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Geofencing: Decreasing Audience to Increase Sales

Geofencing is an advertising and marketing tactic that is being used to create extremely specific target audiences. This tactic may limit the amount of people that see an ad, but the people that do interact with it are much more likely to make purchases, producing higher quality interactions between businesses and consumers.

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The advertising industry never stops looking for ways to improve how people experience content and for new ways to drive purchases. It is constantly adapting to a consumer landscape that rapidly continues to change. One tactic now being utilized is location based advertising, or geofencing. Geofencing uses a person’s  location and allows businesses in that vicinity to send a personalized message or show an ad. A business can set up a virtual perimeter around its location and once someone enters that “virtual bubble”, the personalized message will automatically send. Think of the business as a house and the perimeter as the house’s fence. The yard being enclosed by the fence is the area where people would receive a message. There are different varieties of messages being sent out within each perimeter, according to an article in Forbes Magazine, geofencing utilizes three varieties of ads: SMS messages, display advertising and social media advertising.

  • The SMS messages are typically discounts or promotions that are sent when someone enters the area. iPhone users experience something similar when they receive a severe weather alert. The message automatically sends to everyone in the affected area. Geofencing is similar, but instead of a weather alert, people receive a sale or discount notice for a store near by.
  • Display advertising is used by connecting with IP addresses around the location of a business, allowing native ads to be released in a designated area.
  • The social media advertising tactic pushes certain social media ads depending on the user’s location. So if someone walks into a fenced area while using social media, they will start to see promoted posts and ads for businesses in that area.

These messages are not random, though it may seem that way. The business can input certain criteria a person must meet before that message will be sent out. These specific criteria allow businesses to create a target audience that is much more likely to come into the store and make a purchase.

There are many different variations of geofencing, dealing with perimeter size and the type of content being used within the perimeters. The first perimeter being used is a large area around the location of a business and once someone enters the area, a notification is sent. The other perimeter type is much smaller, typically just the walls of the store. When a customer walks through the doors and enters the store, they’ll receive a notification about store sales and item discounts. While the business may be limiting the number of people that see the message, they are already in the store and much more likely to make a purchase. One example of a brand utilizing geofencing is Whole Foods. They set up geofences around certain stores to show targeted ads and special offers to people nearby. According to an article by Street Fight, this raised their post-click conversion rate to a rate three times higher than the national average. They also set up geofences close to competitors and sent their promotions out to sway customers to come to Whole Foods instead.

Geofencing is useful in the advertising industry and in social media because a much more specific target audience can be achieved and, as a A Small Biz Daily article states, it’s much more cost effective than traditional advertising. Instead of spending thousands, if not millions, of dollars sending out an ad to a large group of people who may have no interest in what is being promoted, advertisers can create personalized messages for people who have already shown an interest in a product or are in close proximity to that particular store. Social media is an instant medium, which is why it goes hand-in-hand with geofencing. If someone sees a tweet promoting a restaurant, looks up and is right next to that restaurant, it’s easier to get them to walk through the door.

While there are many benefits to using geofencing in an advertising campaign strategy, there are a few challenges, too. The first is, not being able to create a personalized message, causing the consumer to be offput from the business or brand. The second occurs when using a larger perimeter, someone might be targeted that has no intention of coming into the store. That’s where a skilled creative team can make all the difference. The key is to put out engaging, personalized content so it feels feels less like a sales pitch and more like a friendly invitation. An article by Be Found Online says that personalized content and a strong call to action creates a stronger relationship between the brand and consumer.

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