The theory is flawed on multiple levels. First, only a small percentage of the world's population can be connected to the internet in a form that will allow them to even fantasize about being free from geography. Second, those who spend much of their time online do so to be better connected not only to the greater world but also their local environs.
This is especially true in marketing. Back in the mid-200s sites like the recently deceased Platial started to merge technology like Google Maps to local events and business. Now advertisers are using internet technology to tailor ads to views based on the viewers' geography. Advertising Age has an article on just that in Forget Foursquare: Why Location Marketing Is New Point-of-Purchase. Be sure to read the article and check out the comments to learn why terms like "geo-fence" may become the new buzz word like "neogeography" was.