Geofence Advertising: All You Need To Know To Get Started

Imagine yourself at the airport. You’re peacefully waiting for your flight, scrolling some entertainment sites, maybe catching up with the latest news.

Among all the ads you see along the way, there’s one that grabs your attention. A discount at a cafe. The one that you know is just around the corner.

Coincidence?

More like geofence advertising. 

In this post, you’ll learn:

• What is geofence advertising and how it works
• How to set up an effective geofence advertising campaign
• Go through some examples, use cases, and more.

What is geofence advertising?

Geofencing is a technology that enables companies to advertise to potential customers who are within a specific geographical radius in real time.

It also allows to collect audiences from specific locations or fenced areas and retarget them later.

While geofence advertising has been there for a while, the ever-growing popularity of smartphones now makes it a precious marketing tool.

How does the app/website know a user has entered the geofenced area? There are several ways how a location can be recorded: 

• GPS 
• RFID (radio frequency identification) 
• Wi-Fi 
• Cellular data

How does geofence advertising work?

It might look like geofencing technology is quite complex, but it isn’t. Let us prove it to you.

The process usually consists of three steps:

1. A virtual fence is created. You should build virtual boundaries around some physical location, like a store. 
2. A user enters the area. If the person has a GPS-enabled smartphone, has given permission to track them via an app or website, and browses their phone in the geofenced area, they’re added to the system.
3. The ad shows up on the user’s smartphone. If the requirements are met, the ad is displayed on the user’s screen. 

Practical example 

Imagine you're a sporting goods business that wants to geofence a ball field and create an audience for the latest promotions on sports products. 

Here's what you can do:

1. Develop a sports enthusiast audience based on places they visit – like gyms, golf courses, and sports shops.  
2. Design your creatives. 
3. Launch the campaign. 

The audience to capture would be into sports and fitness in a specifically targeted park. Golf enthusiasts, in this case, would be targeted using golf courses. 

Other audiences can include students (spotted in universities or colleges) or tourists (spotted in hotels). 

Benefits of geofence advertising

Geofence advertising gives a lot of potential for marketers, either with online or onsite presence. 

Here are some kick-off numbers that speak for themselves:

• Geofencing is compatible with 92% of smartphones.
• Geofenced mobile ads have a double CTR compared to those that aren't location-based.
• Location-based marketing is expected to grow at a CAGR of 18.1% from 2022 to 2023 (from 56.5 billion to 299.3 billion dollars).
• More than 90% of digital marketers use location data in their ad and marketing campaigns.
• 84% of marketers say location-based marketing and advertising increased sales, engagement, and their client base. 

Let's overview some of the biggest pros geofencing offers: enhanced brand awareness, better engagement, higher sales, and improved analytics. 

Increased brand awareness

First and foremost, location-based targeting (geotargeting) grows your brand awareness and promotes online channels. 

Geofenced ads benefit in reminding customers about the fact that the brand exists, where it exists, and that it's ready to serve them. So they become more aware of your business and location. 

Higher engagement

All the insights you get help you refine your geofenced campaigns, thus raising engagement rates. You have tools to experiment with CTAs and copies. 

For instance, you can offer a 20-dollar voucher for sports shoes instead of a 20% discount for all the goods. Then, choose what engages best by examining the response rate and generated leads.

Also, advanced targeting ensures your message is much more relevant to those around you. When mixed with other targeting techniques, it's a recipe for success. 

Enhanced local performance

If you're looking to increase your local performance – geofence is the way to go. 

As it's purely based on location, you can consistently target people in a specific geographical area. 

You can display banners for customers in a defined area with limited-time offers that will likely grow your sales. Not to mention local optimization – ranking high in local search results – can do miracles for your business: 

• 46% of all Google searches are for local businesses.
• 28% of local searches result in a purchase.
• 76% of people end up visiting a business within 1 day after a local search on a smartphone.

Improved analytics & personalization options

If you don't use geofencing, tracking local sales can be nearly impossible. Unless you survey each customer who enters your store (most likely, you don't).

