Harnessing the Power of Geofencing Marketing: A Complete Guide

Learn how to leverage location intelligence to create highly targeted and effective geofencing marketing campaigns.

Harnessing the Power of Geofencing Marketing: A Complete Guide

What is Geofencing Marketing?

Geofencing marketing is a location-based promotional strategy that involves establishing virtual perimeters around specific geographical areas and targeting them with relevant advertising or content. Geofencing allows businesses to create highly optimized ad campaigns that reach the right people at the right time – saving money and increasing ROAS (Return On Ad Spend). 

Map showing how geofencing can be applied to pre-defined geographical areas, such as zip codes
Geofencing can be applied to pre-defined geographical areas, such as cities, states, and zip codes

Geofencing marketing often harnesses mobile device technology to engage users when they enter or leave a defined area or place. But geofencing marketing can also be used to enhance the effectiveness of other digital or offline advertising methods – such as billboards, online search ads, direct mail, and local newspaper ads – by providing data-driven insights for optimal placement and messaging.  

Some common examples of geofencing marketing include:

  • Direct-mail campaigns that precisely target the specific neighborhoods where most of a restaurant’s customers reside. 
  • Billboards that focused on commuting routes frequented by many of a chain’s visitor base.
  • Advertising campaigns focused on segments of a competing fitness chain’s trade area that feature large shares of young, single professionals or families with children. 
  • Ads or special offers that show up on an individual’s mobile device as they enter or leave a particular shopping mall.
  • TV streaming ads served to individuals within a five-mile radius of a particular event venue.

What You Will Learn From This Article

  • How marketers use geofencing and why it’s become such a crucial tool for business success.  
  • Benefits and challenges of geofencing marketing.
  • How companies can use foot traffic analytics to ensure they are targeting the right areas with their geofencing advertising. 
  • A specific example of geofencing marketing in action.

How Does Geofencing Marketing Work? 

1. Determining the Geographical Area to be Targeted

The first step – and arguably the most important one – is to determine the boundaries of the geographical area to be targeted. It’s incredibly important that this be done as accurately and precisely as possible: If you define your area too narrowly, you’ll miss out on lots of potential customers. And if you cast your net too widely, you’ll waste money advertising to the wrong people.

Determining the perimeters of geofence can be done in several different ways.

Geofencing pre-defined geographical areas: The first method is simply to apply a geofence to a pre-defined geographical area, such as an entire city, state, zip code, CBSA or DMA.

Geofencing particular buildings or venues: Another method involves creating a polygon representing the coordinates (i.e. longitude and latitude) of a specific venue –  such as a shopping center, store, or retail corridor. 

Radial geofencing: A third method involves drawing a circle around a given location – say, a restaurant – and geofencing the entire area within the circle. This method allows advertisers to target everything within a set distance of the venue (i.e. the distance of the circle’s radius). A somewhat different variation on this method involves geofencing areas within a certain driving or walking time of a particular place.

Geofencing trade areas based on foot traffic data: A fourth, more precise, method of geofencing advertising involves using foot traffic data to determine a venue or chain’s real trade area – i.e. the specific census block groups that its visitors actually come from. Once the trade area is determined, its geographical coordinates (longitude and latitude) can be used to create a highly-precise geofence likely to encompass the right audiences.

Unlike the other methods – which may leave out important audiences or waste precious ad dollars on irrelevant ones – using foot traffic data for geofencing does not run the risk of being either under- or over-inclusive. 

Map using foot traffic data to create highly accurate geofences for marketing
Foot traffic data can be used to create highly accurate geofences for marketing 

2. Segmenting the Geofenced Area’s Audience

Once the spatial scope of the geofence has been defined, relevant stakeholders can analyze  the demographic and psychographic characteristics of people that reside in or visit the geofenced area – and promotional messages can be crafted accordingly. For example, if a fitness store’s trade area features a large share of families with children, advertising messages can be geared towards parents. 

