What is Geofencing Marketing? 7 Benefits to Consider

With geofencing marketing, marketers can resonate more strongly with the people living in certain locations.

What Is Geofencing Marketing?

Geofencing marketing is specific location-based ads that allow marketing experts to target their advertising and content delivery based on the targeted area. A “geofence” is the physical boundaries of a target location. It could be a specific city, a zip code, a county, or a mileage range around a physical store location. It is also possible to configure multiple geofenced marketing channels for businesses with multiple locations. Before you approach the top digital marketing agencies to enlist their services for Geo-fence marketing, it is essential for you to further familiarize yourself with the ins and outs of this form of marketing. Let’s dive in!

In a geofencing marketing strategy,
The marketing team develops advertisements and content tailored specifically to the consumers within the geofence. People living in New York City have vastly different needs and priorities than people living in rural Kansas, so developing content that appeals equally to both audiences would probably be an exercise in futility.

Geofencing functions by targeting internet-capable devices within the specified geofenced area. When customers travel into these areas, they may receive alerts or notifications about your brand’s current offers, limited-time promotions, and events where they can interact with your brand.

Location-based marketing with geofence technology essentially creates a virtual boundary that automatically targets consumers who cross the boundary into the geofenced area. Geofencing marketing is a powerful tool that allows marketing teams to deliver their brand’s messages to the right customers at the right times.

Businesses in today’s marketplace already know they need to expand their digital presence to stay ahead of the competition; casting too wide of a net, however, can backfire if you aren’t careful about your strategy. It is very easy to get confused today as there is a horde of Top website design companies available in the market that will help make your brand stand out in the cluttered digital space. Sometimes, you might need a little more to stay relevant for your consumers. One way to ensure your net is where it should be is by leveraging Geofencing.

Geofencing is the concept of targeting your marketing efforts around a specific location. While most businesses operate online and sell to a wide range of customers across different locations, many still rely on their local consumer bases to stay in business. If you’re developing a multichannel marketing strategy for your brand, consider the potential of geofencing marketing. One of the great examples is SMS geofencing. SMS geofencing stands as a remarkable marvel in marketing technology. Picture the power to deliver business updates, promotions, sales, or event notifications to customers precisely when they require a product or service. Marketing by SMS is highly practical due to its direct and immediate reach to a large audience, enabling businesses to deliver time-sensitive promotions and important updates effectively. With the widespread use of mobile phones, SMS marketing ensures that messages are readily accessible to recipients, making it a convenient and efficient way to engage with customers. It’s like hitting the jackpot!

Geofencing marketing is an excellent strategy if you want to bring more local customers to your door. This method of marketing focuses on a specific location instead of trying to appeal to a wider audience online.

Geofencing Marketing and Geotargeting: Are These Synonymous?

Before we proceed further, let’s understand the differences between geofencing and geotargeting as that’ll make it easier to understand how, why, and when the necessary targeting is used.

Geotargeting refers to the delivery of ads to consumers residing in a defined radius and is based on specific targeting criteria. The focus on specific consumer criteria such as interests, behaviors, or a person’s location makes geotargeting different from geofencing marketing which simply involves creating a virtual barrier in a location with the help of users’ IP addresses and keeping delivering the ads within the barrier.

In other words, geotargeting deals with bigger goes as ads are not shown to everyone within the geo-fence — they also need to meet the specific targeting criteria.

Are there any shortcomings of geofencing in marketing and advertising?

Despite its popularity, geofencing technology is not a perfect match at all times. It is possible that a device may end up registering a geofence even when there isn’t one. It is also possible that even though a geofence is created around a store, it becomes hard for it to measure the surroundings.

So if you want to use geofencing for marketing and advertising purposes, the recordings have to be accurate so that you can show relevant ads to your customers and provide maximum value. Targeting a wider set of audiences who are really not interested in your products will achieve little.

You may also find it challenging to scale geofencing as it is a very targeted technology for addressing the audience. So even though it may be a success when used for a large chain of stores like Walmart, it may not deliver the same results for smaller campaigns.

Examples of Geofencing Marketing

Geofencing marketing can take many forms:

• A brick-and-mortar retail store could create a geofence in the area around the physical store location. For example, a business owner could target the geofence to a 25-mile radius around the store to focus on the closest potential customers.
• A business owner could set up a geofence intended to capture potential customers leaving a competitor’s location to entice them with more attractive deals.
• Companies that travel for marketing events and industry conferences could erect geofences around future stops to establish brand awareness in advance of their local appearances.
• Service-oriented businesses like law firms and healthcare providers can geofence their advertising efforts to specific service areas.

