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What is Geofencing and How Does it Work?

Q: How does Geofencing work?

Geofencing is a Location Based Marketing method that operates by establishing a digital perimeter around a particular geographic location. Once defined, the predetermined action will activate when someone enters or exits the zone. Marketers, companies, or developers typically specify the action based on the objective of creating the geofence.

Welcome to the Fluid Ads Guide to Geofencing in 2023

Global mobile phone usage has seen a year on year increase in the last few years. A report by Statista indicates that mobile data usage will substantially increase by 2025.

Markets and Markets reveal that the global Geofencing market is set to grow from over $540 million in 2017 to over $1.8 billion in 2022; a compound annual growth rate of 27.5%.

With the significant rise in global mobile phone usage and the projected expansion of the Geofencing market, it’s time to consider using Geofencing as part of your marketing strategy.

This article will provide you with all the information you need about Geofencing, some examples of companies who have been successfully using it and how to integrate Geofencing into your marketing strategy.

What is Geofencing?

Geofencing is a location based service that uses RFID (Radio-Frequency Identification), GPS (Global Positioning System), cellular data, IP address ranges or Wi-Fi to prompt a predetermined action when a mobile device enters or exits a virtual perimeter on a geographical location; also known as a geofence.

Geofencing GIF

A geofence is essentially a virtual boundary in a geographical area. Virtual boundaries can be added to a geographic area or be dynamically generated as a radius around a location such as a landmark, a specific building or postcode.

How does Geofencing work?

Geofencing is a Location Based Marketing technique that works by establishing a digital perimeter around a particular geographic location. Once defined, the predetermined action will activate when someone enters or exits the zone. Marketers, companies, or developers typically specify the action based on the objective of creating the geofence.

Mobile applications often have Geofencing functions within the code. For example, if someone walks past Marks & Spencer and has the app installed on their phone with location services turned on, Marks & Spencer’s could send app notifications that contain offers to try to lure the customer into their store.

Having the ability to create virtual boundaries and send real time messaging to people within this target area and after they leave, gives companies incredible opportunities to take their marketing to a whole new level.

The different types of geofences?

There are 3 different types of geofences that are commonly used, each with its unique features and benefits.

Polygonal Geofencing

A polygonal geofence offers more accuracy than radius based geofences because you can use 12 to 15 points to define an area. The Fluid Ads Platform uses polygonal geofences to create areas in which users can target their audiences. The platform allows users to create geofences that are accurate down to a metre.

Latitude and longitude Geofencing

The square-based system used in the longitude and latitude method is commonly used to create geofences. To use this method you need precise coordinates to create a geofence which can range from 10 ft to 500 ft, depending on requirements.

The limitation of this approach is that the defined area may not always fit the area you wish to target precisely. This may lead to targeting people who are either passing by or are in the building next door, resulting in a potential waste of ad spend.

Circular and radius Geofencing

A circular or radius geofence is commonly used in Proximity Marketing. It allows you to create a circular virtual boundary around a central real world location, and then define the radius of that boundary.

It is worth noting that this type of Geofencing may not be as precise as other methods, such as polygonal Geofencing. Depending on your specific needs, circular and radius Geofencing may not provide the level of accuracy required.

How Geofencing is used by businesses?

With advancements in technology and the increasing use of smartphones, Geofencing is becoming more popular with businesses, especially for marketing purposes.

Geofencing has a multitude of applications, including targeted messaging on social media platforms, in-app notifications, digital display ads on websites via GDN (Google Display Network) or other ad networks, triggering alerts and text messages, collecting location data, and disabling certain technologies.

For example, police constabularies could set up geofences for people on probation to ensure they are not violating their conditions or curfews, human resource departments can set up geofences around their workplaces and receive notifications when employees clock in or out and logistics companies can create virtual boundaries to track movements of their fleet.

Here are some of the common ways businesses are using Geofencing:

Marketing

Aside from social media marketing, Geofencing is a very popular way for companies to deliver targeted messaging to real world locations where their target audience frequently visits.

