Generally speaking Geo-Targeting is a way of addressing people in a personalized manner according to their current location. The message is localized to make it more interesting.
In the internet this can be achieved with different means: If a user is logged into a service and this service knows the address information of this person an added value could be to show a local wheather forecast. The same can be done on mobile phones and in browsers if the user considers the app / service as trustworthy enough to share his / her current location.
In online advertising the IP address is used to estimate the approximat location of a surfer. This indication can be used to communicate nearby shops, advertise tickets of shows or show real estate offers in the vicinity.
Such a personalisation makes an advertisement much more interesting. Sometimes without this personalization it is rather useless. Click-through ratio as well as conversion will increase by a high factor.
However the technique of IP targeting has a varying accurateness. While a surfer sitting in a university building can be identified well other surfers might only be localised in a diameter of 30 kilometres. Surfers that use surfsticks or mobile phones might only be localised down to a country.
Because of that in addition to geolocation information it is always important to adapt the message according to the expected accurateness of the data.
mindUp has a lot of experience in using this data for successful online marketing campaigns and mixing IP targeting with crawling and other techniques.