Geofencing is a term we are becoming accustomed to in advertising through the rise of mobile phone usage. Marketers are taking advantage of geofencing capabilities through location based marketing.
In this article we will discuss what geofencing is, how it works and how you can use geofencing in your marketing campaigns.
What is the meaning of Geofencing?
A geofence is a virtual perimeter in a geographical area created by location based services that apps and software programs use RFID, GPS, Wi-Fi, NFC or cellular data.
When a mobile device enters of exits geofence it can trigger a marketing action such as a SMS, push notification, social media advertisement or email. This enables local businesses and marketing agencies to take advantage of hyperlocal marketing strategies.
What is Geofencing technology?
The main location based geofencing technologies used today to enable hyperlocal marketing include:
- RFID (Radio Frequency Identification)
- GPS
- Wi-Fi
- NFC ( Near Field Communication)
- Cellular data
To create a geofence a software developer can create a virtual boundary around a particular RFID or GPS enabled software. For example a developer may create a 2 mile radius around a certain location on Google Maps using Google's geofencing API when developing a mobile app.
When an authorised app enters or exits this geofence an action is triggered such as a push notification, SMS or targeted social media advertising.
What is Geofencing used for?
There are a range of applications for geofencing, even outside of marketing including:
- Smart appliances
- Automate time cards for human resource management
- Telematics
- Home security
- Mobile security
How Does Geofencing marketing work?
When we think about geofencing in marketing, one of the first applications we think of is social media marketing. Geofencing, however is a powerful marketing tool in hyper local marketing and for audience engagement.
Geofencing in social media
The major social media platforms such as Facebook, Twitter and Linkedin that have an ads platform for business have geofencing capabilities.
The ad platforms on these social networks allow advertisers to precisely target users within a radius of a certain location.
Snapchat uses geofencing to provide users with location based filters and stickers.
Local marketing
Geofencing is used in local marketing from location specific ads, push notifications, SMS and email marketing. Shopping mobile apps can alert customers of nearby in store promotions and more.
A study by Salesforce highlighted that 53% of shoppers visited a retail store after receiving a location based message. This study highlights the potential of geofencing in marketing activities for local business.
Audience engagement
Geofencing is a powerful tool for engaging an audience. It is used to engage people at events, to deliver essential information.
Similarly coupon apps use geofencing to send offers to users who visit restaurants or local shops.
What are the Benefits of Geofencing in marketing?
There are many benefits of geofencing in marketing including:
- Local marketing
- Ad Spend Effectiveness
- Specific targeting
- Personalised customer experience
Many organisations that use digital marketing strategies likely use some form of geofencing to boost their brand awareness and generate leads.
Local marketing
Geofencing is essential for SME's who target local customers. In traditional style of marketing placing an advert in a local paper was considered local marketing.
Today we can now drill down and target particular demographics. This means that you are spending your marketing budget on prospects that are most likely to become a lead or take an action (like visit your store) than targeting a broad demographic.
Ad Spend Effectiveness
Like the targeted marketing capabilities that geofencing offer local business, it is the same benefits that allow marketing teams to invest a marketing budget more effectively with hyper-targeted ads on social media or search engine ads.
Specific targeting
Geofencing allows marketing teams to promote brands in specific geographical areas and at the right time. Through geofence marketing technologies you can target customers at a specific area with an offer unique to those in that location.
Personalised customer experience
Hyper personalisation of customers is a field that is growing with developments of AI technology can result in an ROI of 800%. Geofencing enables brands to offer a personalised customer experience to help establish connections with their customer base and keep them engaged over time.
What is an example of geofencing?
While the term "geofencing" may sound technical, in practice it is simple. Below are some examples of geofencing.
Using Paid Advertising To Target Customers in Close Proximity
A clothing retailer with a physical store can create an ad campaign to target customers on either search engines or on social media apps to appear while they are out and about, in close proximity.
The user while browsing their social media app like Facebook or Instagram while taking a break or in a queue may be served ads promoting a local shop. This is an effective way to find new prospects in close proximity to your shop.
Using Push Notifications through a branded app
Some take-away restaurants have their own branded apps which customers may download to be able to quickly make an order. Such an app can be used to send an in-app notification when a customer with the app installed enters a geofenced area.
Geofencing as a marketing strategy by Uber
Uber is an example of an organisation that uses geofencing marketing to acquire drivers and to earn new fares.
Uber uses geofencing to create geofences around popular hotspots such as airports, hotels and nightclubs. When a user enters the geofence, they receive push notifications from Uber about driver availability in the area.
How to use geofencing in your marketing strategy
Geofencing is a powerful marketing tool when used correctly. If you have created buyer personas and know exactly the demographics you want to target. From your persona development you will understand the type of apps your target customer uses and the social networks they hang out on. From there you can understand if targeted ads would be more effective or direct communication like push notifications, SMS or emails would work better.
Limiting the scope of your geofence
This depends on your business, if you want to target nearby customers to a shop you will want to keep your geofence within a 5 minute driving radius.
For brand awareness purposes you can spread your geofence wider to 10 minutes driving radius from your business. If your business is set in a more rural location you will want to extend your geofence further to increase your reach.
Call to action that converts
When you target customers through geofencing you need to give a clear reason to act immediately. Limited time only offers that create urgency work best for geofencing marketing.
Integrate with your marketing strategy
Geofencing if carried out should be built in as part of your overall marketing strategy. It is an effective strategy to increase ROI when it is built into your inbound marketing strategy and data collected added to your CRM to build your user base.
