Is Geofencing The Future Of Targeted Marketing?

Post written by Antony Melwin
On Friday, November 16th, 2018

Geofencing. It’s a term that has become increasingly popular in the local marketing realm, especially when it comes to mobile marketing. If you’re a marketer or a business that uses push notifications, you’re probably already aware of what geofencing is. For those who are yet to gain exposure to this topic, let me help you out with some basics.

What Is Geofencing?

Before we dive into what geofencing is, let’s take a look at a key feature of modern day technology that makes this possible – location data. Simply put, location data is the information about a user’s geographical location that is collected by either network providers or other forms of wireless technologies. Apart from having its implications in local SEO, this data can also be used by various applications and softwares to understand the exact location of a user and send targeted content or location-relevant advertising.

Geofencing is one such feature that allows softwares to use location data to send targeted ads or notifications to people when they enter or exit a geofence. In case you’re wondering, a geofence is a virtual fence or boundary that is set around a physical location. For example, the image below shows a geofence that is set around ALDI shopping center in Washington.

Geofence

A geofence can have any radius, perimeter, or shape that you want. This can be set up using GPS or RFID that will then enable a smart device’s operating system to trigger an app or event in the background when a customer or an app user enters or exits the geofence. The targeted device or app does not have to be active to perform this function. The most common events triggered through geofencing are text messages, email alerts, and push notifications that advertise or otherwise promote businesses nearby.

This can be an extremely effective marketing tool, especially for local businesses, given their need to target users and potential customers in their locality. Businesses can combine a user’s location data along with their user information such as gender, shopping history, etc. to create and send out personalised ads. That being said, there are also plenty of other areas where geofencing can be applied, with useful and effective results. But in this article, we’re going to stick to its applications in digital marketing.

How Do Marketers Use Geofencing?

There are three basic components when it comes to using geofencing for marketing:

  1. The first thing you need to do is to set up a geofence. A geofence usually specifies an area (e.g. Brooklyn), a street (e.g. Lexington Ave.), a location or business (e.g. Costco), or a radius (e.g. within 3 miles of 153rd & West street). There are quite a few marketing companies out there that provide geofencing capabilities that you can use.
  2. The next component is knowing when a user or customer enters the ‘fence’. This is primarily done using GPS or RFID, as mentioned before. You can even employ microfencing techniques through NFC or Beacon (which uses bluetooth) technologies to do this, but they’re often more expensive, and cover a much smaller area.
  3. The final component is communication. You need to decide what the best way to communicate to your target audience is, be it via text message, push notifications, emails, or digital ads. Keep in mind, the channel that you choose must be effective and mobile-friendly.

Once these three main components are covered, you can use geofencing to target users through various approaches, as required by your business. Some of the common approaches used in geofencing are:

  • To increase app downloads, by prompting users to download your app to avail offers and other incentives whenever they enter the geofenced area.
  • To increase brand awareness and engagement by sending informational/promotional text messages when people enter the specified area.
  • To cross-promote third party apps such as coupon generators that your business has tied up with.
  • To target consumers through social media ads placed of their feed, through features such as Facebook’s Local Awareness Ads.
  • To place targeted web ads through advertisement services such as Google Ads.

These are some of the most common approaches that marketers take with regard to geofencing. Most of these can be done quite easily, using tools such as these. However, there are a few considerations and best practices that you need to keep in mind when it comes to geofencing, so let’s take a look at those as well.

  1. Geofencing is not confined to mobile devices alone. They can also be used with other devices such as laptops and tablets. This can be used to your advantage in cases where people do not usually spend a lot of time on mobile devices (such as internet cafes) or when they prefer these devices to search (for products such as cars).
  1. You need to consider the fact that pushing out targeted mobile ads through geofencing might not be as effective in areas where people do not spend a lot of time on their phones. For example, including a biking lane within your geofence might not always make sense, as people rarely look at their phones.
  2. Give careful consideration to the message and/or CTA that you send out to your target audience. Asking people to try out your salon’s hair products in the middle of monsoon might not always work out.
  3. Think about your geofence boundary. Is it well-defined? Does it include areas where people regularly use their smartphones? Or does it cover a lot of open areas where people are not present, such as construction sites or empty houses?
  4. Keep in mind that the number of people you reach might be significantly lower. Targeted marketing is effective, but almost always has a lower reach. This means that while your conversion rate might be high, the number of conversions might not be so.
  5. You also need to bear in mind that your target audience might not want to see your ad or notification pop up every time they cross the geofenced area. For example, if the geofence covers an area that is part of their daily commute, pushing out notifications every time they cross it can cause them to get frustrated with your brand. You can avoid this by setting a cap on the number of times each customer can receive a particular notification.
  6. Respect your customers’ privacy. Make sure to that your messages and/or content are not intrusive in any way. Avoid phrases such as ‘Hey, you’re just 50 feet away from our store!’, since it might come off as creepy. Additionally, check to make sure whether your area of operation has any GDPR-specific restrictions. If it does, make sure your marketing efforts comply with it.

Now that we have covered the basics of Geofencing and its applications in local marketing, it’s time to answer the final question – Is it the future of targeted marketing?

I think it’s safe to say that geofencing has changed the landscape of targeted marketing completely. It empowers local businesses to reach out to their target audience at the right time, and greatly increase their chances of converting.

Statistics show that the CTR for geo-targeted mobile display ads is twice the industry standard. This leads us to believe that the future of targeted marketing will have a strong base in geofencing. However, businesses would be well advised to carry out a thorough market research, and take all aspects mentioned above into consideration before investing in this.

About the Author:
Antony Melwin is a marketing writer at Synup. When he’s not writing, he’s caught up in his own world that revolves around travel, fashion, poetry, and photography. Having studied textile design, he loves to analyse every bit of fabric that he can get his hands on. Currently, however, he’s focused on traveling to every location in his bucket list. You can follow his travels on Instagram @melwinish.

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