Whenever an SEO talks about geo-targeting your site to a specific region, so it ranks well on that localized version of Google they tell you to do a few things.
(1) Host in the country you want to rank well for (2) Try to use a ccTLD for that country, i.e. domain.co.uk for UK (3) Set the geographic target in Google Webmaster Tools
However, instead of using a ccTLD, I often see sites deploy a subdomain or subfolder to specify a different language or geographic target. A ccTLD is best, in my opinion. Of course, there are times you want to use a localized language by target the main Google - so that does apply.
JohnMu from Google replied to a Google Webmaster Help thread stating that a ccTLD is much more powerful than hosting your site on a server in that country. Specifically, John said:
Yes, we do try to find context from these two factors (I think this article is being updated to be a bit more clear though :-)) -- however, if your site has a geographic TLD/ccTLD (like .co.nz) then we will not use the location of the server as well. Doing that would be a bit confusing, we can't really "average" between New Zealand and the USA... At any rate, if you are using a ccTLD like .co.nz you really don't have to worry about where you're hosting your website, the ccTLD is generally a much stronger signal than the server's location could ever be.
Google will use the ccTLD over the server location to geotarget your site. This makes sense to me, but I do not think this has been covered here. We covered the overal topic dozens of times, but not specifically which factor is more important.
Forum discussion at Google Webmaster Help.
