What is Geofencing?
Updated: Feb 18
Mobile marketing is growing exponentially, and marketers are taking full advantage. One of the most powerful ways to harness the power of location-based marketing is through geofencing.
Although geofencing for advertising is not new, its usage has grown adjacent with the rise of smartphone users.
What Exactly is Geofencing?
Geofencing is a location-based service where an app or other software uses radio frequency identification (RFID), Wi-Fi, GPS, or cellular data to trigger a targeted marketing action when someone enters or exits a virtual geographic boundary, known as a geofence.
A simple example of geofencing is when someone walks by a retailer at the mall, and a popup notification says: “Today only! Buy this product, get one free!”
Geofencing allows you to track a consumer’s location through GPS, Bluetooth, and beacons, and there are three ways to utilize this technology for targeting consumers: geotargeting, geofencing, and beaconing.
Geotargeting focuses on targeted advertising to desktop users based on their location. Beacons are focused on transmitting targeted messages and information to nearby mobile devices. Geofencing focuses on a virtual perimeter that you can build around a specific geographic location to deliver targeted advertising.
Personally, our favorite way to target is through geofencing since you can set up geofences on mobile, tablets, and even desktop devices anywhere in the world. Geofencing focuses on specific places (such as the mall mentioned above), a demographic market area, a business category (e.g., restaurants), a brand location, a city, or a state.
Geofencing can produce incredibly tangible results, so here are some statistics to consider why you should begin geofencing with us today.
Mobile ads with geofencing have double the click-through rate.
Geofencing is compatible with 92% of smartphones.
The average consumer spends 5 hours a day on their mobile device.
71% of consumers prefer a personalized ad experience.
3 out of 4 consumers complete an action after receiving a message when approaching a specific location
53% of shoppers visited a retailer after receiving a location-based message
What is it about geofencing that gets us excited, and how can it help your marketing efforts? Here are the significant benefits:
With the ability to hyper-target potential customers, you’ll be able to reach people at the right time and the right place, but you will be able to engage them with relevant and timely messaging.
Better Ad Spend
Your engagement numbers go up when your advertising is hyper-targeted and delivered at the right time and place. With geofencing, you’re spending ad dollars on potential customers that are most likely to take action and spending less money on those that are not.
Once successfully implemented, you’ll get access to insightful data such as which brick and mortar locations are performing better, which target segment has higher engagement, traffic patterns (when people are in/near your areas), stay durations, and messaging effectiveness.
By combining this collected information with online activity, purchase information, and web browsing behaviors, a business can improve the user experience, increase engagement, and better understand consumer behavior. The collected data can also target people who have previously visited specific locations to create customized follow-up messaging.
Customized Customer Experience
Geofencing also allows you to personalize the customer experience. If you’re marketing to a specific area, you can utilize the demographics of that local population and customize your promotions accordingly.
For example, suppose a favorite local high school basketball team is doing well this year. In that case, you could utilize that information to create some customized promotions (for example, one free coffee every time the team wins!).
When thinking about where to put your virtual fence, consider your physical location and where your customers are likely to be? It may not always be where you are.
Utilizing this tactic has proven hugely successful for many big brands. Why? Because geofencing provides the ability to draw prospects away from the competition.
In 2016, Dunkin Donuts famously utilized geofencing technology to lure customers away from the competition by creating geofences around other coffee shops in the area and sending targeted ads to those prospects. Of the 36 percent that clicked on the offer (a coupon), 18 percent saved the coupon, and 3.6 percent returned to redeem their voucher.
How Is Geofencing Being Used by Us?
There are many ways to utilize geofencing in your marketing. However, there are two main ways to target your users:
Social Media Ads: All the major social media platforms (Facebook, Instagram, Snapchat, Twitter) have geofencing capabilities. Through these platforms, you define your radius, and ads are sent to consumers when they enter that geofenced area.
Web Ads: Like social media ads, ads are served to consumers once they’ve crossed into a pre-defined geographic area utilizing web search platforms such as Google.
Tips for Implementing Geofencing into Your Marketing Strategy
First and foremost, you’ll want to know—really know—your target demographic. Because this is highly targeted, location-based marketing, you’ll want to understand your customers thoroughly and use language that will appeal to them.
Next, you’ll want to limit your geographic scope. You don’t want to have a geofence that is too large, or it will lose its effectiveness. For example, If a young woman is 30 miles away from a Sephora, it’s improbable she’d be keen to travel the distance just for a free lipstick.
The general rule is to keep your geofencing to a four- or five-minute travel radius (walking or driving). This will, of course, vary depending on average drive times in your area. That seems small but remember: The magic of the geofence is reaching potential customers who are minutes away from your place of business.
For example: If your business is in a highly rural area, you’ll want to add a few miles to that geofence to increase your capture rate.
This should be a given, but it’s worth noting: You’ll want to have a clear call to action that requires immediate action.
Geofencing is so effective because you’re targeting folks currently in your demographic area, so give them a clear and immediate reason to walk through your front doors.
Geofencing doesn’t work if it’s simply marketing messaging that amounts to a general announcement, such as a grand opening or long-term promotions like “25% Off All Week.” Be more succinct and create urgency with your messaging when geofencing (e.g., Last day to get 75% off storewide!).
Use Marketing Techniques
Make sure to utilize multiple target marketing techniques for best results. Mix geofencing with content marketing, remarketing, search engine advertising, display advertising, and video advertising (to name a few) to customize and target multiple, specific audiences.