Geofencing Marketing: A Comprehensive Guide for 2021

Ever wondered how you got a notification when you passed by a store or a cafe when you were thinking of buying a coffee? 

Or perhaps, have you ever received a coupon to buy a phone case right after purchasing a smartphone?

If these instances sound very relatable, then it is due to geofencing marketing.

Table of Contents

1. What is geofencing?
2. What is geofencing marketing?
3. How it works
4. Cost of setting it up
5. How to use geofencing marketing
6. Why should it be a part of a marketing strategy?
7. Geofencing vs Geotargeting vs Geolocation
8. The evolution of consumer marketing
9. Frequently Asked Questions

Does this look very familiar?

Source

Uber set up geofences around LAX for users to hail a cab conveniently. Users received these notifications because they entered the geofence created by Uber. 

With the rise of smartphone operators all across the globe, geofencing has become a common tool for businesses and marketers to leverage. Roughly, 95% of Americans own mobile phones, out of which 77% of them are smartphones.  

In addition to this, the average American adult (18+) spends a minimum of 4 hours and 15 minutes on their mobile phone every day. 

What is geofencing?

Geofencing is a type of location-based marketing tool, which, when integrated with an app, creates a virtual geographical boundary that uses GPS technology to send notifications/alerts to a user.

What is geofencing marketing?

Geofencing marketing is a type of location-based marketing that creates a virtual boundary around a predefined location, with the aid of GPS (Global Positioning System) via satellite. 

A user with a smartphone can enter or leave the virtual boundary known as a geofence, location target, or Geotargeting. 

With a plethora of options available, it is best to refine the target audience to send out apt notifications and marketing campaigns. 

Geofencing Marketing: Segmentation

 According to Straits Research, the geofencing market can be categorized by component, type, technology, deployment, and vertical. 

By Type

1. Fixed Geofencing
2. Mobile Geofencing

By Component

1. Service
2. Solution

By Technology

1. GPS
2. RFID
3. Wi-Fi
4. Cellular Network

By Deployment

1. On-premise
2. On cloud

By Vertical

1. Retail
2. Healthcare
3. Government
4. Events
5. Law
6. Transportation and Logistics

How does geofencing marketing work?

A geofencing marketing campaign can be used for businesses and brands of any size and any requirement.

A geofence can be set up with a geographical boundary of up to 1000 meters and as less as 200 meters. 

Geofencing marketing is a robust method of marketing that allows businesses to engage with their users based on their “hyper-local” location. 

To summarize it, this is how geofencing marketing works – 

1. The company creates a geofence for a predefined area and an ad campaign for that particular geofence
2. A user steps in the geofenced area and gets included in the advertising audience
3. The company starts pushing ads to the user via notifications, in-app ads, or coupons

A geofencing marketing campaign may contain promotion, discount, invitation, or even just a greeting message. 

With geofencing marketing, a company can choose when the ads can appear. If there is considerably higher traffic during the evenings, for instance, the ads can be set to appear during that time frame on apps and webpages to get the best results. 

How to set up geofencing marketing 

With Beaconstac’s geofencing solution, creating a geofencing marketing campaign is done in five easy steps. Before getting started, remember to integrate the app’s SDK with our platform. 

iOS | Android

If no app is set in place, create an app using Beaconstac’s DIY app builder on Shoutem.   

1. Create the geofence

Set up a geofence as small as 200 meters or as far as 2000 m to set a radius using Beaconstac’s geofencing solution.

2. Build a landing page

Create and schedule audience-appropriate campaigns – landing pages, custom URLs, forms or even games. 

3. Analyze the data

Collect analytics about the campaign using Google Analytics and export it to CSV.

4. Fine-tune

Using the collected data, fine-tune the campaign to offer well-thought-out notifications. 

5. Integrate SDK with the app

Once the geofence is created, integrate the geofence SDK to an existing app or use Beaconstac’s DIY app builder to set up the campaign. 

Elements to keep in mind before setting up geofencing marketing

1. Privacy 

Before using geofencing, it is best to inform app users about tapping into their geographical data and making use of it for sending out deals and promotions. 

The intent and purpose of the usage of this data should also be explicitly stated, in case there are grievances regarding data usage by third-party apps. 

2. Battery Issues 

Because of the continuous usage of GPS in the background, device batteries of the users may die. Hence, it is paramount to find a geofencing solution that has a low dependency on GPS. 