These are just a few potential applications of geofencing marketing that can have tremendously successful results. However, like any other type of digital marketing effort, it’s vital to conduct appropriate research to determine the best locations for geofences and to understand the potential return on investment that could come from this type of marketing campaign.

How much does geofencing cost?

In contrast with WiFi, NFC, and beacons, no hardware infrastructure is required for geofencing. All you need is a mobile device, keeping your initial costs very low. You also need to factor in the cost of using geofencing which is typically included in the cost of the marketing platform itself.

Bear in mind that the bid prices can go higher than what you would otherwise spend for blanket location targeting. Your competition and existing targeting options near points of interest also play a role in determining the cost. Geofencing pricing is either determined through cost per thousand impressions or CPM or event cost per conversion. It depends on your campaign goals.

On average, the cost of geofencing marketing varies between USD 4- USD 14 CPM (cpm= cost per thousand impressions). If you are on specific ad platforms such as Snapchat, be prepared to pay USD 5 for targeting 20 thousand square feet. The exact pricing depends on a number of factors, such as:

1. Size and number of geofences you want – These can influence the cost of your campaign to a great extent. It’s simple — setting up twenty geofences in a single location will definitely cost more than a single geofence for the entire location. Moreover, the CPM is lower when the geofence is larger as there is more volume and inventory.

2. How much data layering do you want? – The more data you want out of your geofencing campaign, the higher the price will be. So a campaign that would have otherwise cost you a few thousand can easily double or triple depending on the additional features you wish to add. It is advisable to speak to your agency and work out a plan that suits your needs while keeping the costs in check.

3. Type of reporting you are looking for – Not all geofencing reports are created equal. Some may provide you with a full breakdown of the impressions per location, whereas others may only give an overview of the campaign. So make sure to factor in the level of reporting and targeting features in your budget.

7 Benefits of Geofencing Marketing

Some business owners may wonder why it is important to try geofencing marketing. Wouldn’t appealing to a wider audience offer a higher return on the marketing investment by attracting more potential customers? This is a flawed approach to multichannel marketing. Like with anything else worth doing, it’s vital to focus on quality over quantity. Establishing a very strong brand presence in a smaller location is much more valuable in the long term than building a mediocre brand presence across a much wider area with a more detached potential customer base.

When you invest in geofencing marketing the right way, you can enjoy many tangible benefits that will help carry your company into the future:

1. Keeping your geofence small means more precisely targeted marketing. When you connect with a local audience on a personal level, you inherently boost your brand’s image with those potential customers. When consumers know your brand is in touch with their local lifestyle, community, and topics relevant to the area, you create a stronger impression that increases the chances of that customer returning to do business with you in the future.
2. You can create precisely targeted high-quality content more easily. High-quality content continues to reign supreme as the best way to improve your marketing success. When you cast a very wide geographical net for your content publication, it is automatically less likely to resonate with so many different people from so many locations. Geofencing marketing encourages more precisely constructed content aimed at a specific consumer base, ultimately building a stronger brand image for your company within the targeted area.
3. Your brand can connect with the customers most likely to do business with you. Many companies sell online, and your brand may rely heavily on customer orders from well outside your physical store location. However, the local customers in your community are the backbone of your staying power as a brand. Your geofencing marketing efforts can help you cultivate a strong local following that you can expand over time, and you can create additional geofences if you build multiple retail locations.
4. Geofencing marketing allows for timely content delivery. If you’re running a new promotion and want to get more customers in your door, a geofencing marketing campaign makes it easier to get the word out to the customers most likely to take advantage of limited-time offers at your brick-and-mortar store.
5. Geofencing marketing is cheap and effective. If your marketing team is using the Google AdWords platform, your business already has the tools needed for an effective geofencing marketing campaign. Google allows businesses to set location-based parameters for their paid ads and business listings, and this functionality comes at no extra cost. You can set your paid ads to appear in international territories, within the US and Canada, within a specific region, in just one state, or a mileage radius you define.
6. Geofencing can boost data-gathering efforts. When you target your marketing strategy to a specific geofenced area, you gather more detailed data from responding to customers than you would with a broader digital marketing campaign. When a customer visits your retail store in response to a geofenced advertisement, you can gather data about visit duration, spending, messaging effectiveness, and much more.
7. A geofencing marketing strategy can enable your brand to deliver more personalized experiences to customers. The data gathered from a geofencing marketing campaign can help your marketing team develop content and promotions that align more closely with your targeted customers’ preferences, needs, goals, and interests.