Car dealerships can target their competitor’s stores to advertise their inventory.
Bookmakers can target sports events with live odds.
Golf shops can geofence their competitor’s shops and local golf courses.
Ticket companies can target events with tickets for upcoming events.
Charities can geofence locations where potential donors might visit.

Geofencing has opened up new avenues for marketing by offering you the ability to deliver customised, location based marketing content to potential customers.

Social Media

Location based marketing has become an increasingly popular tool for companies looking to take their social media marketing to the next level.

Platforms such as Facebook, Instagram, and Snapchat have recognised the value of location based targeting and now offer Geotargeting as part of their targeting options.

Retail

Some retailers use Geofencing to gain an edge over their competitors by creating a geofence around their competitor’s shops.

You can then target customers who are nearby or enter your competitor’s shops with incentives to leave their shop and visit yours.

This tactic can be an effective way to drive foot traffic and increase sales, as well as gaining a competitive advantage in a crowded marketplace.

Recruiters

Recruitment companies use Geofencing technology to target specific areas such as academic institutions, job fairs, corporate offices, and other places where potential candidates may frequent.

For example, if your company is looking for warehouse workers, you can geofence warehouses to target potential candidates with relevant skills.

With the help of Geofencing advertising technology, recruiters can send highly targeted job advertisements to potential candidates in these geofenced areas. This enables recruiters to connect with candidates in a more meaningful and effective way, increasing the chances of finding the right candidate for the job.

A glimpse into the future of Geofencing

Geofencing is already being used to reach out to customers in specific locations. However, with the growing use of technology and the increasing availability of location data, the possibilities for Geofencing are expanding rapidly.

Here are some potential ways that Geofencing could be used in the future:

Personalised offers

As customers move within a defined geofenced area, they may receive personalised offers based on their shopping history or preferences.

Real-time alerts

Geofencing could be used to send real-time alerts to customers based on their proximity to a store or product. This can include alerts for new product releases, promotions, or discounts.

Enhanced customer experiences

Geofencing can be used to provide customers with an enhanced experience while in a specific location. For example, customers visiting a theme park may receive information about rides and attractions as they move throughout the park.

Analytics and insights

Geofencing can provide valuable insights into consumer behaviour, including how customers move throughout a store or location, what products they are interested in, and what time of day they are most likely to visit.

Geofencing statistics

Geofencing can provide incredible results for companies and marketers who are seeking to accurately target people using their real life movements.

Here are some statistics to demonstrate just how effective Geofencing can be for marketers:

“Using location data increases the effectiveness of marketing campaigns”

A report by Factual identifies that using location data to increase the effectiveness of marketing campaigns can have substantial benefits.

Nearly 90% of marketers believe that location based marketing has increased sales, boosted customer engagement and expanded their customer base.

“A large percentage of marketing budgets is to be spent on location based marketing”

A report by CMO reveals that 52% of global marketing budgets are being spent on location based marketing, with the highest spending taking place in the North American markets.

BIA advisory services conducted research on location based marketing and produced a five-year-forecast which reveals that global location based marketing spend will reach $38.7 billion by 2022.

“Industry professionals in the US identify the leading benefits of location based marketing.”

Research by Statista reveals the top benefits of location based marketing, according to industry professionals in the US.

The number 1 benefit was increased sales, followed by a growth in customer base, higher customer engagement, deeper knowledge of customer’s needs and interests, higher response rates and improved return on investment.

How Geofencing can boost your marketing campaigns

Marketers are thrilled about the possibilities of Geofencing as it offers fresh opportunities to engage with audiences and enhance marketing efforts.

Here are some ways Geofencing can enhance your marketing:

Precise targeting

With the ability to hyper-target prospects, you’ll not only be able to reach people at the right time and place, but engage them with messaging that is relevant. By targeting individuals in a specific geographic area and filtering by certain criteria such as age or gender, you can increase your chances of success.

Reduce wasted ad spend

Hyper-targeting your ads and sending them to the right location at the right time can significantly increase engagement and conversions. With precise audience targeting and messaging, your marketing budgets can be used more effectively.