3. GPS Accuracy

The location is the crux of a geofencing marketing campaign. For a successful geofencing marketing campaign, optimization of the location’s accuracy must be processed without the interference of too many resources. 

The perfect solution should be a harmony between using a coarse location + fine location from the customer’s device. 

In addition to location accuracy, making sure that the users have allowed the app to store and use their location data to run the geofencing marketing campaign is also important. 

4. Collect three types of data 

When collecting data to set up an appropriate geofencing marketing campaign, confirm that the location data collected includes prior visit history, dwell time, and foot traffic of the user. 

5. Actionable CTA

Before setting up a geofencing marketing campaign, check that all the engagement notifications triggered by the geofence have a direct, concise, and actionable CTA for maximum effect. 

For a well-performing campaign, tracking and analytics is crucial. Be sure of analyzing the collected data from the user’s side and location activity to make well-informed decisions. 

6. Have a well-defined dashboard

Use a solution that provides a distinct and well-defined dashboard system that has all the tools required to create and manage geofencing marketing campaigns in one place. 

7. Set up an app 

Setting up an app dedicated to geofencing marketing is the most vital aspect of the campaign. Geofencing marketing will not work sans an app. 

An app that complements geofencing can help brands engage with their users in real-time and boost conversations to increase sales. 

Beaconstac provides a geofencing SDK that can be integrated with any app to include the geofencing marketing campaign. If there is no dedicated app, you can use our DIY app builder platform partner, Shoutem, to build an app. 

In addition to this, make sure the geofence is a four-to-five-minute walk or drive from the store to motivate users to visit the location. 

What is the cost of setting up a geofencing marketing campaign?

The cost of setting up a geofencing marketing campaign depends. Usually, the price varies from $5-$15 CPM (Cost Per Thousand Impressions). 

That being said, several factors influence the price ranging from impression volume, features on the integrated app, and other targeting features. 

The number and size of the geofence affect the cost of geofencing marketing campaigns. The larger the geofence, the lower the CPM is because the volume is higher. 

In addition to this, consider the level of reporting and targeting features to be included too.  

Geofencing marketing campaigns are added to the base advertisement campaigns, which can range from a few dollars to a few thousand dollars depending on the size and intent of the marketing campaign. 

The campaign cost also depends on the campaign goals, which can either be a CPM per geofence or even cost per conversion. 

But typically, a geofencing marketing campaign costs between a few dollars to a few thousand dollars. 

At Beaconstac, the cost of setting up geofencing marketing starts with just $83 per month and an allowance of setting up to 20 geofences with iOS and Android. Beaconstac does not charge extra up to 20 geofences. 

How to use geofencing marketing

Setting up a geofencing marketing campaign may look tedious but in actuality, it is quite straightforward and easy to troubleshoot. 

A geofence can be set up anywhere – around the business and its competitors’ location. A virtual boundary can be created around any geographical area.

Where to use? | Data-driven iterations | How is it used by marketers | Industry verticals | Use cases | Brands

Where to use geofencing marketing?

Geofencing marketing strategy can be implemented in almost every place. Here are a few of the locations that can be targeting using geofencing marketing – 

1. The primary location of the business
2. Competitor’s business location
3. Nearby events
4. Closeby streets and stores
5. Shopping centers
6. Airports
7. Households via addressable geofencing 
8. Educational institutes and workplaces closeby

Measure and manage data-driven iterations

With geofencing marketing, brands can deliver ads and content attuned to their consumers’ behavior and demands. 

Businesses and marketers can collect data, fine-tune their target audience to give their consumers exactly what they want by using an analytics platform. 

Use Beaconstac’s analytics to measure the number of notifications sent, the click-through rate of the campaign, and other campaign analytics such as gender, age demographics, shopping behavior to modify campaigns with these insights.

Geofencing can also be integrated with Google Analytics, which is available on the Beaconstac platform to further fine-tune the campaigns on the go. 

How is geofencing marketing being used by marketers?

Valentina Robotti, digital marketing manager at QNY Creative, says, “We have used geofencing strategies at QNY to promote specific promotions within stores across high volume sales sites. 

We have used geofencing also in coordination with Work Perk initiatives, delivering product samples to offices in the North Carolina and Illinois area, and then similarly serving relevant geofenced ads. 

Geofencing can be used for both leads and influencing brand consideration as well as in combination with other field marketing strategies to strengthen brand recognition.”

