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If I have a business in, say Tampa Florida, and we offer irrigation services, and I want to create some backlinks for a SEO campaign, should I use "Tampa Florida Irrigation Services" as my anchor text? Or should I just use "Irrigation Services" and let Google figure out our location by our Google local directory listing (that I hope would associate with the web site)?.

"Irrigation Services" here is just a sample keyword. It could be any other one, but in general, would you use the location as part of the anchor text? I really hope not, cause there are just too many ways to express the same location.

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Ranking well for "Irrigation Services" doesn't do you any good if the user is in California. You're definitely out to target a specific geographic location and should concentrate your efforts on that. Geolocation is definitely something Google has started doing and will be working to improve but you should give them every clue as to where you are located and what area you service. And Google is smart enough to know the various ways to express a location all mean the same thing (Tampa FL, Tampa Florida, etc).

Additionally, just because you have a couple more keywords in that anchor text doesn't preclude you from ranking well for searches that just use "Irrigation Services" as its anchor text. By having "Irrigation Services" and "Tampa Florida" in your anchor text you give yourself the best chance to rank well for searches that both include "Tampa Florida" in the search term and without it.

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