Looking to learn about location-based marketing? And more specifically about geofencing marketing?
Wondering whether it’s the right fit for your business?
Well, you’re on the right page.
In this guide you’ll learn:
- What location-based marketing is
- What geofencing is
- How it works
- Geofencing pros and cons
- Who should engage in it? And who should avoid it
- And more.
Come as a newbie, leave a pro, and let’s go!
What is Geofencing Marketing? And How Does it Work?
Geofencing is a type of location-based marketing where a virtual, geographic boundary is placed around a physical, real-world location.
When a mobile device enters the designated area an event is triggered, usually in the form of SMS or push notifications.
Here’s how geofencing works.
- First, a business identifies an area of interest, for example, a densely populated city block or a competitor shop.
- Then they set up a virtual geofence around it with specific qualifiers (proximity, an event happening, having visited your online store…) that need to be hit in order for the passerby to be caught in the fence/net.
- Finally, when the event is triggered, the advertisement is sent and the once cold traffic turns into a lukewarm or even a scorching hot lead.
- That’s the power of geofencing done right.
Geofencing Pros and Con Explained
Geofencing is a wonderful strategy that, when done right, can get a lot of new costumes through your doors.
But, it also has its share of cons you need to be aware of before you engage in it.
Let’s cover both the pros and the cons below.
#1- Increase in Foot Traffic
By setting up geofences on strategic locations stores and retail shops can get an increase in direct foot traffic which then turns into more sales.
This extra traffic comes from targeting passersby with relevant ads and offering them deals and discounts they can only get if they stop and purchase then and there.
Geofencing works because it introduces emergency into the mix and because it exploits that nagging desire in the back of our heads and one we all share- the desire to score a deal.
#2- Delivering More Relevant Ads
Geofencing + serving relevant ads is a tried and true combination that simply works. Again, it’s all about hyper-relevance.
When a potential customer who’s never heard of your brand before sees your ad pop on their screen offering a thing or service they need, and offering it a steep discount, that’s bound to be effective and many visitors will at least be intrigued, if not more.
#3- Driving Consumers Away From Competitor Stores
This type of location-based marketing is called geo-conquesting and I talk about it in detail further below.
For now, just know that you can use geofencing to divert and “conquer” your competitor’s traffic right under their noses.
#4- Create a Better User Experience
When you target users at the exact moment they need your services the most, you’re offering them quick relief and a supreme user experience.
Think about it like this, let’s say you have a fast food joint and you’re targeting people when they’re long past feeling just peckish, and now they have a roaring tiger inside their bellies. They’ll come to your restaurant in a hurry and even thank you for existing at that precarious moment in time for them:)
Geofence is not a perfect local marketing strategy, and not all businesses will profit from doing it.
Here’s exactly why.
#1- Faulty Targeting
Geofencing technology works on tracking IP’s and it works as it’s supposed to, most of the time.
“Most of the time” is not synonymous with “always” and it quite often happens that a device is registered entering your hot zone when in fact they haven’t and aren’t even near it.
This means the ads, SMS’s or push notifications you send to them will be irrelevant and will have zero positive effect on your bottom line.
They might even tarnish your brand’s reputation slightly if you’re perceived as obtrusive.
#2- Limited Scalability
All forms of geolocation marketing suffer from one fatal flaw, and that is limited scalability.
In geofencing, your total addressable market is only going to be people who enter your geofence and that is always a tiny percentage of the total population of a larger area, for example, a major city.
This doesn’t mean it’s not worth it. It just means the ceiling is clearly visible and cannot be pushed up much higher.
#4- Privacy Issues
This is a major problem and I talk about it in detail below.
But, privacy concern among users is real and growing fast, and geofencing and other forms of location-based marketing are based on knowing a lot about your user and tracking their movement across the map.
Many people don’t appreciate that at all, including the writer of these lines.
What Are Some Other Types of Location-Based Marketing?
Geofencing is not the only kid on the block when it comes to location-based marketing.
It has at least 3 friends, which makes it a gang of four.
Geotargeting is using the mobile device’s IP address to determine the precise location of a user so that relevant ads, offers, and personalized search results can be served to them.
For example, when you type into Google “nearest pizzeria near me” Google shows you the nearest pizzeria near you based on your location which they determine via your phone’s or device’s IP address.
Here, I’m using a VPN and my temporary IP is located in Santa Clara, California.
So when I search for the nearest pizzeria, Google shows me the one in Santa Clara, which is a suburb of Los Angeles.
#2- Geo Conquesting
Geo Conquesting is a marketing strategy where a virtual border is placed around a competitor’s place of business so that when potential customers cross it they receive advertising and push notifications to visit the competitor’s store so they can score a deal and get a discount…
Burger King engaged in some crafty geo-conquesting aimed at McDonald’s and I will talk about it below.
Beacons are interconnected devices that use WIFI and Bluetooth to establish a connection with applications operating within the beacon’s range.
Beacons work superbly well to target existing customers with upsells within a very small geographic area.
For example, you’re promoting a new line of products in your supermarket. So, why not target people who’re already in your store shopping? Give them a chance to stop and take an honest look at your new product.
