How Effective Is Geofencing? 3 Examples of Real Campaign ROI

By Raubi Perilli

      Jul 30, 2020     Solutions    

When it comes to marketing, it can pay to get more precise rather than broaden your reach. Hypertargeting audiences based on who they are -- and where they are -- can make your marketing more powerful and efficient.  

That’s why geofencing is so effective.  

Let’s look at a few examples of how geofence marketing works and see how campaigns can produce a strong ROI with a relatively small investment.

What Is a Geofencing Campaign?

A geofencing campaign is a digital advertising strategy wherein you target customers within a very specific physical location.  

You create a target zone by drawing an imaginary boundary around a location, such as a specific neighborhood or even an area as precise as the property of a restaurant or a hotel. (It’s different from and more precise then geotargeting which targets customers based on city or zip code.)

When people enter or exit that boundary, you can tag them and present them with targeted display ads. The display ads appear on third-party sites as the person browses the web. You can set a date for how long you would like ads to appear to that audience.  

An example of a geofencing campaign would be:  

  1. A restaurant sets a geofence around a nearby hotel.
  2. When people enter the hotel, they are tagged and begin seeing ads for the nearby restaurant.
  3. The restaurant shows ads to the audience for the next five days, since that is an average estimate of how long they will be at the hotel and most likely to visit the nearby restaurant.
  4. When a person who was tagged enters the restaurant, they are tagged as a conversion.
  5. The restaurant can view the success of their campaign based on how many customers saw the ad and entered the restaurant.

The benefit of geofencing is two-fold. It drives an immediate increase in foot-traffic while building lasting brand awareness  

Related: Improve Local Branding and Customer Acquisition with Geofencing

How Effective Is Geofencing?

Geofencing is effective because it goes small and narrow rather than broad and wide. The investment focuses on a highly targeted group who are most likely to convert. When looking at three of our past geofencing campaigns, we found proof that even with a relatively small budget, geofencing campaigns can be very effective.

The average ROI percentage for the following three campaigns was 312%. Geofencing campaigns produced a 1.5X to 4.3X return for our customers. 

3 Examples of Geofencing ROI

To see how effective geofencing can be, let’s look at some specific examples. Here are three examples of campaigns we ran for MyArea Network customers.

Geofencing ROI Percentage - 156%

A nightclub and bar wanted to increase foot traffic by targeting customers who were already visiting their competitors. We set up a geofencing campaign that would target 13 competitor bars, as well as three nearby hotels.  

With a relatively small investment of $250, the bar was able to drive 32 conversions. With an average check of $20, the campaign produced around $640 in immediate revenue. The 25,521 impressions also produced long-term value by building brand awareness and introducing new customers to the bar.  

  • Investment: $250
  • Return: $640
  • ROI: $390

Geofencing ROI Percentage - 343%

A local bar and grill that already had some brand awareness wanted to run a campaign that would bring their restaurant to the top-of-mind of nearby local customers. The bar and grill had recently done renovations and introduced a new menu. They want to promote the new menu as well as their happy hour special and refreshed look.  

We created an effective geofencing campaign by targeting the location of 52 nearby bars and restaurants. Customers who entered those locations received targeted ads promoting the new updates at the bar and grill.  

We tracked 133 conversions (customers who saw the ad and then entered the bar and grill) from the 98,772 impressions. With an average check of $20, the restaurant earned $2,660 in revenue.  

  • Investment: $600
  • Return: $2,660
  • ROI: $2,060

Geofencing ROI Percentage - 437%

The effectiveness of a geofencing campaign can be tied to the average check when working with restaurants and bars. In the first two examples, the average check was only $20. In this example, we worked with a higher-end restaurant with an average check of $60. You can see how the return is higher as each conversion spent more in the restaurant. 

In this campaign for the steakhouse, our goal was to increase covers for lunch and dinner. We targeted seven nearby hotels and 22 restaurants. We tracked 22,630 impressions and 19 full conversions (customers who saw the ad and visited the restaurant). With an average check of $60, the $212 investment produced $1,140 in revenue.  

  • Investment: $212
  • Return: $1,140
  • ROI: $928

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

How to Optimize the Effectiveness of Geofencing Campaigns

These examples of geotargeting advertising show the results of just one campaign we ran with each client. It’s important to note that geofencing can be more effective each time you run a campaign. 

Each time you run a campaign, you gain data that can help you produce better results in the next campaign. You can identify what performed well and what fell flat and optimize your campaigns to focus on the more successful efforts.  

To increase the effectiveness of geofencing campaigns, you can:  

Update Messaging and Design: Test variations of messaging and design to see which resonates most with audiences. Sometimes something as small a change in color can impact results. Use data to see which ad variations perform the best and focus on running more of those ads.  

Optimize Targets Zones: As you run campaigns, you will get an idea of which target zone performs best. Turn off the zones that didn’t produce conversions and turn up campaigns around areas that performed well to improve overall campaign performance.  

Optimize Frequency: Your first campaign can help you see if you have the optimal frequency of impressions being served to an audience. Increasing budgets and optimizing the number of targets may be needed to achieve the best ad frequency.  

Optimize Ad Serving Times: Data collected from a geofencing campaign can also help you see which days and times perform best. By looking at this data, you can decide when to push ads or turn them off during your next campaign.  

By using all four of these tactics, you can make each geofencing campaign more effective than the last -- driving up results and ROI.

Learn How to Launch Effective Geofencing Campaigns

Geofencing can be a very effective way for your business to get in front of local customers near your business. It drives foot traffic while also producing long-term brand awareness, and the results are clear. Using data, you can see the actual ROI of your efforts.  

If you are interested in learning how you can launch geofencing campaigns for your business, let’s talk. Schedule a free chat with our team to learn more about how we have produced high ROI for clients using precision geofencing campaigns.