What is Geofence – Guide to Location Based Marketing

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what is geofencing

Most likely, you might have come across the term ‘Geofencing’ by now. Geofencing is a technique for marketing that has taken industries by storm. Mobile marketing has increased by leaps and bounds with the rise of mobile phone usage. More specifically, marketers have taken full advantage of their geofencing capabilities, an immensely effective way to leverage location-based marketing strength.

Whether you already know about it or are hearing this term for the first time today, we will be learning how does geofencing work and how beneficial it could be for your business.

What is Geofencing?

Geofencing lets us define borders and geographical areas. This technology enables cellular data to activate a geofence trigger whenever a mobile device or RFID tag enters or exits a virtually setup area known as Geofence. GPS, RFID, WiFi, or cellular data to enable a pre-programmed action. Technology depends on physical location data to set up a geofence trigger. It is a virtual map perimeter, which makes tracking in real-time easier. 

GeoFencing is most commonly used for a certain point in which the diameter may be an extension of a house, a store, or for a few miles. There are numerous examples of GeoFencing, one of which is Google earth, as it manages to view the boundaries of a geographical region with satellites’ help. On the other hand, it is used according to the consumer and web-based maps’ latitude and longitudinal limits.

Depending on Geofence’s configuration, the technology triggers mobile push alerts, allows text messages or reminders, sends targeted social media advertising, enables vehicle fleet tracking, disables such technology, or delivers location-based marketing data.

Types of Geofencing

  1. Active GeoFence – The active geofencing relies on the end-user using location-based service and requires a mobile app to be open. 
  2. Passive GeoFence – Passive geofencing remains on all the time, and they work in the background. Instead of RFID and GPS, it depends on cellular data from mobile devices or WiFi internet connectivity.

How Does Geofencing Work?

With the growth of technology, developers have also begun to experiment with the whole idea of geo-fencing. They develop so many ways to incorporate a much more resourceful and innovative side of this technology. It is used in numerous ways, from social media applications such as Facebook and WhatsApp to apps for travel services such as Uber.

Businesses can target most of their potential customers by providing them virtual boundaries. When potential customers enter the territory, it allows them to activate ads or notifications about their business and encourages them to visit the nearby store. This technology is being used every day by more and more companies.  

Three necessary components need to be taken into account for how to set up Geofencing. The first one is setting up a geofence, which means to Geofence an area, a location, or a business. The next step is to use GPS, WiFi, or RFID when a customer reaches the GeoFence. The last and final step is proper communication. Strategize and choose a perfect way to communicate with your targeted audience. It can be through text, e-mail, push notifications or ads. However, remember the method you select should be mobile friendly and effective.  

Furthermore, let’s look at the benefits of Geofencing and how it can work for your business.

location based service

Benefits Of Geofencing for Brand’s Marketing

Though being new in marketing, Geofencing has achieved a tremendous rate of success. There are four key advantages of incorporating geofencing into the marketing of a brand. Let’s have a look at them and try to gain some benefit from them. 

  • Targeting – Brands get an advantage over usability by geofencing to select when to send far more important and timely messages. Besides adding other top marketing factors, such as analytics, a brand is much more likely to attract customers by targeting users who are always on the move and geographically closeby.
  • Brief data – Marketers often overlook some of the data which Geofencing can fetch. A brand can collect valuable data on traffic patterns, dwell time, and messaging efficiency using the right type of platform.
  • Effectiveness – It helps brands reach their audiences that are most likely to take action. Geofencing helps marketers grind out unnecessary target audiences, implying that an irrelevant audience will need to spend less on brands.
  • Attribution – Geofencing is the connection between advertisement and the result. Geofencing technology enables advertisers to calculate how consumers react when they come across an actionable ad and experience the messaging campaigns’ exact effect. Geofencing can be a very effective form of advertising. 

Cost of setting up Geofencing

Geofencing is a fantastic approach that enables your company to draw interested leads to your website. It becomes important to look at the technique’s expense to see if it fits into your budget if you are prepared to start using the technology. It is essential to consider different aspects that impact the cost of geofencing when planning to implement it. 

