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I received a good response form one of my associates. I thought I'd post it because it was a concise answer.

1. Yes, Google has several ways of determining where you are searching from or about and then shows ads accordingly.2. Indirectly, yes it can make the click less expensive because it could raise the clickthrough, thus raising the quality score, thus lowering the required cost per click. Is it worth the effort to create unique ads for each state? No. It makes things very complicated to measure and difficult to manage.

See the attached image.I searched for a drug called "Actos". The first Google Adwords result was a result specific to "Arkansas" which is odd because I didn't specify that I was in Arkansas. I understand that Google makes that recommendation because Google knows I'm in Arkansas. The resulting landing page has NOTHING to do with Arkansas and you can view it here: http://bladdercancerlawsuit.org/actos-bladder-cancer/My question is this: Does the fact that the AD has the name of the user's state (Arkansas) make the "click" less expensive or higher ranking or both? Is this known by Adword specialist community? I'm wondering because this is an expensive keyword and hard to guarantee top position for. If this is a technique we should incorporate, I'd love to do it. U1dfiiE