Ultimately, any brand with a physical retail store and a digital presence should understand how geofencing marketing works and the potential benefits of developing this type of marketing strategy. Over time, a geofencing marketing campaign helps to build a brand’s local following and credibility, and business leaders can expand their organizations physically and digitally with greater confidence thanks to the insights gleaned from detailed geofencing marketing campaigns.

How to Integrate Geofencing into Your Marketing Strategy

Here are some tips to help you integrate a geofencing campaign into your marketing strategy:

Know your target audience

Learning where your audience is and what they like is crucial.

Not sure about the exact demographics of your audience? Utilize whatever data you have at hand. For example, if you have active social media accounts, interact with your customers and find out how they feel about your products or services. Remember that your target audience is the ultimate beneficiary of your geofencing campaign. Therefore, you must understand more about your target audience — who they are and what they expect from you.

Only when you are armed with the relevant information will you be able to design a campaign that delivers results? Moreover, it will also help you create ads that actually engage shoppers and nudge them in the right direction to purchase.

Pick the right size for your geofence

An oversized geofence can do more harm than good. So deciding upfront exactly how big your geofence is necessary. For instance, if your competitors are located within a 15-minute drive from your store, the chances of customers also visiting your store on the same day are very slim.

Target small and compact zones — you want your target audience who can discover your store within a four-to-six-minute walking distance. A four-to-five-minute drive is another option for geofencing campaigns. But anything more than that can mean a great deal of inconvenience for your users to visit you.

Keep an eye on your data

Reviewing the data on a regular basis is the only way you can be sure that your geofence campaign is on the right track. You will be able to identify what works and what needs tweaking. Otherwise, you may find yourself investing a lot without receiving any expected returns. If the word analytics scares the daylights out of you, partner up with a digital marketing or geofencing marketing company that can get the job done.

Pick the perfect moment to reach out

Most geofencing marketing campaigns fail because the advertisers reach out to the target audience at the wrong time. You need to identify when your customers are most likely to have time for you and engage with you. Bothering them when they are getting ready for work/school or are fast asleep will ensure that your geofencing campaign never takes off.

How These 9 Brands Expanded Recognition Using Geofencing

Over the past several years, marketers have realized that modern consumers desire more personalized interactions with authentic brands. Marketing strategies have adjusted, and the accepted best practices that worked ten or even just five years ago no longer apply. Today, it’s essential for marketers to precisely target their campaigns. While many marketers rely on data gathering tools to find out as much as they can about as many potential customers as they can, a few have realized that their precise targeting should pertain to geographic location as well. This realization spurred the rise of geofencing, the concept of targeting marketing materials to specific geographic areas.

With each year, geofencing becomes more mainstream. We probably recognize it most easily in retail, but industries from banking and finance to restaurants and hotels are levering geofencing to attract business and boost their name recognition. If you haven’t explored the potential geofencing could hold for your marketing campaigns, it’s time to reconsider your strategy and evaluate what geofencing could do for your brand. A few companies have capitalized on geofencing to incredible effect, so taking a look at how these companies succeeded with their geofencing strategies can be a great starting point for developing your own successful strategy.

1. Whole Foods: An Aggressive Approach to Geofencing

The basic concept of geofencing revolves around using a potential customer’s location data to your advantage, but it can be difficult to convince some customers to part with their location data willingly. However, loyalty rewards apps for many companies come with the condition of the user being required to share location data to use the app. Signing up for special offers via SMS typically requires sharing location data, too.

Whole Foods created an aggressive geofencing strategy that involved two parts. First, the company erected geofences around every store location. When customers crossed into these geofences they automatically received alerts and promotional offers to entice them to visit the nearest Whole Foods location. The second part was much more aggressive. Whole Foods implemented a “geo-conquest” strategy that leveraged geofences placed around local competitors.

When potential customers visited those places, they received offers from Whole Foods designed to entice them away from the competitors’ stores and to visit Whole Foods instead. The national average post-click conversion rate is about 1.4%. Whole Foods’ aggressive geofencing and geo-conquest campaign allowed them to reach nearly 4.7%.

2. Coca-Cola: Maximizing Revenue from Vending Machines

The average person may see as many as a dozen drink vending machines during an average day. Soft drink giant Coca-Cola has implemented a unique geofencing strategy designed to fine-tune its supply chain and entice more potential customers to use their vending machines. Today, more than one-third of all Coca-Cola vending machines are connected to the internet, and the company has implemented facial recognition and payment tracking tools into their vending machines. These implementations have led to incredibly valuable data streams for Coca-Cola.

