Yes, it is generally tougher to rank highly for valuable keywords in larger markets it is also tougher. Volvemedia has a few clients in very small markets and it has been generally easy to manipulate and optimize for search engine placement.
Google is smart enough to know that a company specializing in “web design” in Winter Park, FL is not competing with other websites targeting Orlando, FL. We have numerous clients who are located in a metro area of a large city and try to optimize and promote their products/services in the local and metro areas.
We typically advise our clients to promote within the scale of the larger market. So, if your website is based out of a smaller metro area it is in your best benefit to target and market for the larger metro area.
You don’t have an address in the larger city/area? No problem. Get a P.O. Box for the sake of internet promotion and SEO and have your mail forward to your main address through the P.O. Box. This will boost your SEO for the larger metro/city area as well as help target those prospective clients/customers who specifically target businesses in certain areas and cities.