What is Geofencing Marketing?
Geofencing marketing is a digital marketing strategy that involves setting up virtual boundaries, or geofences, around specific geographic locations using GPS or RFID technology. When a potential customer enters or exits these predefined boundaries, they trigger real-time alerts that enable businesses to send targeted advertisements and promotions directly to their mobile devices.
To better understand the strength of this approach, think of the way traditional TV or radio advertising works. These channels appeal to broad audiences in large neighborhoods, cities, or even countries. It's more or less a random approach, as viewers or listeners of the ad might not even be interested in what the advertisers have to offer.
Conversely, geofencing helps marketers set precise geographical limits where their ads will appear. As a result, they target people who are more likely to visit a nearby store due to its proximity to their work or home, brand identity, or importance for the local community.
How Geofencing Marketing Works?
There are three main options businesses can choose from when creating geofences, so let’s take a look at each one individually.
Centroid Radius
The centroid is the center point of a particular area, such as a retail store, a park, or an office building. The radius is the distance from this central point that forms a circle defining the geofence's boundary. This technique allows marketers to create a circular geofence that encompasses all locations within a certain distance from the centroid. For example, a local restaurant, café, or gym might target all neighborhood residents living within a 1-mile radius from their business location.
Self-serve advertising platforms like Google and Facebook make it easy to achieve this sort of targeting by simply dropping a pin at the address of the business and specifying the extent of the radius in miles or kilometers.
Isochrone
This is a more precise approach that takes into account walking or driving time. It calculates how long it takes to get to a particular location using available transportation methods—cars, buses, bikes, etc. In other words, it is based on travel time rather than distance. For example, an isochrone might be used to define the boundaries of a geofence by marking out all areas that are within a 10-minute drive from a store.
Isochrones are particularly useful for marketing because they factor in road networks and traffic conditions, providing a realistic sense of how accessible a location is for potential customers.
Building Footprints
Building footprints refer to the detailed geographical outlines of individual buildings as seen from above. These outlines are used to create precise geofences around specific buildings or structures. By using building footprints, marketers can target their advertising efforts more accurately to people within, entering, or exiting these buildings.
For example, a marketing campaign might use building footprints to set up a geofence around a shopping mall, office complex, or residential building. This enables businesses to send targeted promotions or messages to mobile devices based on the user's exact location within these densely structured areas.
Benefits of Geofencing Marketing
We have covered the theory behind geofencing advertising, so let’s dig into its benefits to see how it can help a small business get more customers.
Instant Ad Delivery
Think of ads as triggers or external stimuli designed to drive a particular action—a purchase. The problem with traditional TV and radio advertising is that businesses have to wait for their ads to be seen or heard. Besides, customers listening to a song or watching their favorite TV show are not in the mood for buying; their primary focus lies elsewhere. A trigger released at the wrong time is not highly likely to produce the desired outcome.
In contrast, as soon as consumers cross your geofence, you can start marketing to them right away. They might be walking distance away from your store, increasing the odds of dropping by and becoming customers.
Precise Targeting
Mass advertising counts on reaching a large number of people, hoping some of them will turn from viewers into buyers. You get scarce information on who your ideal customer is, where they live, their demographics, purchasing habits, etc. This is because large-scale advertising typically targets big cities, regions, countries, or continents.
On the contrary, geofencing allows you to zero in on your customers in places where you can expect them to be. For instance, a local car rental business might decide to advertise near airports and bus or train stations.
Cost Effectiveness
Local TV ad rates range from $5 to $100 for every 1,000 viewers in the US. A local radio ad spot can also reach up to several hundred dollars, depending on the station’s audience size, the time of the day it airs, and the location of the station. This makes mass advertising quite expensive for a small business, as it takes a lot of resources to spread the ads across a large geographic area.
On the other hand, geofencing can cost a fraction of that price if implemented correctly. It can reach a higher concentration of people in a smaller area at a precise point in time, which drives down marketing expenses.
