While this was handled poorly, I think too many companies are making a mad dash into international sales without thinking about the costs involved. Personally, I don't sell outside the United States and really don't plan to though I do use the Internet. It is hard enough to deal with the labyrinth of laws between the 50 states and the Federal government. It would be impossible as a small business to deal with those of 200 other countries. As such, it would be a waste of money to advertise to people that are outside the sphere of influence.

Geotargetting should take place before the ad is shown. The advertising network gets the IP address when the ad is requested so don't show an ad that isn't relevant. The advertiser should require this or go with another network.