According to a recent report by Markets and Markets, location-based services are forecasted to grow from $8.12 billion in 2014 to $39.87 billion in 2019, at a compound annual growth rate (CAGR) of 37.5 percent. Not surprising, given how location-aware technologies currently play a critical role in reinventing the mobile advertising, and app development industry.
While proximity marketing has been one of mobile’s promises since the beginning, it was not until recent, that the infrastructure necessary for location-based marketing was put in place at scale. The confluence of beacons, geofencing and other location-aware technologies has put hyper-local marketing back at the top of the hype cycle. Many retail experts predict that, one of the biggest advances in mobile retailing during the upcoming holiday shopping season compared to last year, could be the more sophisticated use of real-time location-based marketing.
Though, beacons have been in rage since their launch at WWDC 2013, not many marketers are aware of what beacons could be used for or how to get started with proximity marketing using their beacon pilot. We have answered some of the frequently asked questions around how iBeacon, NFC, GPS measure up against each other and what are the basic differences between Wi-Fi and iBeacon technology in our earlier posts.
In this post we will discuss in detail about one of the other frequently asked questions – how do beacons differ from geofencing? If you happen to be working in the location-based marketing industry, this is one question that would have struck you at some of time or the other. Particularly because beacons and geofencing actually try to achieve a similar goal – identify a user’s proximity to a particular location and trigger an action accordingly.
So let’s first take a look at each of these location-aware technologies.
What is Geofencing? How does it work?
Geofencing uses GPS coordinates to encapsulate a geographic area and takes a mobile user’s (who has opted in to receive push notifications) location data via GPS to determine his/her proximity to that particular region (whether they are inside or outside or if they just went in and came out of that particular area in a matter of seconds). It allows marketers to send messages to smartphone users when they enter a defined geographic area, such as a retail store, stadium, shopping mall etc.
Though, geofencing is popular among marketers as a way to send offers or coupons to their customers, it does not end here. Retailers could even use geofencing to provide a more personalized experience. For example, Neiman Marcus used geofencing to enable salespeople to see when VIP customers are in-store, look at their purchase history and provide more personalized service.
Generally speaking, there are three types of geofencing action triggers:
(1) Static: This is based on the position of a mobile user with respect to a fixed area. For example, the messages that are sent to opt-in users when they enter a retail store.
(2) Dynamic: This is based on the position of a mobile user with respect to a changing data stream. For example, the “open parking space” notification that is sent to mobile app users who happen to be driving nearby.
(3) Peer-to-Peer: This is based on the position of a mobile user with respect to other users. For example, the check-in notification of nearby friends on a social mobile app like Yelp, Facebook, or Foursquare.
Another important thing to note here is that geofencing using GPS has a huge impact on the battery life of your customer’s mobile device as it requires satellites and cell phone towers in order to pinpoint their location.
What are beacons? How do they work?
Beacons on the other hand do not deliver offers or other content. They merely broadcast identifiers (Bluetooth Low Energy signals) that can trigger certain actions in a beacon-enabled app on a mobile device.
Also unlike geofencing, beacons are incapable of pinpointing the location of a mobile user on a map. Instead, these proximity detection devices use Bluetooth Low Energy to estimate if a mobile user is within the range of its signal, and if so, how close is he/she.
This allows marketers to configure their apps to trigger messages when certain rules are true. For example, you can set a rule that triggers a message once a user has been within the beacon’s range for 3 seconds or 3 seconds after the user has left the beacon’s range etc. The rules and actions can be set up on a beacon management platform such a Beaconstac.
Which one will your business benefit from? Geofencing or beacons or both?
Now that you have read through the basic differences between these two technologies, the next question that pops up is, ‘Which one do I use? Geofencing or beacons or both?’ The decision should be based on what your company or brand wants to accomplish using them.
For example, geofencing being a lot less precise when it comes to proximity detection, users may have a varied experience of the time at which a message gets triggered once they enter the geofence perimeter. This makes geofencing more effective for broader marketing campaigns that target customers on a larger scale, such as when they are driving around the parking lot or are walking by the entrance of a mall.
On the other hand, beacons with their ability to detect customers with greater accuracy, work better if you are considering offering location based services indoors. For example, beacons can be used to deliver more precise turn-by-turn directions within a building.
An important thing to note here is that, in spite of their differences, these two technologies complement rather than conflict with each other. Here is a perfect example – any marketer looking to leverage beacons has definitely been bogged down by one main challenge at some point of time- ‘What can I do to ensure that users with my app have bluetooth turned on?’ This is one of the questions that frequently surface in most of our client conversations as well.
There is a simple solution to this – geofencing. The Beaconstac platform recently launched a new feature called ‘Places’ that allows retailers to define a geofence with ease. All they have to do is choose ‘Places’ from the navigation, click on ‘Add a new place’ and type in the attributes such as name, address (latitude and longitude values). Once that is done, they can easily define the range of a geofence (in metres).
Once a retailer has set a geofence for a place, he/she will receive callbacks when the fence is breached and a user enters or exits the region. Retailers can then use these callbacks to show a notification, that gently nudges the users to keep their Bluetooth turned on.
If you are planning a beacon pilot, take a look at Beaconstac, that includes everything you need to get started. Using Beaconstac you can set up your own campaign, without a developer’s help!