Geofencing: A Beginner’s Guide For Marketers

Written by Kyle Claypool • June 22, 2021
A geofence is a virtual perimeter for a real-world geographic area. It can be a radius around a point location, or a predefined set of boundaries.
Geofencing Marketing

What Is Geofencing?

Let’s start with some definitions, courtesy of Wikipedia:

A geofence is a virtual perimeter for a real-world geographic area. It can be a radius around a point location, or a predefined set of boundaries.

The use of a geofence is called geofencing, and one example of usage involves a location-aware device entering or exiting a geo-fence. This activity could trigger an alert to the device’s user as well as messaging to the geo-fence operator.

Put more simply, geofencing is a tool used to trigger an action when a device enters or leaves a defined location. 

The technology’s been around for at least a decade, but the proliferation of smartphones and smart/IoT devices has opened up a vast array of new applications. 

How Does Geofencing Work?

There are several different technologies that allow businesses and consumers to implement geofencing. Here are the most common:

Cellular- or Data-Driven Geofencing

Our smartphones put out a lot of different signals in the course of using various apps and services throughout the day. Many different apps transmit your location in order to improve the service they provide. Many also transmit what’s known as a Mobile Advertising ID (MAID), a unique identifier that helps advertisers serve up personalized ads based on your interests and past behavior.

Many apps that include in-app advertising (and plenty of others) share user MAIDs and location information. If you aggregate data from enough smartphone apps, you can get a great sampling of the users who come to a given location.

Note: This is the primary method MudShare’s GeoDirect Geofencing uses to track and aggregate user data.

Pros and Cons of Data-Driven Geofencing For Marketers

Pros: 

  • Since no special hardware is involved, you can create geofences anywhere, including around competitors’ locations
  • Since it doesn’t require a specific app on users’ devices, you can use this approach to fill your marketing funnel with brand new prospects simply because they’ve walked through your geofence.

Cons:

  • This approach relies on data from a variety of sources, so you need a huge pool of data partners to capture a meaningful percentage of foot traffic within the geofence.
  • People who are not using apps with location tracking will not be detected.
  • With the shifting landscape of privacy legislation, the disclosure and opt-out requirements are constantly evolving. You need to ensure that data is collected responsibly and that users are able to opt out.

App-Based Geofencing

Some apps incorporate location-based services to enhance functionality. Users grant these apps permission to passively monitor their location to improve the overall experience. For example:

Airline Apps – An airline may draw a geofence around airport terminals to detect passengers as they arrive for a flight. If a passenger has the airline app installed, entering the geofenced area may trigger an alert from the app that allows the traveler to check in, pull up a boarding pass, get more information about their itinerary, etc.

Fast Food Apps – Fast food chains can use geofencing with their mobile ordering apps. Sure, mobile ordering is a convenience for consumers, but it also opens up a new path for highly targeted advertising. If it’s mid-afternoon and you’re a few blocks from a McDonald’s, you just might get a notification from the app about a “today only” special.

Smart Home Apps – The applications for geofencing with Smart Home and IoT (Internet of Things) devices are endless and limited only by your imagination. You can use a smart home app to draw a geofence around your home and create a “welcome home” routine. As you cross the geofence threshold near your driveway, you can set lights to turn on, music to play, thermostats to adjust, and (someday, not soon enough) have your robot butler start prepping your favorite cocktail.

Hardware-Based Geofencing

Brick and mortar businesses have the ability to place special hardware on-site to gather information about devices that enter their businesses or pass within range. 

A restaurant may use Bluetooth beacons that trigger an action from anyone using that retailer’s app. When the customer enter’s the beacon’s range, the restaurant is notified that the customer is arriving to pick up their order.

This sort of application can be done with Bluetooth, RFID, or wifi signals. Some may argue that this isn’t technically geofencing so much as detecting devices within range of specific hardware, but it’s worth noting as the use cases heavily overlap with geofencing.

How Narrowly Can You Target a Geofence?

This is what makes geofencing so powerful! With the right tools, you can draw a fence around individual business locations with a precision of less than 10 meters.

For comparison, Facebook location targeting has a minimum targeting radius of 1 mile. You simply can’t target people based on real-world behavior when you’re looking at a mile radius. 

There’s just no question – geofencing is the best, if not only, way to market to people based on whether they’ve been to your location, a competitor’s location, or another location that might indicate an affinity for the product or service you offer.

How Do Businesses Use Geofencing For Marketing And Advertising?

We’ll spend a hell of a lot more time on this in future posts, but here are a few of the most popular use cases:

  • Retail (Competitor Conversion): Many car dealerships will geofence competitors’ lots to intercept people who are actively looking to purchase cars. Most people visit more than one dealership over the course of several days before making a purchase, so advertising to these people may persuade them to visit your business before they’ve bought a vehicle.
  • Restaurants (Demand Generation): Say you want to drum up business on Tuesdays with a special happy hour promotion. Why not target people who are regularly in the area, driving by, or frequenting other restaurants nearby at 4:00PM on Tuesdays?
  • Live Events: Geofence competing event venues to capture your target audience based on the calendar of events at those venues.
  • B2B Prospecting: Geofence trade shows or prospects’ businesses to capture leads. (This works best when you can identify locations with a high density of potential buyers).

What Makes GeoDirect Different?

Most geofencing platforms are fairly limited in their scope. If a phone is detected within your geofence, that person will see banner ads and in-app ads for a period of time (typically 30 days or so). That’s about it.

GeoDirect is vastly more powerful. Here are a few things we enable our clients to do:

  • Filter and segment foot traffic based on demographic and psychographic data. Let’s be realistic: just because someone was at your location, that doesn’t mean they’re your target customer. The husband dutifully waiting while his wife tries on a dozen outfits isn’t your market, and hitting him with ads afterwards is just adding insult to injury.
  • Feed this segmented geofenced audience into a custom Facebook audience or other ad platform. Want to reach 35-50 year-old married women who’ve been to your two biggest competitors’ locations? We can do that.
  • Reach people with virtually any form of messaging. In addition to feeding visitors into digital ad campaigns, we’re able to connect many devices to specific email addresses, phone numbers, and other contact information. MudShare’s platform allows for peer-to-peer texting, live or recorded phone calls, email, and other options to connect with your audience at the perfect time and place.

Want to learn more about GeoDirect? Get in touch

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