Recently, there's been quite a bit of discussion around Google’s localised search extension on Google Web Master Tools (WMT). The addition allows web masters to specify if any section on their site (top level domain, sub-domain, or directory) targets a specific geo location. The location can range from country right down to suburb level.

Sound complicated? Well, Google has spent a lot of money incorporating this into their algorithm. By making use of the your (the searchers) IP address, they can accurately pin point your location down to your suburb. Hence being able to supply you relevant results for services in your community.

To briefly explain:
If you had a small locksmith service in Clapham – London, then you would only need to optimise your website for the phrase Locksmith after which you would log into Google WMT.
You would then, on the dashboard, go to “Tools” and click "onset geographic target”, then select the option “Associate a geographic location with this site”, then enter your country, city and suburb.
And you’re done - soon you will be eligible to rank on the first page of the SERPs when someone in your area searches for the key phrase “Locksmith”. Cool isn’t it?

This will also work for multilingual sections on your site. So if you were running a German version on http://www.domain.com/de/ then you would be able to specify that it is relevant to Germany. However, if you make it specific to Germany would you then still rank in Switzerland or Austria?

Currently, it’s an endless debate; with questions like:
“Will this benefit your keywords containing your location?”
“Will this exclude you from normal listings?”
 
All I know is that it won’t work everywhere. Unfortunately in a country like South Africa, we don’t have geo specific IP addresses. Whether or not it’s accurate I can’t confirm, but I’m definitely going to test it out so watch this space.