Geofencing Marketing: A Complete Overview and Exploration

What Is Geofencing Marketing?

Geofencing marketing is a strategy that uses location-based technology to create virtual boundaries, known as geofences, around physical locations such as stores, events, or neighborhoods.When someone enters these boundaries with a mobile device, businesses can send personalized ads or notifications.
A personalized ad for a coffee shop on a mobile device

How Geofencing Works?

Geofencing marketing leverages GPS, mobile networks, and Wi-Fi to create virtual boundaries around physical locations. This allows businesses to send targeted ads or notifications to mobile users who enter these boundaries.

Implementing geofencing in a custom app requires significant development effort, making it challenging for small- and medium-sized businesses. Instead, businesses can use platforms like Google Ads or social media, which offer built-in geofencing capabilities.

For example, with Google Ads:

  1. Create an ad targeting users near your coffee shop.
  2. Define a specific geographic area, like a one-mile radius around your store.
  3. When a user enters this area, Google recognizes their location.
  4. The user becomes eligible to see your ad, increasing the chances of them visiting your shop.

This simplified approach to geofencing marketing allows businesses to target local customers effectively.

An infographic showing how geofencing marketing works

Advantages of Geofencing Marketing

Geofencing marketing provides several key benefits:

  1. Precise targeting: Reach customers in close proximity to your business, improving the relevance of your ads.
  2. Personalization: Customize messages based on users’ locations and behaviors, enhancing user experience.
  3. Customer loyalty: Use geofencing to offer personalized incentives, fostering customer loyalty.

Geofencing Marketing Tactics

Here are some ways you can leverage geofencing to meet your business objectives:

  1. Location-Based Offers: Send discounts and promotions to potential customers near your business location. This strategy can be effective in attracting customers who are already in the vicinity and may be more inclined to make a purchase. For example, if you own a restaurant near an airport, you could target travelers with offers for discounted meals or free appetizers, enticing them to dine at your establishment during their layovers.
  2. Event Targeting: Use geofencing to target attendees of specific events or conferences. This allows you to tailor your marketing messages to a highly relevant audience. For instance, if you sell sporting goods, you could target attendees of a local marathon with ads promoting your running gear.
  3. Competitor Targeting: Set up geofences around your competitors’ locations to target their customers with your own offers and promotions. This can be a strategic way to attract customers who are already interested in similar products or services.
  4. Re-Engagement Campaigns: Use geofencing to re-engage with customers who have visited your business in the past. For example, you could send a special offer to customers who haven’t visited your store in a while, encouraging them to come back.
  5. Geo-Conquesting: This strategy involves targeting customers who are near your competitors’ locations. By offering them a better deal or highlighting your unique selling points, you can persuade them to choose your business instead.

These are just a few examples of how geofencing can be used to drive customer engagement and increase sales. By leveraging the power of location-based marketing, you can reach your target audience more effectively and achieve your business goals.

Examples of Geofencing Marketing in Action

Now that you have a grasp of geofencing and its common strategies, let’s explore how businesses have effectively employed this marketing approach to achieve their objectives.

Major Brands

Starbucks is widely recognized as a brand that effectively leverages geofencing in its marketing strategies.

Customers who have the Starbucks app often receive timely push notifications with exclusive offers when they are in close proximity to a Starbucks store.

The app’s ability to track order history allows Starbucks to customize messages based on customers’ preferences and frequently purchased items.

Another notable example is Burger King’s “Whopper Detour” campaign in 2018, which demonstrated successful competitor conquesting.

During this campaign, customers within 600 feet of a McDonald’s restaurant received notifications offering the signature Whopper for just one cent. Users who engaged with the offer were directed to the nearest Burger King location to redeem it.

The campaign resulted in 1 million app downloads within a few days, making Burger King the top downloaded app in the Apple App Store for multiple consecutive days.

These examples highlight the effectiveness of well-planned and targeted geofencing campaigns in driving engagement and app downloads.

Small businesses

Small businesses are also leveraging geofencing to achieve their business objectives, often with the help of marketing agencies. Here are some examples of how smaller businesses are using geofencing:

Assisted living facility: A regional senior care center implemented geofencing ads to target emergency rooms, hospitals, and even competing care facilities. This effort resulted in 60 walk-ins and tours within a 30-day period.

Fitness center: A gym utilized geofencing to drive membership growth by targeting competing fitness centers in the vicinity. The campaign yielded 73 new extended memberships, translating to approximately $38,000 in revenue.

Hotels: A hotel used geofencing marketing to enhance its staffing efforts, particularly for open housekeeping positions. By targeting other hotels in the area, the hotel received 60 applications and achieved a 20% increase in staffing capacity.

Best Guide for Using Geofencing Marketing

Here are some best practices for using geofencing marketing:

Establish Objectives

 Define clear objectives for your campaign before launching it. This step is crucial for evaluating its success.

The more precise your objectives, the simpler it becomes to select the metrics to monitor and assess the effectiveness of your campaign.

Collaborate with your team to establish objectives that are specific, measurable, attainable, relevant, and time-bound (SMART).

A visual showing what SMART goals stand for in geofencing marketing

A visual representation illustrating SMART goals For instance, a potential objective could be to boost sales by 15% compared to the previous month.

Know Your Audience

Understanding your audience is essential for a successful geofencing campaign, ensuring that your messaging resonates with your target audience.

Semco’s One2Target tool is a valuable resource for gaining audience insights based on your main competitors.

Simply input the URLs of up to five competitors and click “Analyze.”

