What Is Geofencing? [Advantages & Disadvantages]

What Is Geofencing? [Advantages & Disadvantages]

Geofencing is a location-based mobile marketing optimization strategy companies use to target a specific location or area of smartphone users. When a potential customer enters a particular geographic location, they receive targeted information or advertisements on their smartphone or device.

With geofencing, users get ads that are relevant to who they are and also where they are. Geofencing allows companies to focus their marketing campaigns on specific areas where their potential customers are, rather than wasting their budget on generic ads for the wrong audience. It also helps increase product interest and conversion rates compared to broader, less targeted advertising and marketing campaigns.

What Is the Purpose of Geofencing?

Geofencing exists to help you find interested customers when and where they are most interested in using your services or buying your products. It is a conversion-focused advertising method designed to get results because it reaches out to the right people instead of anyone who might want what you have to offer. 

You can better understand the purpose of geofencing when you understand how a geofence works. 

How Does Geofencing Marketing Work?

The first step of any geofencing advertising campaign starts with the company. They establish when and where they want to advertise, and most importantly how they’re going to advertise. The advertisement is distributed within the selected area to anyone using their phone. However, the advertisements don’t spontaneously appear. A customer has to be using an app or be in an active web browsing session. 

Once the campaign is active, anyone who uses their phone in the specified area will receive the customized message via in-app advertisements or a web browsing session. The company then gets data about who saw their ad, the demographics of that group (like age and gender), and what kinds of interaction took place (like clicks on the ad).

What Are the Advantages and Disadvantages of Geofencing?

Advantages of Geofencing

  • It provides double the click-through rate. That’s right. Double. Geofencing can be twice as effective as other marketing campaigns.
  • It gives a chance for personalized interaction. Rather than potential customers getting generic messages and ads from your business that mean nothing to them, geofencing speaks to who they are and what they are doing in regards to their location. That’s a powerful tool and helps customers feel a close connection and understanding from your business. In fact, 71% of consumers prefer a personalized ad, like geofencing.
  • It gives you arguably the best advertisement placement possible. Rather than using a shotgun approach, like a billboard that targets any person who drives by, geofencing focuses on a very specific location. Geofencing is like a sniper rifle. You’ll hit the target audience you want. 
  • Geofencing’s focus increases the efficiency of your marketing dollars. The conversion and click-through rate of a geofencing campaign is higher than broad-based marketing campaigns because they are targeted. Targeted ads perform better and get longer-lasting results than generic, wide-sweeping ads.
  • Geofencing-based marketing can track a wide range of metrics. Because geofencing is based on smartphone use, you can gather a ton of data about how customers interact with your brand. For example, you’ll gain insights into target segments, traffic patterns, and even messaging effectiveness. The more metrics you track, the easier it is to make better-educated choices, which only helps to improve future geofencing campaigns. 

Disadvantages of Geofencing

  • It takes time to establish and set up a geofencing campaign.  Because geofencing is based on relevance and connection to customers in a close area, it isn’t as easy to recycle or reuse previous campaigns. You need to create and establish new content tailored to the specific campaign, and that takes time and energy. 
  • Your ad is limited in how it is viewed and interacted with. While it might sound amazing that you can reach out to every customer in a specific area with direct marketing, geofencing does not automatically pop up information on a phone with an alert to anyone who enters the area. It requires customers to be on their phones doing more than checking emails or texting. They must be in an app that has advertisements enabled, or on a website that displays ads. This limitation directly alters who will see your ad, because not everyone is on their phone to see this ad. The situations and target audience you are aiming for might be too busy to ever see it. 
  • Geofencing requires customer activation. Customers have to approve that their location is tracked and advertisements can be customized due to their location. If your target audience doesn’t want a customized ad experience, they won’t receive your ad. While your target audience might be in a specific location, they might never see your ad because they have disabled that feature on their account or phone.
  • Geofencing requires more addresses than you may think for scale purposes.  Geofencing was built with the intention of targeting singular addresses or locations/areas that are too granular for geo-targeting. If you are looking to target larger areas such as cities, states, or zip codes, geotargeting is more likely to help you achieve your goals.

What Tools Do You Need in Order to Geofence?

Geofencing might feel like the perfect blend of digital media and location-based advertising, but what do you need to start using this technique? A geofencing platform. Geofencing platforms allow advertisers to strategically spend advertising dollars by tracking users that enter conversion zones and get served their ad.

How Do You Get the Most from Geofencing?

Geofencing is targeted marketing. It may feel limiting, since you will probably not reach as many people as with other forms of advertising. But geofencing brings a laser-like focus that leads to better results. Here are a few ways to get the best from geofencing marketing.

Limit Your Scope

When picking the area you’re targeting, try limiting your scope. The best ads are ones that speak to a customer’s situation and location. If you go too big and try to cast your net too far, you might reach more people but your ad will be less relevant to most recipients.

The standard rule of thumb is you should keep the area limited to a 4-5 minute walk if you are in an urban location. If a person gets your ad, they should only have to walk or drive a short distance to take the action that is part of your campaign. If you’re in a more rural location, you can increase the range by a mile or two, but it should still be nearby and a short trip to fill the call to action in the ad.

