Geofencing Marketing: A Complete Guide to Building an Effective Strategy

By Raubi Perilli |

  | Nov 12, 2020  /  Solutions |

If you haven’t tried geofencing marketing because you think it’s too complicated or confusing or technical, we’re here to help.  

Geofencing marketing isn’t as tricky as it sounds. In fact, with the right tools and strategy, geofencing is actually a pretty simple and extremely effective way to reach new and existing customers that are right around your business.  

Let’s look at what geofencing marketing is and how you can use this marketing strategy to promote your brand, track your results, produce a high ROI, and optimize your efforts to create even more effective future campaigns.

What Is Geofencing Marketing?

Geofencing marketing is a type of location-based marketing that targets customers where they are. It draws a virtual boundary around a specific location and then delivers mobile display ads to people who move in and out of the targeted region.

How Does Geofencing Work?

With the right geofencing software and strategy, you can launch an effective campaign in just a few steps. (At MyArea Network, we use Simpli.fi’s technology to target customers with pinpoint precision.)  

1. Create a geofence target zone. Start by drawing a digital GPS boundary around a specific location that will attract your ideal audience. To determine the best place to draw a geofencing boundary, take time to think about your audience. Create a buyer persona. Who are they? Where do they spend time? What events do they attend?

Choose a location where you know your target customers will visit or spend time. Consider if it would be best to use:  

  • Competitor targeting: shows ads to people who are visiting competitor locations
  • Traveler targeting: shows ads to people who are in hotels and resorts near your location
  • Addressable targeting: shows ads to people in a specific neighborhood near your location
  • Event targeting: shows ads to people at an event that would attract your ideal customer

2. Develop a strategic message and ad content. Determine what message you want to share with your audience. Think about your buyer persona and target locations. What messages would resonate with people in the target locations? What information does that audience need? What message would drive them to take action?

Choose whether you want to display your message as a static or dynamic display ads or video ad and create your content.  

3. Drive customers to take the desired action. In your message, add a call-to-action that tells audiences what you want them to do. You can use geofencing marketing to drive either online or in-person actions.

Decide what is best for your business goals and audience. Drive online actions by asking audiences to click on a link and make an online purchase. Or, drive in-person actions by asking audiences to visit your business and use a coupon when they arrive.  

4. Track conversions. Monitor the results of your campaign by tracking conversions.

Track online conversions by measuring the number of clicks and purchases that came from your ad. Track offline conversions by setting up conversion zones. Conversion zones use tagging to track the people who see your ad and then enter your location.

The Benefits of Geofencing Marketing

As you can see, geofencing advertising is an effective way to target customers based on where they are. You can create strategic messaging based on their needs and wants and use conversion tracking to monitor your success. There are a variety of benefits in this type of marketing strategy.  

Boost mobile marketing effectiveness. Ninety-one percent (91%) of adults keep their smartphones within arm’s reach as reported by Forbes. Geofencing marketing taps into mobile marketing by getting your message in front of audiences while they are on their phone.  

Hypertargeting. Geofencing marketing uses precision targeting to reach customers based on very specific criteria. This hyper-targeting allows your message to get in front of your ideal audience, without spending money reaching audiences who aren’t likely to be interested in your ads.  

Collect real results and customer data. With geofencing, you can track impressions, clicks, and even offline conversions making it easy for you to collect data, see real results, and gather information to optimize future campaigns.  

Get a high return on investment. Geofencing is cost-effective because it goes small and narrow rather than broad and wide. You pay to reach a specific group of customers and get the most out of your ad spend which leads to a high return on investment (ROI). Our customers typically see a 100% return on ad spend.

Who Should Use Geofencing Marketing?

Geofencing marketing is primarily used by brick-and-mortar businesses in retail and hospitality industries. But with the right strategy, geofencing can work for a variety of businesses in many industries.  

If a brand knows where their ideal customer spends time, they can target that location and drive both online and offline conversions. Brick-and-mortar businesses can drive foot-traffic while online businesses can also drive online sales through click-to-buy messaging.

Geofencing is also flexible in pricing which makes it a potential marketing channel for brands with large and small budgets. With the right strategy, geofencing can work for businesses of all sizes.  

Related: How to Use Geofencing for Restaurants to Increase Store Traffic

What Is the Cost of Geofencing Marketing?

A benefit of geofencing is that there is no set cost for this marketing tactic. We’ve seen brands run successful campaigns for as little as $212. Geofencing campaigns scale with your budget. If you have a limited budget, you can start small and grow as your campaigns produce results.  

How much you spend can change based on two factors.  

Frequency of Ad Delivery: With geofencing marketing, you pay for impressions (or how many people see your ad). You can run an ad with a small budget (only less people will see it than if you had a higher budget.)  

Length of Campaign: The amount of time you run your campaign will also impact cost. The longer you run your campaign, the more money you will spend. We recommend that you run a campaign for at least three months as we have found that geofencing works better over a longer period of time.

What Is the ROI of Geofencing Marketing?

