audience who is more likely to convert will be the ones seeing the advertisements, overall getting the most out of an advertising budget.
Read more about the comparison between geotargeting and geofencing in “Geofencing vs. Geotargeting”.