You're right, ISU is not going to beat out Texas, A&M, Baylor, TCU for a high school kid in Texas. But there are plenty of high school guys from Texas every year who don't get offers from one of the big in-state schools. That could put ISU (or Iowa, or whomever is showing up in the state) as a viable option for more kids.
In Iowa's case, Atlanta might be an option for a camp. Iowa offered something like 30+ kids in Georgia over the last 2 years, and yet to land one. Iowa is very unlikely to beat out Georgia or GA Tech for a Georgia kid, but what about a Georgia kid with an offer from NC State or Virginia?
The northern schools have to get the foot in the door in the south. The demographics in the north just are not trending in the B1G's favor. Population in B1G footprint states is stagnant/receding compared to the south/west. Not only that, the average age of the population in the B1G footprint is trending older. Fewer high school kids as a portion of the population compared to the south/west. The talent disparity will only continue to worsen. B1G schools must get their names in new places to stay relevant.