One of the most widely used sectors of geofencing marketing is marketers. The possibilities of geofencing campaigns are endless. 

Having said that, here are a few core practices marketers are using widely – 

1. Brand engagement

When users download the dedicated app and are prompted a notification to encourage a purchase after entering the geofenced area, the app to user engagement increases. 

Daria, the marketing manager at Chanty says that after implementing geofencing marketing, they witnessed a 40% increase in sign-ups in the US in just a month. This has helped them fine-tune their prices for their products to give a tough competition to their competitors at a higher price. 

2. SMS engagement

When users opt-in to receive text messages on their smartphones from a brand, engagement automatically rises. SMSes are sent when the user enters the geofenced area. 

3. Social media advertisement

Using Facebook and Instagram’s local awareness, brands send out advertisements to users in the context of social media when they enter a geofenced area. 

4. Web advertisements

Users enter a geofenced area and a designated brand’s ads are delivered via Google AdWords as and when they surf the web. 

5. Third-party app engagement

If users download a third-party app such as a restaurant locator, the brand’s geofenced messages are delivered via that app. 

Industry verticals witnessing success with geofencing marketing

Here are some of the business verticals that are using geofencing to enhance their marketing strategies to unleash the maximum potent of geofencing –

1. Geofencing for retail

Retail stores can create a geofence in an area within its perimeter. Every time a user passes by the defined area, they will receive a location-based alert. Perhaps, offer a deal that can make them drop in and shop at the store. 

2. Geofencing for law

A law firm, attorney, or a lawyer can set up geofencing marketing to target specific areas of interest. The targeted locations might include jails, hospitals, courts to reach their target audience. Geotargeting could also be set up to attract more leads. 

3. Geofencing for real estate

Geofencing marketing is a wonderful tool for real estate. With geofencing, real estate agents can set a virtual boundary and every time a potential onlooker/buyer enters or exits the boundary, they receive a notification. 

This can boost sales and conversion and help real estate agents to even filter out unnecessary clients. 

4. Geofencing for auto dealers

An automotive dealer could set up a geofenced advertisement that can target a user leaving the competitor’s store. 

The automotive dealer can offer a better offer or discount to let the user browse through the options at the geofenced location and address a particular pain point that the competitor did not use. 

Ryan Moothart from Portent introduced geofencing to one of their clients in the automotive space.

He says, “When we took over their paid search advertising accounts, their geographic targeting strategy was too broad; they were showing ads to users who were potentially hundreds of miles away from their nearest store location. 

That’s not something you want to pay for if your goal is to make a profit from your paid search ads. 

By restricting our client’s geographic targeting, thereby making our eligible areas of where our ads could show to be significantly smaller and closer to our client’s store locations, we were able to drive their online conversion rates way up and bring their average cost per user acquired way down. 

Thus, we generated more potential customers from our paid search ads while spending the same amount of money they were before.”

5. Geofencing for events

Artists and musicians can set up geofencing around their tour destinations, events, and concerts ahead of time to target their audience and let fans know. 

They can also promote their upcoming shows for the audience who are not aware of them or even their fans to create a sense of intrigue. 

The collected data could be used to analyze their users’ behavior to understand their mindset and use it for future events. 

6. Geofencing for healthcare

The healthcare sector regardless of its profit margin can highly improve its marketing strategy by implementing geofences as a part of its cohesive marketing strategy. 

Hospitals and private practiced clinics can send out timely and appropriate notifications to their users who enter the geofenced area.

Rahil Chaudhary, the Managing Director at Eye7 Chaudhary Eye Centre, says, “We have used geofencing for marketing much more in 2019 since we started getting much more footfall through the door since using it.

We target opticians and glass stores. The trick is our adverts and marketing are in the small script so the users actually struggle to read it; the marketing centers around asking them if they found that hard to read when they need to visit us.

The humor and timing of the ads have really helped our business.”

Use-cases of geofencing marketing

1. Enhance hyperlocal sales 

Geofencing helps apps and marketers to pinpoint and track their users’ location precisely to deliver products and services more effectively. 

With this feature, marketers can filter their target audience and send out appropriate messages and notifications to enhance hyper-local sales. 

2. Increase sales by driving traffic

Retail outlets and location-based services can take the help of beacons to direct foot traffic to the most popular sections in the outlet. 

By leveraging geofencing and beacons together, businesses can drive traffic in and to the outlets seamlessly. 

Confused between choosing geofences and beacons?

