What is Geofencing?

Geofencing has been used for non-marketing applications for a while. Geofences have been placed around secure facilities like government installations and airports, for example. If there is an unauthorized intruder they’ll be detected when they breach the geofence. Unmanned drones can be electronically and instantly disabled, for instance, if they enter a geofenced airspace where they are prohibited. But with the widespread adoption of digital devices like smartphones, geofence technology offers a new frontier for more effective consumer marketing.

Geofencing is a type digital advertising that reaches consumers who are within a very specific geographic location. The technology enables businesses to create an electronic digital fence or geofence around a designated area. Digital ads or marketing messages are transmitted to the consumer while they are inside the geofence. They conveniently receive those ads on their mobile device. Just as someone enters a retail location, for example, they may receive a discount coupon or sales promotion for a product that they are shopping for at that exact moment.

The marketing can be set up to work in a sequential manner, too. If a consumer is with 100 yards of a location, for example, they may receive one kind of prompt or ad. Then when they are 10 yards away, another kind of message is sent, and when they enter the actual brick and mortar location, a third marketing sequence is triggered. In that way, you can create highly customized marketing funnels with geofence capabilities.

Benefits of Geofence Marketing

The value of this approach, of course, is that marketers can display ads or marketing messages tailored to a geographic location or radius. While localized marketing is a key to success, geofence technology takes it the next level with hyper-local pinpoint precision. You can literally stick a pin in a map anywhere that you want to create a target-rich marketing environment. Then you cater to the browsing, shopping, and buying behavior and preferences of anyone who physically enters that area with customized ads and messages.

Say, for example, that you own a restaurant or retail store on a busy street. Instead of sending the same ads to potential customers all the time, you can use geofencing to send them uniquely relevant ads when they pass in the vicinity your business. Notify them of the day’s menu specials or tell them about a new product that just hit the shelves or showroom.

You may market to them when they are at home or in their office with one kind of ad campaign. But when they enter the geofence area while driving past your business location, they start to receive your more specific, targeted ads. Maybe they are a few doors down or across the street, when they receive a digital ad on their mobile device alerting them that you are having a sale. Or maybe when they enter your geofence area you send them a two-for-one offer. They respond to the ad, realizing they are already inside your business or close enough to that stopping to buy from you is not out of the way or inconvenient. For businesses with multiple locations, geo-specific ads can be sent as consumers drive around, to direct them to the nearest one.

Geofencing Competitor Locations – Geoconquesting

You can also apply this technology to strategically market to your customers when they are near or at a competitor’s location. Say, for instance, that you own a car dealership and your main competitors are in other zip codes in the same city or county. Using the right kind of geofence technology and marketing, you can establish geofence zones around the competitors’ dealerships. That way, when an auto buyer drives into one of those dealerships they will start to immediately receive your dealership ads and messages. That can be highly effective to lure from your competitors and to your dealership, because your marketing communicates with them in real-time. But it also feeds you back highly valuable analytical information. You’ll know such things as which of your competitors is receiving the most auto buyer traffic, and on exactly which days and at what hours.

Maybe a buyer gets an ad while inside a geofence you placed around a competitor’s car lot. It tells them that you offer better pricing, a larger inventory, or superior customer service. Despite the fact that they are within your competitor’s dealership, you are able to still make them aware of your brand and engage them in influential, effective ways.

In that way, geofencing can give you a powerful competitive advantage in any market. You have the ability to capture the attention of auto buyers wherever they go to look for vehicles. They may be about to purchase or lease a vehicle when your geofence marketing lets them know you can offer the same vehicle with more affordable monthly payments. Once they leave your Geofence, you can also retarget them with messages for a pre-fined period of time. Even if they are having a face-to-face conversation with a competitor’s salesperson, your dealership can intervene with your messages and ads, sent instantly and right to their smartphone or other mobile device.

Localized and Personalized Marketing

The ability to pinpoint locations and program hyper-local marketing opens up all kinds of possibilities not possible with other types of advertising.

Here’s an example of how it could be used to great effect by an RV dealer. If there is an RV show event in town, where thousands of RV lovers will gather to look at vehicles, a geofence can be set up around that special one-time event. Anyone who attends the RV show enters the geofence zone, where they are prime targets for dealership ads.

Similarly, a hotel or restaurant could use geofence marketing to send ads to the smartphones of everyone at a business convention or popular tourist destination such as a beachfront or amusement park. If you sell home improvement products, you can deploy a geofence around a home show being held at your local arena. Those who sell music can use the same tactic to advertise to everyone attending a big outdoor concert.

The performance of each ad or message can be measured to keep enhancing the effectiveness, based on such things as time of day, exact location, and buyer behavior. Based on the demographics of a particular target market, and one’s advertising objectives and products/services, geofencing can be applied in a virtually unlimited variety of creative and cost-effective ways.

Geofencing Attribution

Another advantage of geofence marketing is that since it is digital, you can perform helpful and insightful analytic measurements to track ad performance. With conventional advertising, for instance, you cannot know how long a customer stayed inside your physical business location. But with geofencing, you know exactly when they entered whatever designated area you drew on the map. You also know when they exited that area, and how frequently they returned and entered it once again.

You can also collect sales data, purchase history information, and other marketing feedback like local demographics. Depending on the application of the geofence campaign, you can harvest all sorts of valuable data that can be used to guide other forms of marketing. In that way, each marketing campaign can strengthen other marketing you do. With geofence-enhanced advertising you can drive more traffic to your website, your e-commerce stores, your social media platforms, and your brick and mortar locations.

Of course you can also analyze all of that data to help craft ads and messages that are hyper-personalized and for each demographic or type of consumer you target. If someone frequently visits a competitor’s auto service repair center, for instance, that may alert you to the fact that they are in the market for a newer vehicle. Or when increasing numbers of people from one city visit your out-of-town retail location, that may indicate that their city is a prime candidate for opening your next store.

The Bottom Line

Geofence marketing is still in the early stages of development, and is being refined and enhanced at a rapid pace. Those who adopt and utilize the technology have a powerful competitive edge, and can generate greater returns on their marketing campaign investments.