Advertisers and searchers can benefit when a search engine collects geographic information from the Web and indexes it by associating that geographic information with a system of overlapping and adjacent geographic boundaries for the locations.
It can mean using considerably less geographically related keywords to bid upon, and on smarter geographically related search results.
In a post from May, Geo Targeted Advertising for Google Maps and Google Earth, I described how Google may use, or anticipate using, an approach like this. Looks like Yahoo is considering it, too.
A trio of patent applications from Yahoo were published last week which describe some of the strategies and algorithms that Yahoo may use to gather and organize this kind of data, and use it in search results and advertising.