The data gathered from the vending machines’ payment software and facial recognition systems allowed Coca-Cola to easily determine which drinks sold the best, which locations were the busiest, and which vending machines needed attention or repositioning very easily.

Coca-Cola has announced plans to streamline its supply chain even further and provide customers with better experiences by enabling its vending machines with free Wi-Fi, effectively transforming Coca-Cola vending machines in developed countries into Wi-Fi hotspots and gathering places.  While you may not have the same kind of reach as Coca-Cola, it’s still worth considering taking steps to not only draw customers to your physical retail locations but also encourage them to spend time there beyond simply making purchases.

3. Sephora: Providing Customers With Instant Digital Assistants at Every Location

Sephora is one of the most popular cosmetics retailers in the United States, and the company recently implemented a new strategy that’s a unique take on the geofencing concept. Instead of simply targeting potential customers near store locations, the Sephora companion app launches when a customer enters a Sephora location. The app contains the user’s past purchase information, details about ongoing promotions, timed exclusive offers, and wish-list item availability for that location. The app also displays store-specific information in an easily accessible format.

The Sephora companion app has provided many customers with much better experiences, allowing them to not only streamline their shopping experiences within Sephora locations but also encouraging them to make additional purchases, take advantage of limited-time offers, and use the wish list tool to entice them into returning again and again. As an added touch, the geofencing technology built into the Sephora companion app will automatically notify users who cross into a geofenced area about unspent gift card balances, reminding them that a Sephora store is nearby if they want to shop. If you’re thinking of ways to provide your customers with more enriching experiences at your stores, the Sephora store companion app is a fantastic source of inspiration.

4. Dunkin’ Donuts: Fun with Snapchat Filters

Geofencing is not only a great tool for convincing customers to make purchases but also to engage with a brand in other ways. Dunkin’ Donuts recently released a Snapchat filter on National Donut Day that users could only access in-store or through the “Snap to Unlock” feature, prompting many to visit their local Dunkin’ Donuts locations and connect with Dunkin’ Donuts through Snapchat to take part in the trend. The company’s personalized geo-filter transformed users’ heads into enormous pink donuts, complete with sprinkle animations.

The marketing campaign worked, and Dunkin’ Donuts gained ten times as many followers on National Donut Day than their daily average. This geofencing campaign may not have been directly tied to sales, but it still drove customer engagement with the Dunkin’ Donuts brand and encouraged many customers to use the Snapchat filter and share their silly donut-head photos across social media. This is a great example of using geofencing to generate engagement around your brand that could potentially lead to conversions without directly influencing users toward sales.

5. Burger King Continues the Fast Food Wars

One of the cleverest geofencing strategies in recent years was also a magnificent example of corporate trolling. Burger King launched the Whopper Detour campaign, which started with erecting 600-foot geofences around McDonald’s locations. Burger King then took to social media to encourage their followers to go to McDonald’s, but there was a surprising twist. As soon as a customer who had downloaded the Burger King app crossed into one of the geofences around a local McDonald’s, the app would send an offer for a one-cent Whopper from the closest Burger King. This prompted many customers to take “Whopper Detours” and abandon their plans to go to McDonald’s.

Fast food companies, most notably Wendy’s, have used social media in some very surprising and often entertaining ways. The Whopper Detour campaign is a prime example of how a company can not only leverage geofencing as an effective sales-driving technique but also as a means of generating engagement across social media. The stunt resulted in more than 1.5 million downloads of the Burger King app, skyrocketing it in the Apple App Store’s Food and Drink category from ninth place to first place. This could inspire you to leverage the power of playful competition to generate enthusiasm around your brand and drive users toward your own mobile app.

6. Domino’s

Pizza giant Domino’s is a great example of a brand that used geofencing to reach hotel guests on their mobile devices and encourage them to order pizza as well as to deliver pizza to any location of their choice, including their favorite park bench.

For the hotel guests, Domino’s targeted popular apps and mobile sites around the hotels in South Florida and ran targeted ad campaigns for a particular set of audiences, the travelers. As soon as the guest clicks on the ad, they are taken to a landing page filled with multiple options for ordering their favorite pizza from the nearest location. Why this case study stands out because the audience was already geofenced (as they are guests staying at a hotel) and Domino’s made sure to utilize this by offering something special. This unique mobile marketing strategy was incredibly successful and delivered the desired results for Dominos.

