Is geofencing the future of targeted marketing?

Geofencing has been gaining popularity recently when it comes to local marketing, but what is it and how useful is it really?

If you’ve been working in digital marketing, and in local marketing especially, you’re bound to have come across one of the biggest buzzwords in the industry right now - geofencing. If you haven’t, then let’s just quickly give you an idea of what geofencing is and what it can do.

What is geofencing?

In a nutshell, geofencing is a software feature that allows you to send targeted ads to customers based on their location. The idea is this: you set up a virtual boundary (or a fence, if you will) around a certain region using GPS or RFID that allows the software to trigger ads when customers enter or exit that particular region.

The most straightforward use for geofencing is by local businesses - since they have the biggest need for targeting users in the vicinity, as opposed to ones that are further away. However, ads for events and even security alerts can be triggered using geofences - the applications for it seem to be almost endless.

Geofencing gives businesses and publishers more control over targeting an audience than ever before, which begs the question, “Is geofencing the future of targeted marketing?”

To give an answer that would justify that statement, let’s take a quick look back at how technology has evolved over the past few years.

The evolution of digital marketing leading up to geofencing

When it comes to technological advances, the past decade has been exciting for both consumers and businesses alike. The first iPhone was launched just over ten years ago, in 2007. Though there were other phones that fell under the “smartphone” umbrella before the this, the original iPhone bears the closest resemblance to the modern day smartphone with its (then) state-of-the-art build quality and touchscreen interface.

Smartphones enabled customers to do all that they could do on a computer but remotely, helping millions of users make a huge leap into a truly mobile world. Today’s market has a throng of smartphone manufacturers and service providers that seem to develop new innovative hardware and software solutions with every passing day. To the common man, it almost looks like the modern day smartphone finds itself in almost every pair of human hands. Out of the (approximately) 7.5 billion human beings on this planet, over 4.5 billion own phones. Among these users, there are 3.5 billion unique mobile internet users out there, who contribute to over 50% of the total internet traffic.

The prolific usage of smartphones and mobile internet has given way to tons of new business opportunities for online companies and it goes without saying that online businesses have thrived in the past decade. Google has been used more extensively than ever, social media sites have made billions of dollars in revenue, and marketing - well, it’s never been easier to sell to people than now.

The digital marketing industry has been one of the industries to have faced the biggest growth owing to these technological advances. By 2021, digital marketing spends in the USA are predicted to be around $120 billion. Global digital ad spends have already beaten TV advertising spends and this has been a long time coming. But for some, the big question is:

Why did people shift towards digital marketing?

The answer is fairly straightforward - digital marketing produces better ROI for companies than traditional marketing does and has the potential to reach out to a wider audience as well. But how does it manage to do this effectively? One word. Targeting.

Digital marketing helps businesses market the right product to the right people, instead of throwing everything at the wall and hoping that something sticks. Owing to the vast amount of information that is available about internet users, digital marketing offers targeting options that help you sell your product/service to a user who's more likely to buy it.

Download our Premium Resource – Ad Retargeting Guide

Retargeting gives you the opportunity to reach prospects or customers who have already interacted with your brand, to further persuade them into making a conversion after they've left your site.

Access the Ad retargeting guide

Digital targeting has been a game changer for marketing. In a world where targeting traditionally meant tailoring advertisements and marketing campaigns to a certain type of audience, you could suddenly choose who exactly this ad would reach, as well. This meant that even small companies that couldn’t afford billboards and newspaper ads could use the internet to bring in the right kind of leads for their business - but the problem was, this still didn’t help local businesses greatly. Not all local businesses had a good enough use-case for online marketing.

But this changed as well, not too long after that. The thick YellowPages of the bygone era made its way onto the internet and with it came companies like Yelp and TripAdvisor, which acted like business directories - only that they were available on the web. With all of them came Google My Business, making it easier than ever for both customers and business owners to find each other, redefining how business discovery worked in the real world.

As of today, customers can search for something as vague as “plumbers near me”, or something as specific as, “top-rated restaurants on Sunset Boulevard” and Google will give them exactly the results they’re looking for. All that businesses need to do is make sure they list their business online. While Google Ads has always been an option for businesses to promote their business locally, it might turn out to be a tad too expensive, especially if they’re just starting out. Recent developments like Google Posts have given a free medium for local businesses to improve their online marketing. Other factors that directly impact their revenue are reviews and star ratings.

But out of all these location-based, local marketing services that are offered, nothing compares to how effective geofencing is. Geofencing gives businesses the ability to notify users at exactly the right time about buying a product or a service, increasing the chances of them actually buying it. Stores like American Eagle Outfitters have even gamified the purchase process using geofencing and beacon technology, which is another method to target people based on their location and proximity to a business. You can put out a promotional offer to improve the likeness of a customer walking into your store from around the corner or send a push notification that asks them to remain hydrated if you’re running a juice shop.

Geofencing has the potential to greatly improve your chances of earning more repeat customers and gives businesses the power to engage with their customers in a more relevant way than ever before. There are tons of geofencing services out there that allow you to do this in various ways, some of which even let you build your own apps that will help you send regular notifications better. As far as targeted marketing is concerned, geofencing is a groundbreaking development for businesses.

However, this doesn’t mean that geofencing doesn’t come with its own set of pitfalls. The good news is that this can be avoided with some best practices. Let’s look at what could go wrong when you employ geofencing to send targeted ads to customers and how you can avoid/fix them.

Geofencing - Pitfalls and Best Practices

1. Better targeting might mean lower reach

Don’t pour all your money into geofencing with the hopes of doubling business revenue in the next week. While geofencing improves audience targeting, it’s prone to not reaching many people, especially if the region you are employing your geofence in is fairly small. Patience is the name of the game when it comes to this trade, so wait till the targeted messages do their thing.

Do make sure that you try sending different types of messages in your ads, though. Take a look at how top brands are using geofenced ads with varied ideas and messages to maximize their profits.

2. Don’t spam your customers

Ensure your geofenced ads don’t spam your customers because this might lead them to grow tired of hearing your brand’s name. Remember that they might not have a problem seeing a billboard every day, but might not like getting a push notification or an ad every time they pass a business on their morning commute.

Set up filters that will control the number of times your customers will receive these messages and you should be good to go.

3. Be aware of privacy concerns

Privacy is a huge deal when it comes to geofencing. People might start getting the feeling that you come off as creepy if your messages start getting too personal or intrusive, so stay away from anything that might make them feel uncomfortable. There’s an easy fix to this though - firstly, make sure you’re being completely transparent with your wording during your opt-ins.

Another thing you need to be aware of when it comes to geofencing is GDPR. Make sure you are GDPR compliant and double check whether the region you are operating in has no restrictions that are GDPR specific.

4. Geofences and microfences

Knowing the difference between geofences and microfences is hugely important when you’re stepping into this field. Do a little research to figure out which will work best for your business before you invest in it.

A combination of both of these used effectively might also turn out to be good for your business, if you have the budget for it.

To conclude, geofencing has brought in a completely new dimension to the world of targeted marketing and the right application of it might change the way local businesses improve their targeting. However, it is important to tread carefully and do a cost-benefit analysis for your business before you invest in geofencing.