Enhanced data collection

Location data provides several ways to enhance your business operations. Using Geofencing to collect data, you can gain access to a wealth of insightful metrics. You can analyse traffic patterns and when people are in or near your locations. This data can help you gain a better understanding of consumer behaviour, so you can use it to improve customer experience and increase engagement levels among existing customers.

Personalised customer experience

In today’s competitive market, personalisation is the key to success. When marketing your business, it’s essential to tailor the customer experience to each individual. Personalising your messaging can have a positive impact in gaining new customers and retaining existing ones.

Increase local sales and store visits

Local optimisation is highly valuable for most businesses, but it can be difficult to rank highly within your target area. If you’re working towards improving the performance of local searches and looking for additional ways to target local consumers, Geofencing is certainly worth considering.

Raise brand awareness

Geofencing is an effective way to promote online channels and boost brand awareness. Geofencing marketing gives you the ability to remind people of your business’s existence, let them know you’re nearby and available to serve them at their convenience.

Top tips for using Geofencing for marketing

Here are our top tips for using Geofencing as part of your marketing strategy:

Create Geofences the right size

Companies can get over ambitious when it comes to creating geofences and make them too big. This can lead to oversized geofences which can potentially decrease targeting accuracy and result in wasted ad spend.

To effectively target large areas, it’s recommended to create multiple geofences rather than one large geofence that includes both target and non-target areas.

Thoroughly research your target audience

Understanding your target audience is crucial for successful Geofencing Marketing. By identifying their characteristics and interests, you can create a geofence that that your target audience is more likely to enter.

Start by analysing your existing data and engage with customers on social media to gain insights into their experiences with your business and competitors.

Clear call to action

While it’s important to give potential customers a compelling reason to take action, it’s equally important to have a clear call to action.

Focus on creating engaging ads with a clear call -to-action that naturally guides people through the buying funnel.

To succeed with Geofencing marketing, you need both quality and creativity. Your ads should be original, appealing, and avoid appearing spammy or self-serving.

Regularly review results and data

To ensure the success of your Geofencing campaign, it’s important to regularly review the data. Without analysing the performance, you won’t be able to identify areas for improvement.

While analytics can seem overwhelming, there are resources available to help you make sense of the data. At Fluid Ads, we offer digital ad reporting as a standard feature with all campaigns.

This allows you to easily access and understand the metrics so you can effectively optimise your campaigns.

The various targeting options to use with Geofencing

Geofencing can be a powerful tool for targeting your ideal audience, but it works best when combined with other targeting methods.

By using a variety of targeting options, you can define your audience and improve the effectiveness of your campaigns.

Here are some other targeting methods that you should combine with Geofencing:

Keyword targeting

It’s not enough to simply include a list of keywords that are related to your product or service. It’s important to consider the intent behind each keyword and how it relates to the needs and desires of the person doing the search.

For example, if you own a vegan-friendly restaurant, you can target people who have recently searched for terms related to vegan restaurants. It’s essential to ensure that both your ad and landing page have content that relates to the user’s search to increase the chances of converting them into customers.

Retargeting

Retargeting gives you the ability to capture data on your website visitors and ‘follow’ them around while they view other content and browse other websites. You can win back those who didn’t convert on their first visit by re-engaging them after the initial interaction has ended.

Retargeting Ads are a great way to stay at the forefront of your customer’s minds and engage with them as they visit other sites. You can also pull back users who have been browsing online, even if you don’t know their email address or any personal information.

Time and Date

Ad scheduling can help you maximise your ad budget and make the most of every user. For example, if you know that your target audience is active Monday to Friday between 8:00 am -5 pm, then you would only run promotions during those times.

Contextual targeting

Contextual targeting is an option that allows you to display ads to people who are interested in the products or services you offer. For example, if you own a vegan restaurant, you can target people who have shown an interest in veganism, plant-based diets, and healthy eating.

Demographic targeting

Demographic targeting allows you to show your ads to people of a specified age, gender, household income or parental status.

In conclusion, Geofencing is a powerful marketing tool that can help you target the right people in the right place at the right time.

By setting up virtual boundaries around specific locations, you can create highly targeted Display Advertising campaigns that drive more foot traffic to your business, increase traffic to your website, and ultimately improve the effectiveness of your digital marketing efforts.