Geo-location or geo-targeting is concerned with ensuring that the correct pages of your web site appear in front of the correct target customers when they search.
Many people forget to investigate what's going on with the search engine radio buttons which enable the user to specify either language or country - as in ‘pages from France' or ‘Pages in French'. The web section of the search engine is also filtered based on the location of the searcher (identified from their internet connection's IP address) and the ‘Pages from..' and ‘Pages in...' also give important clues as to what may be going on in the filtering of the ‘web' section.
A further point on the radio buttons is that if your site is not listed in those more narrowed searches (where it is easier to achieve higher rankings, by the way) then you will be missing out on potentially large numbers of visitors. The number of people who use the radio buttons varies from search to search but it is at least 10% of searches - and in some cases much higher.
Here are the signals that locate your web site or pages - ranked in order of importance (by Webcertain):
By far the easiest locator and strongest signal for the search engines is the local domain. If the web site has domain.co.uk - it can only be a UK-based web - or a web site targeted at the UK. If it has domain.fr, then it must be targeted at France - the fact that French domains require a French national address gives this domain even further strength.
From experience and testing at Webcertain, local domains appear in the right geo-targets faster than any other technique - it can be a matter of hours not days. Can you use generic domains such as .com, .net, or /eu? In fact no, if your site relies on one of these domains the search engine will have to rely on other signals to determine the web site's targeted location.
Assuming the language is correctly detected, this language narrows to geo-target a range of countries or country.
Local hosting / webmaster tools
Search engines check the IP address to ascertain the geographic location of a web site. So hosting locally provides another strong clue as to the relevant geography. Google's Webmaster Central has a facility to identify how your web site is targeted. This is effectively an override of the hosting signal - it should be used carefully and do note that it only relates to Google.
Local inbound links
Local inbound links also help to locate a web site correctly. Note that what the word ‘local' means in this context is that the search engine has identified that the link is located in the target geography. In other words, local links are those with local domain names, local hosting and, in their turn, inbound local links.
Addresses, post codes, city names, country names - all act as signals to identify a web site's geography. These play their most significant role with intra-country geo-targeting in other words following keyword searches such as "car hire Manchester".
Within the HTML library there are tags to indicate the language of a particular page with encodings such as en-gb or en-us for example. You are recommended to use these tags - but it should be noted that they are frequently not used correctly with the result that search engines also will not rely on these language tags. They will generally have little impact on geo-targeting issues.