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August 12, 2021

What is Geofencing?

Smartphone ownership is growing rapidly, and the World Advertising Research Center projects that by the year 2025 72% of all internet users will access the web solely via their smartphones. This opens up new and exciting opportunities for marketers to reach their target audience in new powerful ways. One of these ways is through location-based marketing or geofencing.

What is Geofencing?

Geofencing is a location-based technology that uses GPS, RFID and even IP address ranges to establish a virtual barrier (or fence) around a specific location. This allows marketers to take targeted actions when a user’s device enters this boundary such as sending an email, text, digital ad or mobile notification.

One famous example of a successful geofencing campaign was the Burger King Whopper Detour. In a creative marketing stunt, Burger King used mobile geofencing technology to promote the “order ahead” feature of its redesigned app. Burger King used this technology to target users within 600 feet of most McDonald’s locations and delivered mobile notifications offering users a Whopper for one cent. From December 4th–December 12th, the Whopper Detour drove more and 1 million app downloads, boosting Burger King’s app to the most downloaded in the Apple App store.

Benefits of Geofencing

Improved Targeting

Leveraging geofencing correctly greatly improves marketers’ targeting capabilities. Not only can marketers reach users at the right time and right place, but they can also tailor messaging for relevancy and urgency. Marketers who target users in specific geographic locations and filter that location by additional target criteria have a much higher chance of engaging the right audience.

Spend Efficiency

Geofencing offers multiple benefits to marketers’ budget allocations for advertising. Geofencing and improved targeting capabilities limit reach to only relevant users resulting in fewer, yet higher-quality clicks. In addition, these higher-quality clicks can result in higher ROI from ad campaigns by ensuring your audience is the one most likely to take a purchasing action.

Increased Data Insights

Geofencing can also offer great insights about the audiences entering specific locations. This information can be used to inform what products perform the best, how specific locations have the best/worst engagement, website traffic patterns, messaging performance and much more.

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Successful marketers collect and combine this type of information to improve user experience, engagement and their understanding of the behavior of specific audiences and locations to tailor their advertising strategies based on the nuances of different location-based audiences.

Personalization

Marketers are using geofencing to increase the personalization of their ad campaigns in order to improve relevancy and user experience. By leveraging location-based targeting as well as ad personalization targeting, marketers are able to tailor their messaging not only by location but also demographic, interest, behavior and more. This type of targeting can help result in higher intent ads and increased audience engagement.

Geofencing Use Cases

Branding

Similar to the above Burger King example, many marketers are using Geofencing to increase the visibility of their brand. A common use case is sending in-app notifications to users who enter a specific location (i.e. one cent Whoppers within 600 feet of a McDonalds.)

Digital Advertising

Almost all major advertising platforms (Google Bing, Facebook, Instagram, Snapchat, Twitter) support geofencing capabilities. Within these platforms, you determine your digital boundary and serve ads to individuals who enter as well as fit secondary criteria. From here, fit criteria users are served your ads until they leave the geofenced area.

For example, geofencing a conference area and serving mobile/desktop ads to attendees would be a great way of advertising your booth location, booth number and messaging strategy.

Text/Email Messaging

If you’ve ever filled out a form or agreed to a “Terms and Conditions,” you may have noticed a clause or text box asking for permission to send email or text messages. By agreeing to this companies are able to market through email or text messaging. By overlaying geofencing technology towards this strategy marketers are able to efficiently only send promotions when users enter a location.

For example, this may be effective when a user enters an area near a store and is sent a text or email containing a coupon.

Geofencing Tips

Targeting Radius

Arguably the most important aspect of geofencing is establishing the right targeting. Marketers need to test and find the right geographic scope in order to be effective. Going too large can result in too broad of an audience as well as create distance issues. For example, if I’m 45 miles away from a store a 10% off coupon may not be enticing enough for me to jump on the opportunity.

A good rule of thumb is to limit the geofencing to a few miles in order to target users who are within walking or driving distance. However, that being said you need to ensure your radius will capture enough people to build an effective audience so base your radius partly off the rough population of the area you are targeting.

Personalization

Not everyone in your geofence radius will be a good fit prospect. Leveraging additional marketing techniques such as personalization will help result in higher engagement and higher ROI for your ad campaigns.

Whether you're adding additional fit criteria (demographics, interests, behaviors) or tailoring messaging to specific segments of the population, reaching the right audience at the right time, and in the right place is crucial for a successful geofencing campaign.

Call-To-Action

One of the most important components of any advertising campaign (including geofencing) is your call to action. That being said, one of the most important aspects that geofencing offers is creating a sense of urgency. Because these users don’t have an identified purchase intent at the moment of the ad, creating a “too good to miss” opportunity will help create a sense of FOMO (fear of missing out) creating that urgency. 

Finding the right mix between relevancy and urgency in your offer will ensure you’re not only reaching the right people but also incentivizing them to take the right action (purchase, download, follow etc.)

Conclusion

Location-based marketing is opening up powerful and exciting techniques for marketers. Whether you are in B2B, B2C or brick-and-mortar, geofencing can help you not only reach the right people at the right time but also create a relevant sense of urgency towards your intended call-to-action. 

If done correctly, geofencing can be a great way to efficiently advertise to those most likely to positively engage with your messaging and product. However, if done incorrectly you may find yourself wasting spend or worse creating a negative user experience for those you are targeting.

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Rider Gordon

Rider Gordon is the Lead Search and Paid Social Advertising Strategist at New Breed. In his free time, he likes to ski, fly fish and brew beer.

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