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.
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 –
The company creates a geofence for a predefined area and an ad campaign for that particular geofence
A user steps in the geofenced area and gets included in the advertising audience
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.
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.
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
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.
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.
Geofencing marketing strategy can be implemented in almost every place. Here are a few of the locations that can be targeting using geofencing marketing –
The primary location of the business
Competitor’s business location
Closeby streets and stores
Households via addressable geofencing
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.
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.
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.
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.
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.
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%.
In inclusion to this, there are four major benefits of adding geofencing to a brand’s marketing mix –
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.
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.
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
Uses GPS via Wi-Fi, or cellular data to set-off a pre-programmed action/alert when a user with a smartphone enters/exits a designated virtual geographical boundary via a mobile application or webpage.
Uses the user’s geographical location with the help of GPS signals, geofencing, zip code via IP address or device ID
Uses mobile phone or internet-connected device to estimate a geographical location
A valuable tool to target and filter the target audience to boost sales, ROI, and conversion rates
A valuable tool when experimenting with the target audience
A valuable tool to view location history, tag images on social media, and to interact with other people
Geofencing works even after the user has exited the fence.
Geotargeting works only when the user is targeted every time they enter a neighborhood or a specific targeted location set by the owner
Geolocation is usually a self-initiated tool, which means that the user has to allow the device to use this feature
It does not work independently of an app. An app has to deployed for the successful use of geofencing
It works solely dependent on the user’s location data. If the user has allowed the permission, the brand can target them accordingly to send ads
It works solely on the discretion of the user. The user has to turn on their location data and grant permission to websites for their location
Geofencing is used solely for marketing purposes, along with other industrial uses such as healthcare, retail, and museums
Geotargeting is similar to geofencing. The technology is used for marketing purposes as well
Geolocation is used by the government for security purposes, games, and tracking
Some of the companies that use geofencing are Sephora, Whole Foods, and Taco Bell
Some of the companies that use geotargeting are Urban Outfitters, Toyota, and Purple Mattress
Some of the companies that use geolocation are Pokemon Go, and Ingress.
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).
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 –
Bring new customers
Retarget customers to increase customer loyalty
Provide better services by gauging their target audience
Maintain attribution, and
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.
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