3. Customer retention

With the flexibility of geofencing, marketers can use this feature to the fullest to bring back customers to the outlet. 

Geofencing allows tracking the shoppers’ past behavior and with the aid of that data, marketers can send out appropriate notifications to the user in the form of a discount, loyalty program, exclusive member-only sales, and games to bring them back to the outlet. 

4. Initiate feedback on exiting the geofence

Marketers can reach out to their users who have left the geofenced location to fill a feedback form and get more insights about their experience. 

This can be done by several methods – survey, games, or even by enticing a coupon upon filling a form. 

5. Social networking

Geofencing marketing is used by all social media channels – Instagram, Facebook, Twitter, and Snapchat to serve highly customized content, advertisements, and location-based filters that are highly distinct to that particular location. 

6. Optimize user experience 

Geofencing is dynamic in nature. This insinuates that geofencing can be analyzed by the marketers to track and gauge their audiences’ behavior around the geofenced area and the app. 

The data collected can then be used to offer highly personalized offers and services to serve better and therefore, increase the overall ROI of the outlet. 

7. Boost engagement and conversions

Every customer’s dream is to receive the right offer at the right time. With geofencing marketing, this need will reverberate. 

By implementing geofencing marketing, the sales conversion ratio will increase rather marginally and generate more revenue. This helps in the long run in increasing brand engagement and boosting the undying customer loyalty. 

Use geofencing to supercharge customer experience

8. Optimizing analytics and data

Location and data analytics is the core part of geofencing marketing. Geofencing marketing strategy heavily depends on these two factors mainly. 

It runs on data, which then alerts marketers to take a suitable action by sending out the appropriate information. Geofencing also provides data in real-time. 
Some elements that can be measured are – 

1. Ad impressions/views
2. Conversion zone visits

An added benefit with geofencing marketing is that the campaigns can be edited in real-time based on the data collected. 

If users are not responding to the promotions, marketers can analyze why and re-edit the promotion in real-time to attract more customers. 

9. Improve customer behavioral data

Users who enter and exit the geofenced area can provide valuable insights to marketers that can be leveraged for a handful of reasons. 

Marketers can study a user’s purchase propensity and the kind of products they are interested in. This can be used to enhance and improve every customer’s profile in order to serve better. 

Brands that have used geofencing marketing

1. Dunkin Donuts

Source

Snapchat partnered with Dunkin Donuts on World Donut Day with a geo-filter that turned the user’s head into a donut. This filter could only be unlocked at a Dunkin Donuts outlet, and the outlet offered a free donut with every coffee purchased, upon using this filter. 

2. Burger King vs. Mc Donald’s 

Source

Talk about creating a geofence around the competitor. 

Burger King excelled with its “Whopper Detour” campaign that had a 600-feet fence around Mc Donald’s restaurants. Although Burger King did encourage its users to go to Mc Donald’s, and on entering their fence, the burger company offered a one-cent Whopper burger that could be unlocked on the Burger King app. 

This marketing campaign resulted in over 1 million app downloads and their ranking soared from ninth to first place in the App Store. 

3. American Eagle

Source

American clothing retail uses geofencing to drive users to their outlets. 

The clothing retail giant teamed up with the shopping app Shopkick and used beacon technology in addition to geofence to give their users in-app coins by urging them to try products in the trial room. 

This geofencing marketing campaign helped them triple their revenue in their retail stores.

4. Walgreens

Source

Walgreen, the pharmacy giant revised the entire concept of rewards and loyalty with the use of geofencing. With the aid of in-store beacons and an aggressive geofencing marketing campaign, Walgreens captured their app users’ attention to direct them to their rewards program status. 

The geofencing marketing campaign was to highlight the user’s present reward point balance, their reward milestone journey, and their reward money balance. 

The campaign actively encouraged its users to spend their reward balance, collect more reward points and initiated them to progress further in their milestone reward journey. 

5. Whole Foods

Source

Whole Foods partnered with location-based marketing firm Thinknear to place geofences around a handful of its store locations to target users who entered the fence with special offers and advertisements. 

Whole Foods also deployed geo-conquesting tools by placing geofences near its competitors’ stores to target shoppers close to their competitors with attractive offers. This incentivized their shoppers to travel in exchange for better deals at Whole Foods. 

This campaign garnered them with a 4.69% post-click conversion rate; more than three times the national average of 1.43%. 