While the ROI of geofencing marketing will vary by campaign, we can look at the averages of past campaigns to determine an average return. We’ve found that our customers typically see a 100% return on their ad spend.  

We have three case studies that show campaigns that produced a 1.5X to 4.3X return for our customers.  

  • A nightclub and bar wanted to increase foot traffic by targeting customers who were already visiting their competitors. They invested $250 and saw a $640 return -- a 156% ROI.
  • A local bar and grill wanted to bring their restaurant to the top of the mind of nearby customers. They invested $600 and saw a $2,660 return -- a 343% ROI.
  • A high-end steakhouse wants to increase covers for lunch and dinner. They invested $212 and saw a $1,140 return -- a 437% ROI.

Want more case studies? Check out: How Effective Is Geofencing? 3 Examples of Real Campaign ROI.

The Best Geofencing Marketing Strategies

To produce the highest ROI on your geofencing campaigns, you need to have a strong strategy that drives your efforts. Don’t start a campaign without spending time developing a plan for getting the most out of your efforts.  

Consider what geofencing marketing strategies will work best for reaching your specific audience and goals. Here are a few examples of strategies that work best in geofencing.  

  • Build loyalty and stay top-of-mind with existing customers. Tag customers when they come to your store and then deliver ads that encourage them to come back.
  • Attract nearby customers and drive in foot traffic. Set a geofence around your business so when customers walk past, they are targeted with ads that encourage them to visit.
  • Target your competitor’s customers. Target competitor locations and put your advertisements in front of people who would be potential customers for your business.
  • Advertise at events that attract your ideal customers. Use time and location targeting to reach attendees of events with your ideal demographic.
  • Build awareness during the buyer’s journey. Target places where customers might be on their way to doing business with you. (A lawyer who represents people in auto accidents may geofence an auto body shop or urgent care.)
  • Pair direct mail with geofencing ads. If you are running a direct mail marketing campaign, use addressable targeting to show ads to audiences at that location so they see your message in print and online.

Related: Local Branding and Customer Acquisition with Geofencing

Geofencing Marketing Key Performance Indicators

Monitoring key performance indicators (KPI) of geofencing campaigns is an important part of the process. It not only shows you the level of your success, but it also helps you identify where you need to improve and optimize for future campaigns. To monitor your campaigns, track the following geofencing KPS.

Click-Through Rate (CTR): Click-through rate (CTR) is the percent of people who saw your ad and clicked on it. CTRs help determine if ads are served to an optimal audience or at the optimal time. If the CTR is low, the ad might be reaching the wrong audience at the wrong time or using creative that isn’t engaging or interesting.

Total Visit Rate (TVR): Total visit rate is the percentage of people who saw your ad and then visited your location. If a campaign serves 200,000 impressions, and 200 people visit a store, the TVR would be 0.1%. The higher a TVR, the more optimized the campaign is at delivering on ad spend.

Cost Per Conversion (CPC): Cost per conversion (CPC) is the amount of money it costs to drive a user to take action. To find the CPC, divide the total cost of the campaign by the number of conversions. The lower the CPC, the more optimized the geofencing campaign is.

How to Optimize Geofencing Marketing Campaigns

Once you run a geofencing marketing campaign, you can use your results to identify ways to produce even better results in future campaigns. You can learn from your campaign KPIs and find ways to optimize your campaign to drive higher ROI.

  • Adjust messaging and design. Test different messages and ad collateral to see what resonates strongly with audiences.
  • Optimize target zones. Turn off target zones that are bottom performers and launch new geofencing targets to test out new regions.
  • Optimize frequency. Increase the frequency of ad delivery or add additional target zones to get more eyes on your ads.
  • Optimize ad serving times. Identify the times when your ads convert at the highest rate and when they perform at the lowest. Increase frequency during high conversion periods and decrease during low conversion periods.

Geofencing Marketing Example

Now that you have a strong foundation of how to create an effective geofencing marketing strategy, let’s look at a real example of success.  

A local bar and grill had a new happy hour that they wanted to promote. They already had some brand awareness and wanted to run a campaign that would bring their restaurant to the top-of-mind of nearby local customers.  

Strategy -- $600 Investment  

Create a geofencing campaign to target 52 nearby bars and restaurants. Promote the new happy hour to an audience who is already interested in bars near the location.  

Success -- 343% ROI  

The campaign brought the bar and grill to the top-of-mind with nearby customers through thousands of impressions. It also effectively brought in customers. Through conversion zone tracking, 133 people visited the bar after seeing the ad.  

  • 98,722 brand impressions
  • 133 conversions (People who saw the ad and entered the bar and grill)
  • $2,660 in new revenue
  • $2,060 ROI

How to Get Started with a Geofencing Marketing

Now you know what geofencing marketing is and how to create a strategy around this marketing tactic, it’s time to put your plans into action.  

It’s time to launch a strategic geofencing marketing campaign.  

To get started, sign up for mySuite from MyArea Network. Members can access our geofencing technology to easily set up campaigns that target nearby customers and drive them to take action. 

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