7. Papa John’s

The new locations of Papa John’s wanted to increase the loyalty rewards program. Super Bowl promo was the perfect opportunity to promote the Papa Rewards Program, and Papa John’s leveraged geofencing marketing to do just that.

A Super Bowl promo code was offered for loyalty rewards, and the ad ran on average within 2.5 miles radius of four locations. Geofencing used GPS coordinates to map the location and offer links to order. This was a new market area for the pizza franchise, and the geofencing campaign helped in increasing brand awareness.

8. Starbucks

Starbucks uses geofencing for advertising drinks to the target audience. Usually, they send push notifications whenever the customers are close to a Starbucks outlet. They also advertise special offers to get more footfall. For example, Starbucks has happy hours on Thursdays between 2 to 7 pm. Customers can avail of a BOGO offer on any grande drink. So whenever customers are near an outlet or in the area, Starbucks sends push notifications to them, urging them to visit and check out the offer.

The coffee chain is also known to recommend a drink to the user based on the order history. For example, if you typically order an iced latte, you will receive a geofenced notification nudging you to order one.

9. John Hopkins

This may seem like an unusual example, but strangely, it is one of the most successful geofencing campaigns. Johns Hopkins Hospital uses geofencing marketing to reach out to more people to hire them. They are known for creating different social media ads that are positioned in the newsfeed of qualified users.

The idea is to reach out to experienced professionals and make it easy for them to apply to Johns Hopkins. They no longer need to put in the hard work to locate the job openings in the market — a recruiter like Johns Hopkins is willing to advertise the relevant opportunities to the potential candidates and lure them in. This geofencing marketing strategy helped Johns Hopkins locate the right candidates for the job and fill the openings.

Creating a Geofencing Marketing Strategy That Actually Works: Here’s What You Can Do

• Data hunt before you start your geofencing campaign. The more you know about the kind of audience you are trying to target, the easier it becomes to implement the strategy.
• Be intentional about who you target through the geofence. The idea is not to target anyone who enters the geofence — rather, only those who fit the customer persona you have created.
• Keep evaluating and tweaking your geofencing strategy. It is not a one-off action you can take. Staying up-to-date and accurate is crucial for success. Once you have the raw data, conduct A/B testing to see what works best and create better campaigns that deliver solid results for your business.
• Make sure that you link the physical store location with the user profile online. This includes their wishlist, previously purchased products, and products best suited for them. You can use a geofencing strategy to promote lucrative offers to boost the interest of the target audience.
• Pay attention to the messaging. Your message needs to be creative to stand out in the crowd. It also needs to be eye-catching so that the notifications are more relevant to the audience and actually encourage them to open them and read. Segmenting your audience is an excellent way to create ad copies that genuinely resonate with them. Where your audience is located, what are their hobbies, what kind of browsing behavior they demonstrate, and what the other demographics can be some of the markers to segment them.
• Don’t just analyze reach and frequency once you start a geofencing campaign. You get a lot of valuable information through geofencing, including where your customers frequently shop, which stores are closer to where they live or work, and several other details that will give you a ton of ideas on how to market to your ideal customers.
• The fence should be around a high target area so that you can bring in more new customers. Be careful about the fence size — too big or too small of a fence can result in missing out on potential customers. When you have the right-sized fence and make an attractive offer to your audience or give them a special deal, they are more likely to avail of the opportunity and go ahead with the purchase as your store is located close to them.
• Have a compelling CTA that inspires the audience to take the next steps. A generic CTA often falls flat as they don’t tell the audience what will happen next. However, a laser-focused CTA such as “Claim your 50% off coupon” tells them exactly what they are in for once they click.

Drawing Inspiration for Your Brand

These are just a few examples of how major companies have leveraged geofencing technology in surprisingly effective ways. Whether you intend to draw attention away from your competitors or simply provide your customers with more engaging experiences while in your stores, geofencing can help you make it happen. When you combine geofence marketing with branding services that are provided by a host of companies available in the market, like SEO companies, you are bound to make your brand name stay in the mind of the end customer.

If you’re trying to drive traffic to your brick-and-mortar locations, geofences around each location that entice customers with limited-time promotions are fantastic tools that leverage location data in your favor. One of the best parts of using geofencing technology is that it is very low cost. Neither Facebook nor Google AdWords requires you to pay extra for geofencing functionality. Simply choose your target locations, set up your campaign, and then track the results.

Start thinking of the potential geofencing marketing could hold for your brand and brainstorm strategies for connecting with your local market in more meaningful ways.