The volume and scale of the geofencing determine the expense of marketing strategies for geofencing. The bigger the Geofence, since the volume is higher, the lower the CPM(Cost Per Thousand Impressions) is. The cost of geofencing marketing strategies is influenced by the volume and scale of the geofencing. The bigger the Geofence, the smaller the CPM is since the amount is greater. The geofencing campaigns are added to the base advertisements, and that can range up to a thousand dollars. It depends on the size and intent of the campaign. The campaign’s objective, which can either be a CPM per Geofence or even cost per conversion, influences the campaign’s cost. 

Industries implementing Geofencing technology

Geofencing has offered online marketers new marketing opportunities because they can now find their future buyers right on the go. Several brands have reported success through the geofencing campaigns, especially those with highly classified data requiring maximum protection. 

So here are some business models or organizations that can apply geofencing technology:

  • Social networking – The most recognized uses for geofencing are social media applications. They allow location-based services, filters, and other sharable information with the help of geofencing. Any of the content you shared which states the location is all because of these virtual perimeters. 
  • Marketing – In addition to social media, geofencing is also a common way for companies to offer promotions in-store, alerting you as you walk around the store. It helps businesses target advertisements to a specific audience and figure out what works best according to the user’s location. 
  • Monitoring assets – Not only does it help track assets, but it can also test the frequency of a particular asset. It may be a computer operating in a fixed position or a car running down the lane. All the data can be read when the specific asset falls in the region.
  • Human resources management – Many companies use this technology to monitor their employees. For the employees that spend most of their time out of the office. It is also a simple way to automate timesheets as they come and go, clocking staff in and out.
  • Security – Geofencing has vast potential. One of which is utilizing it for security systems and bringing security to your mobile devices. For instance, one can set Geofence to your home and get alerts on your mobile whenever someone enters or leaves the house. 

Examples of Brands Using Geofencing

Dunkin’s Snapchat geofilter

One of the successful geofencing examples implemented is the Snapchat geo-filter used by Dunkin’s on national donut day. This filter helps brands demonstrate their innovative skills and personalities, and offer cartoonish, shared experiences to app users. Dunkin’s filter could be accessed when people visit the stores or use the ‘Snap to Unlock’ feature. The filter turns the user’s face into a giant pink donut that inhales sprinkles. The result of this campaign was that Dunkin’s had ten times more Snapchat followers than every month. 

Burger King tolls McD.

This concept is the most impressive example of what is geofencing marketing. Burger kings’ Whopper detour’ built a 600 feet fence around McDonald’s outlets. They encourage customers to visit McDonald’s, which involves a twist. Individuals could unlock an offer on the Burger King app for a one-cent Whopper burger as soon as they reached the’ fence.’ Though being a bold promotion, the Burger King app was downloaded over 1,000,000 times and raised from ninth to first place in the food and drink category of the Apple App Store.

Sephora’s store companion

It is one of the best examples of a smart location-data solution. Sephora’s companion turns on as soon as the customer steps into the store. It helps customers get information on various products, recommendations, and offers to give them a personalized experience of the store. It also allows them to check product availability and add them to their wish-list. Customers also get a reminder if they have an unused gift card when they enter the store. The Sephora app improves customer satisfaction and loyalty using geofence technology by creating innovative everyday mobile content, including location-targeted messages. 

Starbucks Push Notification

Starbucks uses Geofence to advertise their products to interested individuals. They send push notifications about the exciting offers and new promotions to get users in the door. Starbucks also sends customized app notifications. If a user typically orders a Frappuccino mocha, a geofenced message will be sent by Starbucks, enticing that user to grab the Frappuccino. The customized data attract more users to visit Starbucks. These examples of what is geofencing show how you can drive individuals into your company using your app.

The Future of Geofencing

After all the information we have considered, the next question is, what is Geofencing’s future? All the benefits and implementations show that geofencing has changed the targeted marketing conditions. It helps local companies to meet their target customers at the right time and dramatically increase their chances of conversion. The analysis shows that click-through rates for geo-targeted mobile display ads have risen twice from earlier times, which makes us believe that geo-fencing would provide a factual basis for the future of targeted marketing.

Even so, businesses are advised to conduct extensive market research and take all the above considerations into account before investing in it.

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Bluein Christian

Content Writer with experience of 6+ years. Have experience writing content for different industries, such as travel, education, fashion, and more. A creative person by birth and by profession. She loves learning new concepts and creating useful content about them. She loves traveling and is always up for new challenges.


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