They might buy if the offer is relevant to them and they discover they need your new hot item.
Note: for beaconing to work they need to have your app installed. That is how beacons can recognize devices that have the app installed.
Mobile targeting is when marketers send targeted ads to people on their mobile devices.
Because consumers are weary of normal, generic, bland and intrusive advertising, marketers aim to make their ads super context specific, and hyper relevant.
They achieve this by making their ads appear as if they’re native content, as something that should be there.
Native mobile advertising works really well as most users are not so savvy to be able to easily recognize an ad hidden inside content.
The One Major Hurdle to Overcome in Location-Based Marketing…
I’m talking about privacy.
Privacy concern among web users is real and is growing.
- 79% of the American population think that companies will not take responsibility in case of data leakage and misuse (source).
- In 2019, in the US, 80% of all internet users were concerned about their internet privacy because of their government’s actions (source).
- In the US, 52% of female internet users expressed concern about their personal data security and management (source).
And I could go on and on.
Bottom line is that location-based marketing has a lot of real privacy hurdles to overcome and it’s not getting easier as time progresses.
Users are wary of brands tracking their every move, especially unfamiliar brands.
They also fear that hackers could steal their precious data and leak it all over the web.
The widespread concern and fear also make brands hesitate when it comes to geofencing and other location-based marketing strategies.
In fact, 59% of brands say the reason they’re not engaging in location-based marketing is that they fear alienating people from their brand.
Luckily, there are several things marketers can do to lower privacy concerns.
- They can have the users opt in to reduce updates. This is even mandatory for all business marketing to EU citizens)
- They can anonymize data to prevent accidentally exposing anyone’s sensitive data.
- They can establish superb cyber protection for all data stored on their servers. And give proof of it to worried customers.
Should You Be Doing Geofencing Marketing? Or Any Other Type of Location-Based Marketing? And How to Get Started?
That’s up to you to decide.
What is your strategy for getting new leads and customers? What are your goals?
Think of geofencing as another marketing tool in your vast marketing toolbox.
Just as you wouldn’t use a hammer to smash open every job, you also can’t use geofencing, or any other location-based marketing strategy, as your only way of getting new leads and sales.
Instead, think of them as valuable adjuncts and ways to diversify your marketing and income sources.
Here’s How to Get Started With Geofencing (Step-by-Step)
- First, you need to brush up on the legal matter, whether or not you have a legal team. Very important so you don’t run into problems later.
- Second, you need to establish clear goals. For example, are you trying to steal customers away from a competitor? Or are you trying to upsell existing customers, perhaps those in the store at that moment?
- Third, choose a targeting method (geofencing geo-conquesting beaconing…) and of course the method you picked needs to match your goals.
- Finally, measure the result via your analytics software, see what works and what doesn’t
Examples of Brands Using Location-Based Marketing
The biggest brands don’t shy away from using location-based marketing to their advantage.
Some even made media stunts out of it.
For example, Burger King had an extensive and elaborate geo-conquesting campaign where they targeted people who had their app installed on their phones and who got within 600 feet (200m) radius within any McDonald’s store in the US (except Hawaii and Alaska).
They offered a 1cent whopper to those who skipped McDonald’s and went to their closest store instead.
The campaign was a massive success and they advertised it as “making every McDonald’s restaurant a Burger King restaurant, at least for a little while”.
Another example of location-based marketing comes all the way back from, 2013, the famous sports shoe brand Adidas linked their location extension with their search campaigns.
This had the effect of driving the web users who were looking for an Adidas store straight to the store locator page on Adidas.com
Thanks to that convenience factor, one in five customers who clicked on the store locator page ended up visiting the store, and a good chunk of them proceed to buy.
This campaign’s result was a huge 680% bump in conversions and ROI.
Whole Foods supermarket chain partnered with Thinknear to place geofences around Whole Foods stores; and also engage in extensive geo-conquesting by sending hyper-relevant ads to the phones of users who got close to competitor grocery stores.
These ads offered better deals than normally available and they could only get it if they visited the store then and there.
Time sensitivity was a big factor in this geo-conquesting campaign.
The campaign was super effective, giving Whole Foods a 4.69% post-click conversion rate. This is more than 3X the national average of solid 1.43%.
Bottom line: location-based marketing works for big brands, but it could work for you too, even if you’re a much smaller brand.
Don’t shy away from it if you suspect you could pull it off, as the gains could be massive says Vince T. – Founder of 12SM Digital Marketing Agency.
Concluding My Geofencing Marketing Guide for 2021…
None of the location-based marketing strategies, including geofencing, are probably never going to become your go-to way of acquiring new customers.
You will never have the majority of your business and income depend on these stratagems alone.
But that’s a good thing as you wouldn’t want it to.
Instead, treat geofencing and other types of location-based marketing as valuable tools in your vast toolbox of marketing strategies.
Use them for what they’re worth and gain an edge over your competition who think geofencing and targeting people locally is a royal waste of time.
Go and prove them wrong now, as this guide is done.
But first, leave me a comment below, let me know what you think.