Adwords came out with the new dynamic location insertion feature in April.
You can read about it here.
I haven't tried this but I figure this would also work for national focused ecommerce sites also.
The way I reason it; is that you are competing to have your ad clicked, and if your ads says
and the customer is from chicago, the customer is more likely to click on your ad.
If you have an excellent website, the customer will probably say, "no point in fighting traffic to go down to the local widget shop", I might as well buy online.
I figure the less commom the product, the better this will work.
Has any body tried dynamic location insertion for national campaigns?