Segmenting the audience of your geofence allows you to craft highly relevant messaging
Segmenting the audience of your geofence allows you to craft highly relevant messaging

3. Creating and Launching the Campaign

For offline campaigns, the final step is simply to create and launch the campaign within the boundaries of the defined geofence. This could include things like setting up billboards or distributing leaflets in the relevant area. Or if the campaign is online, it could include setting up a digital campaign that targets users within the geofenced area.

If the campaign seeks to leverage mobile devices, the final step is to integrate the geofence with a location-based service that triggers a particular action when a mobile device enters, leaves, or moves within the geofenced area. Actions may include things like the sending of notifications or alerts or the delivery of targeted advertisements. 

Benefits of Geofencing Marketing

The benefits of geofencing marketing are obvious: By clearly delineating the specific areas to be targeted with promotions, businesses can reach the right audiences and increase conversion rates. Imagine, for example, a restaurant chain that sends alerts with special breakfast offers to individuals that enter its defined geofence in the morning, and alerts with special dinner offers to those that enter in the evenings. Or a sporting goods chain that creates geofences around its trade areas and creates highly tailored billboard advertising campaigns designed to reach their actual audiences with pinpoint accuracy. 

Challenges of Geofencing Marketing

But geofencing marketing also has its drawbacks. 

For one thing, many forms of digital geofencing advertising require individuals to enable location services on their mobile devices. And whether due to privacy concerns or to preserve battery life, many consumers are reluctant to do so. 

These kinds of mobile device-powered geofencing advertising services also rely on people actively opting in to receive alerts, or even installing particular apps on their phones – significantly limiting the potential reach of this method. 

In addition, like many advertising strategies, geofencing marketing risks overuse. Customers that are overwhelmed with notifications and messages may get annoyed and develop a negative perception of the offending brand. 

Finally, accurately defining the area to be geofenced can be a challenge. Without the right geofencing tools, businesses may invest a lot of time and money in poorly-focused campaigns. 

Location Intelligence-Driven Geofencing in Action: An Example

But despite these potential pitfalls, when done right, geofencing marketing can be extremely effective. And by utilizing location intelligence, businesses can make the process of defining the specific area to geofence easier and more accurate than ever before.

Imagine, for example, that you run a local bakery that specializes in hand-decorated, fancy cupcakes and high-protein treats for fitness buffs. You are planning a direct-mail campaign to attract new customers and increase market share, and want to maximize ROAS as much as possible.

You could simply target nearby zip codes, or send flyers to everyone within a certain distance or drive time of your bakery. But by analyzing foot traffic patterns, you could also:

  • Hone in on the precise Census Block Groups (CBG) where visitors to your bakery reside and create a custom geofence encompassing the areas with the highest visit engagement.
  • Determine the boundaries of your competition’s trade areas and target regions where they overlap with yours.
  • Segment the audience of your trade area to uncover consumer preferences, lifestyle trends, shopping behaviors, and more – and craft messages likely to resonate with your customer base.
  • Analyze nearby regions to find areas to geofence and target with audiences similar to your existing one. 
  • Compare the audience profiles of your overall trade area with those of the CBGs within your trade area that yield the most visits to identify additional untapped markets.

Turbocharge Your Geofencing Marketing With Placer.ai

Placer.ai – the industry standard in location intelligence – offers businesses the tools they need to zero in on the best geographical regions for their promotions and to optimize the boundaries of their marketing geofences. Placer harnesses advanced data science and machine learning techniques to generate highly accurate, precise, and privacy-protecting foot traffic analytics. And Placer’s Data Marketplace offers customers a wide range of demographic and psychographic datasets that can be combined with foot traffic data to conduct effortless audience segmentation analyses.

Whether you intend to launch a digital campaign through a geofencing marketing platform, or to stick to more traditional offline OOH promotional techniques, Placer’s easy-to-use platform makes it easy to create optimized geofences for your advertising campaigns.

Key Takeaways

Geofencing marketing is a highly effective promotional technique that can drive visits and increase sales. And by harnessing the power of location intelligence, brick-and-mortar businesses can make the most of this advertising opportunity.

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