Yet geofencing provides a whole new level of tracking. It gives you data about demographics, what type of offers interest your clients, or even what products they most often purchase. 

Having all this data allows adjusting your ads on the go. 

Geofence limitations

Just like any other targeting type, geofence also comes with some cons. 

There are limitations to using this kind of advertising and you should consider them before setting your campaign goals.

• Limited use cases. The technology that geofence uses and the nature of this targeting type itself are what reduces the number of possible geofence applications. Geofence works only in pre-defined locations which means that you have to be sure about the specific audience you want to reach and have a clear idea of what you want to achieve. 

• Smaller audiences. If you’re looking for a bigger reach, geofence might be not the way to go. Of course, no one can stop you from mapping the area as big as you like but chances are that it won’t bring you the results you’re looking for. Geofence focuses on smaller audiences nearby, but with higher relevancy. 

• Time spent in location. Running geofence in a place where people don't stay for too long will not work. For instance, drawing a fence around a single takeaway coffee shop. Even though many people come in, they don’t spend much time there using apps or browsing, therefore, the data cannot be collected. 

• Most traffic comes from apps. The biggest part (90%+) of traffic for geofence campaigns comes from apps, mostly Android users. Keep this in mind when planning campaigns and preparing your ads.

Geofence advertising examples

Let's look at some practical examples of how big names use geofencing in their marketing strategies. 

Uber

As a matter of fact, private car hire networks like Uber can't pick up passengers at this airport because they don't have the required license. Except for the luxury service, which is the only one properly insured and commercially licensed.

Well, Uber didn't take it as a complete NO. 

As a way out, they use geofencing ads outside the pickup points, in places where drivers can wait for fares. 

When users land at the airport, they get push notifications inviting them to order an Uber car. Just in case they forgot. 

Carlsberg

Carlsberg, a Danish multinational brewer, ran a geofence campaign to collect audiences from local supermarkets in Azerbaijan and retarget them with ads promoting its flagship brand Baltika.

Brewer’s ads were aimed at men between the ages of 18-54 who happened to visit any of the geofenced stores. The ads were then displayed on users’ that met the required criteria screens while they were scrolling through the internet or using apps.

Carlsberg's geofence campaign hit a whopping 567K+ impressions and reached more than 25K people in total.

Starbucks

Starbucks is well-known for implementing geofence to advertise drinks to interested customers.

What's unique about their campaign? Starbucks offers certain drinks for half the usual price and notifies nearby users about this promotion. But that's not it. 

Starbucks employs geofencing to put clients into diverse categories to display the most relevant notification. This way, depending on whether you're a cappuccino or a latte drinker, you'll get a tailored notice. 

Philips

During its geofencing campaign, consumer electronics brand Philips wanted to target mothers-to-be and women who have recently given birth in four cities in Kazakhstan.

Electronics giant used interactive rich media ads to advertise to 25-34-year-old women around 80 locations like gynecological centers and maternity hospitals. 

This particular Philips geofence advertising campaign has successfully reached thousands of women and even exceeded the expected number of clicks 15 times.

Burger King

You might have heard of a Whopper Detour – the famous story of how Burger King took McDonald's clients back in December 2018. And you guessed it right – implementing geofencing helped them. 

Here's what they did:

• Used their mobile app to send notifications to customers who entered a 600-foot geofence around McDonald's. 
• Offered to buy a Whopper for one cent in the closest Burger King. 
• Gave directions on how to get there! 

Was it a success? HUGE one. 

Burger King's CMO said customers used a promotion approximately 20 times more than any previous app offer. Not only that, but the campaign also generated over 1.5 million app downloads. 

How to set up an effective geofence campaign

Think about all the usual steps you'd take when launching a campaign, just with some on the top. 

1. Analyze your target audience

Before kicking off your geofenced ad campaign, do extensive research to learn about your customer demographics and WHO they are. 

As anywhere marketing-related, knowing your audience is key to getting the most out of a campaign. 