One2Target tool search bar

One2Target tool search bar You’ll then be directed to the “Demographics” tab, where you can view information about the audience’s age, location, and more.

"Demographics" dashboard in One2Target tool

“Demographics” dashboard in One2Target tool Next, navigate to the “Socioeconomics” tab to access details about the audience’s household size, employment status, and other relevant factors.

"Socioeconomics" dashboard in One2Target tool

“Socioeconomics” dashboard in One2Target tool Finally, visit the “Behavior” tab to understand the audience’s interests and preferred social media platforms, which can guide your ad placement decisions.

"Behavior" dashboard in One2Target tool

“Behavior” dashboard in One2Target tool Remember these details when developing your marketing strategies.

Selecting a Geofencing Marketing Approach

When initiating a geofencing marketing campaign, businesses typically employ one of three methods:

Self-Created and Launched Ads: Businesses independently create and launch their geofencing ads.

Collaboration with a Developer or Development Team: Businesses work with developers or development teams to implement geofencing strategies.

Partnership with an Agency: Businesses collaborate with agencies specialized in geofencing marketing.

The optimal approach depends on the business’s available resources, as geofencing marketing costs can vary significantly, and its specific business goals.

Launch Ads Independently

 You can utilize platforms such as Google Ads or Meta Ads Manager to establish your geofencing campaign.

This approach offers you autonomy over the process, targeting, and ad content, all within the guidelines and limitations of the platform.

Here’s an example of location targeting within Meta Ads Manager:

Location targeting within Meta Ads Manager

Additionally, you’ll need to familiarize yourself with the platform’s intricacies and continually refine your campaigns.

Create an App and Collaborate with a Developer

A developer can create a tailored app for your business with built-in geofencing features.

This approach allows for full customization to suit your specific requirements.

However, custom app development incurs substantial upfront costs and time commitments, which may not always be feasible. Additionally, ongoing app maintenance is essential.

Moreover, attracting users to download your app is critical for successful push notification delivery.

Collaborate with an Agency

Partnering with a marketing or advertising agency can be a smart choice if you lack the expertise or time to manage a geofencing campaign.

Agencies possess the experience and resources to create and oversee effective geofencing campaigns.

However, agencies can be expensive and might require you to commit to contracts. Additionally, finding an agency that aligns with your goals can be challenging.

Determine the Area(s) to Target

Now, it’s time to establish the area(s) you want to target with your geofencing campaign. Your target area should align with your audience and business goals.

If you’re working with an agency, they will likely determine the best targeting area for you. However, if you’re running your own ads or using your own app, the decision is yours.

A good approach is to start with a smaller geofence to test campaign effectiveness. Then, based on the data, you can expand or adjust as needed.

For businesses with multiple retail stores, consider targeting multiple areas around each location to direct customers to the nearest store.

The type of business also plays a role.

For instance, a small boutique might focus on shoppers in the surrounding neighborhood. On the other hand, a university might choose a larger location to target prospective students who live farther away.

Craft Your Messaging

Crafting the right message for your geofencing campaign is crucial for driving results such as increased traffic and sales. Your messaging should be tailored to both your target audience and the specific location you’re targeting.

If you’re working with an agency, they will handle the message creation for you. However, if you’re managing your own ads, focus on creating messages that are relevant and clear.

Looking for inspiration? Semco’s AdClarity tool can provide insights into the ad formats, tone, and messaging used by your competitors.

To start, open the tool and enter a competitor’s domain in the search bar. 

AdClarity dashboard for ""

Scroll down past the dashboard until you see the “Top Ads” widget.

"Top Ads" widget for "" in AdClarity

You can go even further by clicking on the ad to see more specific metrics. And even click through to see the corresponding landing page and a full report. 

";See full campaign report," and "Campaign landing page" buttons highlighted on an ad page in AdClarity

This can help you understand what resonates with your audience and differentiate your own ads.

Launch Your Campaign

After refining your messaging, it’s time to launch your geofencing campaign.

If you’re working with an agency, they will handle the campaign launch for you.

If you’re using platforms like Facebook or Google Ads, you’ll need to apply the targeting and add all creatives. Ensure all settings align with your goals before publishing.

Regularly monitor performance using your platform’s analytics tools. Adjust your strategy based on the insights you gather.

Measuring and Analyzing Geofencing Campaigns

Measuring and analyzing the performance of your geofencing campaign is crucial for its success. Here are some key metrics to track:

Click-through Rate (CTR):

The percentage of people who clicked on your ad after seeing it. A high CTR indicates that your ad is resonating with your audience.

Geofencing Marketing - Click-through rate (CTR) formula

Conversion Rate:

The percentage of people who took a desired action, such as making a purchase or signing up for a newsletter, after clicking on your ad.

Geofencing Marketing - Conversion rate formula

Return on Ad Spend (ROAS):

The revenue generated from your ad campaign compared to the cost of the campaign. This metric helps you determine the effectiveness of your campaign in generating revenue.

Geofencing Marketing - Return on Ad Spend (ROAS) formula

By regularly monitoring these metrics and making adjustments to your campaign as needed, you can ensure that your geofencing efforts are effective in reaching and engaging your target audience.

Elevate Your Marketing Strategy with Geotargeting

Geofencing marketing presents a valuable strategy for businesses of any size. However, initiating this approach can pose challenges.

Access to the appropriate tools is key, especially if you intend to manage ad campaigns independently.

Begin by leveraging One2Target for in-depth research into your target demographic.