How To Implement Geofencing Marketing Successfully?
21st-century marketing is all about personalization, so you can’t create generic ads hoping to attract a diverse set of customers. You need to understand as much as possible about your customers, your industry, and your competition. Here are some tips to get you started.
Figure Out the Demographics
Regardless of the marketing channel being used, a perpetual issue with advertising is addressing people who have absolutely zero interest in what a business is offering. Take the time to research the demographics of your target area—age, income, marital status, level of education—knowing all this plays a key role in crafting your marketing message.
Trust data from government sources, such as the U.S. Census Bureau or local or regional statistical agencies. Additionally, check reports done by local market research companies, which offer detailed analytics on consumer behavior, purchasing patterns, and lifestyle data. Finally, benefit from examining data from social media reports and online analytics tools like Facebook Insights or Google Analytics, which can shed more light on the interests, preferences, and behaviors of users in your target areas.
Think of a Geofencing Strategy
Remember the types of geofencing we described above—radius, isochrone, and building footprints. Consider how each of these three types can fit your business goals. For instance, imagine your real estate agency office is surrounded by competitors you want to steal market share away from or with businesses you can cooperate with. In this case, you might want to set up building footprints around the offices of your immediate competitors and target their potential real estate customers. Similarly, you can geotarget the area around nearby plumbers, electricians, or pest control specialists, as people looking to buy or sell their property are very likely to need these services.
Alternatively, if your beauty shop is close to a mall, you might think about isochrones geofencing to indicate you are in close proximity to a place your potential customers are likely to spend their free time.
Don’t Forget About Timing
The timing of a geofencing ad is crucial for its success because it ensures that the message reaches potential customers precisely when they're most likely to be influenced by it. Picture a person off to work going by a coffee shop in the morning and their phone buzzes with a discount offer from the shop they’ve just passed.
This isn't just a coincidence—it's excellent ad timing, making the message not only relevant but almost irresistible because it fits seamlessly into the context of their day. When ads pop up at just the right moment, they transform from being just another piece of digital noise into a helpful suggestion that feels tailored to the immediate needs of the consumer.
How Can a Small Business Launch its Geofencing Campaigns?
Google Ads or Meta
Business owners can use ad platforms like Google and Facebook to create and manage their campaigns. This involves choosing a geographical area where the ad should appear—this could be near the business's location or in areas which target customers frequent. By setting parameters like radius around a point, postal codes, or specific cities, businesses can reach precisely their potential customers.
The major downside of this method is the rising cost of advertising on these big platforms. The regional and global competition a local business faces can increase the cost of the campaign significantly, making it unprofitable. In addition, some level of technical expertise is required so that local advertisers can make sense of all the sophisticated data, graphics, and metrics.
Building an App with a Developer
A developer can design a custom app from scratch with built-in geocentric functionality. The main advantage here is the level of personalization and targeting criteria that can be implemented.
However, there are significant upfront costs in terms of time and money along with an ongoing maintenance fee. Apart from that, getting people to download the app so that they can receive push notifications is challenging. In 2024, there are currently close to 2 million apps on the App Store, so some App Store Optimization (ASO) is needed to secure exposure to the target audience.
Local Newspaper Advertising
Many local newspapers have expanded their advertising services to include digital options like geofencing. As traditional print media companies seek to stay relevant and competitive in the digital age, they often embrace new technologies that allow them to offer more targeted advertising solutions to their clients. This can be particularly appealing to businesses that want to combine the credibility of a respected local newspaper with the precision of digital targeting.
How To Track the Success of Your Geofencing Marketing Efforts?
No matter whether you are running geofencing campaigns or any other digital form of advertising, you want to measure the performance of your campaigns. Here are some key KPIs you should be aware of:
- Impressions: This metric records the total instances someone with a mobile device enters the area defined by your geofence, showing how frequently your advertisements were distributed, regardless of any subsequent action taken