2. Choose the right geofence parameters

Try to keep it moderate. You don't want to choose a geofenced area that's too tiny or too big.  

The key here is to use common sense and think about population density, how long people spend time in a specific location, and whether or not they use their smartphones there (apps/browsing).

The latter is especially important. Unless people use their smartphones there, you won’t be able to target anyone even if the place is crowded.

3. Create an actionable ad

You can display ads for prospects who are in your geofenced area or who’ve already left the geofence (and headed back home, for example). Either way, the goal is to make the audience act as soon as possible. 

Make sure your ad has a clear CTA that requires prompt action. Instead of inviting them to claim a "special" gift, tell them they'll get a second sandwich for free. 

Straight to the point. 

4. Review your ad regularly 

We already mentioned it and will do that again (probably more than once) – optimize, optimize, optimize. 

Leverage a good deal of data that geofencing provides and refine your campaign until the results are maximum.  

5. Mix with other targeting techniques

Don't let geofencing do all the work alone and, most importantly, don’t put all your budget into combining it with other targeting techniques. 

What you can and should do is try different targeting options alongside geofencing, like:

• Contextual targeting – to target search keywords and their intent. For example, for the keyword "restaurants with group event areas", you'd have to make sure the content talks about your restaurant and group event options.
• Behavioral targeting – to show ads relevant to specific users’ habits and interests based on their online browsing and shopping behaviors.  
• Retargeting – to display ads for potential customers who've viewed products on your website, e.g., after visiting your store.
• Dayparting – also known as ad scheduling, to target your audience at specific times of the day when you know it's primarily active. 

How to set up a geofence using an advertising platform

The steps for setting up a geofence campaign may vary depending on the advertising platform. For example, the process of building a geofence on Facebook can be a lot different than using a DSP (software that allows advertisers to buy ad placements with the help of automation).

For instance, setting up a geofence campaign with a DSP could be as simple as:

1. Create geofence. Upload coordinates, type in the address, or use a drawing tool to geofence a custom-shaped area. 
2. Design ad creative. Tailor your dedicated message and use relevant call-to-action. 
3. Collect your audience. This will help you estimate the campaign’s media plan.
4. Launch a campaign. Once the ad creatives are done and the audience is collected, you can launch your campaign.
5. Analyze and optimize. Examine how your campaign performs and upgrade based on audience insights and KPIs. 

FAQ 

How accurate is geofencing?

The accuracy of geofence can depend on several factors, like how far the location is from cell towers/WiFi routers, technology, or the geofence system used (coordinates, polygon mapping, etc.). 

For example, the more precise your location coordinates, the more accurate the geofence will be.

In an ideal case, advertising platforms and DSPs can deliver accuracy of up to 10 meters.

What locations can you target with geofence?

The opportunities are endless for a creative marketer and the right brand. For those that are not, here are some examples to help inspire you:

• Your location
• Competitor locations
• Events or trade shows
• Colleges
• Nearby streets or stores

Does Facebook allow geofencing?

Facebook's geofencing feature allows businesses to advertise in a specific area and get as specific as a 1-mile radius. 

Geofencing on Facebook comes with a few limitations though:

• Limited radius. The maximum radius for Facebook geofencing ads is 50 miles (while the minimum is 1 mile). Compared to DSPs, it is much smaller.
• Doesn’t support custom shapes. Facebook doesn’t support polygon targeting, which can significantly improve accuracy. It allows you to define the area by a radius by “dropping a pin” on the location that meets your targeting criteria. To narrow the area, you have to build exclusions around the selected radius.
• Limited to Facebook’s reach. Building geofence on Facebook narrows down your audience to Facebook users only.

Relevance is key

Location-based advertising and, in this case, geofencing can be one of the most effective ways to not only reach your target audience but also help you sell.

As it’s focused on people nearby or users who visit/like to visit particular locations, geofence advertising is a great way to show them tailored ads that require less convincing. And that’s just one benefit besides many others, like better local marketing and increased brand awareness.