Clear Call to Action

Good ads should always move the customer to do something, and with geofencing, those calls to action can be powerful, traceable actions. Invite your audience to interact with your brand. Have them come into your storefront right then or call to place an order.

A major strength of geofencing is that you can instill a sense of urgency with limited-time sales and deals. Because customers are close to your store, having an advertisement that offers a limited time 20% off deal could provide that extra incentive needed to check out your business. Your call to action can also be related to the area that the store is located in. If you’re close to a sports team (professional, college, and even high school teams can work), you can create a call to action related to the games that are happening close to you. For example, you can give everyone with a ticket to the game 10% off for a home run or offer a free dessert for everyone if the team wins.

Your biggest goal in creating a geofencing call to action is to tempt your targeted audience into coming to your store. Provide them with real value, in the form of a special deal or discount, to motivate them to take those few extra steps toward a purchase.

Pair with Other Marketing Campaigns

If you want to get the best out of geofencing, make sure it’s unified with your other marketing campaigns. This can include content marketing, remarketing, search engine advertising, other forms of display advertising, video advertising, etc. 

While your geofencing campaign is targeted to a very specific audience, it should be paired with campaigns that are not as specific or that target different groups and locations. Your ideal customer often needs to be marketed to multiple times before making a purchase, and you need to make sure your overall marketing campaign is unified so the end user has a cohesive, positive experience with your brand.

What Does Geofencing Mean?

Geotargeting is when you are marketing towards a certain demographic in a geofenced area. Companies will usually start out with a geofenced area and wait to receive data back. Next, they analyze the data to understand the general demographics of who is in that area. Then, they re-target their platform to a specific type of audience. 

What Is the Difference Between Geo Targeting vs Geofencing?

When comparing geo targeting and geofencing, it’s important to know the difference. Sometimes these two phrases are used interchangeably, but they are not the same. With geofencing, you reach anyone and everyone with a smartphone that enters the designated area, whereas with geo-targeting you can create a platform to reach a specific demographic that enters the designated area. 

How Do You Use Geofencing?

To use geofencing, you first need to know what geofencing is. Once you understand the basic concept and the audience you’re targeting, you can then team up with a company like Agility to choose a geographic area that you want to target. Targeted areas can range from a specific competitor’s store to an airport. Once people with smartphones begin entering your geofenced area, you will receive data and be able to send advertisements.

Who Uses Geofencing?

Geofencing is used by a variety of businesses, from startups to well-established franchises. For any company wanting to market a specific demographic or reach a group of people in a specific location, geofencing is here to help. With geofencing, you can target anyone with a smartphone, which is most of the population. And for those companies that don’t know where to begin with geofencing, Agility is here to help you navigate this new platform.

Where Do Geofencing Ads Appear?

Geofencing ads appear on smartphones with apps and mobile browsers that have ads enabled. This includes apps like YouTube, Facebook, Pinterest, and more. A majority of social media apps allow ads, along with certain shopping platforms, music apps, and generally any unpaid app. 

Can You Geofence on Facebook?

Yes, you can geofence on Facebook. Social media platforms are a popular way for companies to reach their audiences. When someone enters the geofenced area and is currently using the Facebook app, they will receive your ad.

Can You Use Geofencing Without an App?

The short answer is no, you cannot use geofencing without an app. However, it’s not that potential customers need your app to receive your advertisements. Geofencing can be used through any app that has ads enabled. For example, you can geofence the airport and anyone there watching YouTube with the ads could receive your advertisement. 

How Does Mobile Geo Targeting Work?

Mobile geo-targeting is a way for companies to gain information about their audience with help from mobile devices. There are two sub-categories in mobile geo-targeting: place data and device data. When using mobile geo-targeting, you can gather information about the physical location, like who is shopping there and how long they are there for or collect data from the devices of people entering the physical location.

How Effective is Geofencing?

If you’re still asking “What is geofencing?”, you should see how it has worked for other companies. Here are a few case studies from Agility that show just how powerful a tool geofencing is and how it helps all types of organizations to improve traffic and build their business. Thanks to Agility:

  • A hospital network was able to serve over 18 million ad impressions with a 0.146% click-through rate and drove over 42,000 nursing applicants to conversion zones. Geofencing made it possible to target specific areas and to land more in-person interviews.
  • An online juice seller brought in $172,000 in revenue over 60 days.
  • A local magazine brought more than 3,600 new visitors to their website. 

Why Agility?

With 23 years of combined industry experience, the team members at Agility have built a platform that delivers on what other geofencing providers are selling but not actually delivering. Agility’s platform is more accurate and yields better performance. We fixed the accuracy problem and the inventory problem that many geofencing providers struggle with. Get started with Agility today.

Leave a Reply

Your email address will not be published.

Join Our Newsletter

    Schedule A Demo

    The majority of digital spend has shifted to programmatic, which means leveraging programmatic has become vital to the success of online marketing strategies. What most don’t realize is it requires the use of man and machine to drive results. Pick a partner who has the right technology and a team of experienced professionals. At Agility, we have a passion for helping advertisers find their key demographic and spending their advertising dollars efficiently. Most agencies are the jack of all trades and master of none – we focus on programmatic display and not all of your online advertising channels. We do one thing really well and it’s display advertising. Let’s meet to discuss your return goals around display campaigns now.