Read how brands use beacons and/or geofencing with their marketing campaigns

Why should geofencing be a part of a brand’s marketing strategy?

To get on to any new technology, data-driven information drives the best decision. Here’s some statistics to corroborate the fact –

1. 40% of shoppers look for information while on the move.
2. 70% of users are willing to share their location with the brand for a quid pro quo offer.
3. Boost secondary action rates – users visit a store after seeing an advertisement twice with location-based marketing.
4. 60% of consumers search for local information on their smartphones.
5. Trade and home services rank the highest amongst secondary action rates. 

In inclusion to this, there are four major benefits of adding geofencing to a brand’s marketing mix – 

1. Targeting

With geofencing, brands get an edge over the accessibility to choose when to send messages which are much more relevant and timely. 

By targeting users who are constantly on the move and geographically close by, in addition to adding other targeting criteria on top such as analytics, a brand is much more likely to attract consumers. 

2. Concise data

Geofencing provides data collection which is often overlooked by marketers. With the right kind of platform such as Beaconstac, a brand can collect valuable information on traffic patterns, dwell time, and messaging effectiveness. 

3. Effectiveness

With geofencing marketing, a brand can reach its audiences that most likely will take action. Geofencing helps marketers filter out unnecessary target audience, implying that brands will have to spend less on an irrelevant audience. 

Better engagement lead generation always leads to highly effective marketing spend. 

4. Attribution

Marketers have long wanted a link between advertising and action. Geofencing is the answer to that. 

Geofencing technology allows marketers to gauge how customers react when they come across an actionable advertisement and to witness the exact outcome of the messaging campaigns. This can be a major factor in determining ROI. 

The advantages of geofencing might not be distinct; they are rather intertwined. Better data collection, better targeting, and better attribution leads to more effective spending. 

Geofencing vs Geotargeting vs Geolocation

Geofencing Marketing: The evolution of consumer marketing

According to Markets and Markets, the geofencing market is pegged to reach $1.8 billion by 2022. This implies that the market of geofencing marketing is not slowing down by any means. 

Not surprisingly, the industries anticipated with the most growth are travel and logistics (Uber). 

North America is predicted to head the geofencing market, owing to the maximum penetration of mobile phones and advanced GPS infrastructure. 

Asia is pegged to be the fastest-growing region in the geofencing market during the forecast period by virtue of increasing government investment. 

With geofencing marketing, brands can create rich customer interactions that can drive measurable business outcomes for brands. 

Is geofencing marketing the next big thing in location-based marketing?

Yes. 

Geofencing marketing offers a plethora of opportunities for both consumers and marketers. 

For consumers, when integrated with an app, geofencing can serve as a reminder tool, home security systems, automatic coffee pots, and receive offers from their favorite restaurants. 

For marketers, the technology of geofencing can enable them to send regular push notifications and mobile advertisements that can be pinned to a business location. 

Read how location helps gain a competitive edge via geofencing

Frequently Asked Questions

1. Is geofencing marketing dependent on location accuracy?

Yes. Geofencing thoroughly depends on the users’ accuracy of location. 

Today, the technology of GPS is highly advanced and accurate to pinpoint and detect if a smartphone is in the vicinity. 

Suppose the user is 100 meters away from the location of a brand using geofencing, the brand can send automated notifications to the user via their app. The notification can be heavily based on marketing or even just a greeting that can be viewed within their app. 

2. Who can add geofencing to their marketing mix?

Any business or brand that has a physical location on the map, and that want to – 

1. Bring new customers 
2. Retarget customers to increase customer loyalty 
3. Provide better services by gauging their target audience 
4. Maintain attribution, and 
5. Increase ROI

3. Is an app required to set up geofencing marketing?

In short, yes. 

Geofencing marketing cannot be set up independently of an app. For a successful geofencing marketing campaign, setting up an app is paramount. 

Beaconstac offers a robust geofencing SDK that can be integrated with any existing app to get started with geofencing. If there is no dedicated app, then fret not. 

You can use our DIY app building platform partner, Shoutem to create an app along any vertical and simply integrate the SDK with the created app. 

Want to start leveraging the power of geofencing? Explore Beaconstac’s geofencing solution or schedule a demo today!

• Author Details
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Author Details

Apoorva Hegde

Content Marketing Strategist – MobStac

Tech-aficionado, curious about all things related to marketing, and an ardent junkie of The Office.

[email protected]

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This blog was originally published on January 31st, 2020 at 10:55 am