Cranky missed the other side of the problem with zipcodes! In the larger, more geographically spread out states (i.e., Montana, North Dakota) the same zipcode covers locations hundreds of miles apart. Here in Hawaii, the same zipcode covers locations on different Islands!

There are free zipcode data files that include lists of cities, and even gis data for each city. You could, in addition to having each advertiser pick zipcodes, offer them lists of cities for each zipcode. Additionally, using the gis data, you can construct a pretty good "within x miles" search! (by returning results with long, lat meeting a computed test) All the data is available for free.

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kulawebguy