Geofencing Marketing & Ads 101: A Guide for Local Businesses

Starting a business requires a lot of attention to detail, and one aspect you must pay close attention to is your marketing strategy. Marketing your business can get very expensive quickly. This makes it important that you learn how to target your efforts to your ideal audience.

This is where geofencing marketing comes into consideration. These strategies can help small and local businesses ensure that their efforts make an impact on their target audience.

How geofencing really works in digital advertising platforms

Most business owners will think of geofencing as a single tool, but it’s actually available across several advertising platforms, each with its own strengths. Google Ads lets you set a location radius around your business or a specific address, showing search and display ads only to people within that boundary. This works well if you’re already running paid search campaigns.

Meta Ads takes a similar approach but layers in behavioural targeting, so you can combine location with interests, past engagement, or purchase behaviour to reach people who are both nearby and likely to convert. Programmatic advertising networks go a step further, buying ad space across thousands of apps and websites in real time based on a device’s location data, giving you reach well beyond a single platform.

On top of paid advertising, geofencing can also trigger direct communication. Many businesses connect their geofence to a CRM so that when a customer or lead enters a defined area, an SMS or automated message goes out immediately, whether that’s a reminder about an appointment, a limited time offer, or a nudge to visit a physical location. It’s this combination of paid media and direct messaging that separates a basic geofencing setup from one that actually drives foot traffic and revenue.

What Is Geofencing Marketing?

Geofencing means you are marketing based on the location of your audience. This involves the use of GPS to set virtual boundaries around the locations you want to target. Consider, for example, that if you have a dog grooming salon in Florida, it will make no sense to market to pet owners in Michigan. It is better to send relevant messages to people in areas that make sense for your business.

This type of marketing gives businesses the opportunity to interact with a local audience through desktop and mobile marketing. One common strategy is to use geofencing to engage users within your area using text messages or emails. You can also use geofencing advertising to send offers to potential clients when they do a search near you.

As a form of local SEO, geofencing makes a difference because it allows two of the most important factors, location and time, to influence your marketing plan. You also see more conversions because of the increase in foot traffic to your business.

Geofencing is an important tool for local businesses to consider because it keeps your advertising dollars working hard for you. This makes it easier to grow your business.

Knowing the difference: Geofencing vs geotargeting vs geoframing

These three terms get used interchangeably, but they describe different approaches to location based marketing.

• Geofencing is real time: it draws a virtual boundary and triggers an action the moment a device enters or exits that zone, which makes it ideal for time sensitive offers or on the spot engagement.
• Geotargeting is more static, serving ads to people based on their general location, such as a suburb, postcode, or city, without needing them to physically cross a boundary at that exact moment.
• Geoframing sits somewhere in between, using historical location data to identify people who have visited a specific place in the past, such as a competitor’s store or an event venue, so you can retarget them later even if they’ve since left the area.

Picking between them comes down to what you’re trying to achieve. If you want to catch people in the moment, such as someone walking past your shopfront, geofencing is the way to go. If you’re running a broader brand campaign across a service area, geotargeting is usually more cost effective. And if you want to reach people who’ve shown intent by visiting a relevant location in the past, geoframing lets you build that audience over time rather than relying on catching them live.

How Does Geofencing Marketing Work & How to Set Up a Campaign?

If you are still wondering “What is geofencing marketing?” then understanding how it works can help. The purpose of geofencing marketing is to identify users in your particular business range so you use highly targeted strategies.

You use geofencing marketing software to set up virtual boundaries around a business location, such as your store. Then, this virtual boundary tracks when someone enters it carrying their mobile device. When someone enters the boundary, your campaign sends mobile ads or push notifications to the person in question. This lets you target your customers with more specific ads without overwhelming them with irrelevant ones.

Geofencing marketing software relies on multiple technologies to track the location of users and send them relevant ads. These include:

• Bluetooth
• GPS
• IP address
• RFID (radio-frequency identification)
• Wi-Fi

At the outset, it can be confusing trying to figure out what steps you need to accomplish for your location-based marketing and advertising campaign. Here are the first steps in how to set up geofencing marketing.

1. Create an Ads Campaign

The first thing you will need to do is create an ad campaign. Decide which products or services you want to advertise and who you want to market them to, and then create the messaging. Make sure you use a clear, engaging call to action.

2. Set Up a Geofence

Once you have your ad campaign designed, set up your geofence around a geographic location. In most cases, you want to set up a geofence around the vicinity of your business.

3. Wait for Users to Enter Your Targeted Area

With your geofences established, it’s time to wait for users to enter the area. When users do so, they will be marketed to.

4. Start Delivering Ads to the Users in Your Zone

Once all your research and planning are complete, you can start delivering ads to mobile devices inside your geofence. Don’t forget to track the user experience so you can refine your geofencing marketing strategies later.

Building up a geofencing campaign (step-by-step framework)

Setting up a geofence is simple in theory, but a campaign that actually converts needs more planning behind it. Start with audience and intent mapping: work out who you’re trying to reach and what stage of the buying journey they’re likely in, since someone browsing a competitor’s aisles has different intent to someone walking past your own store.

From there, choose your location type, whether that’s your own premises, a competitor’s location, or an event or venue where your ideal customers are likely to gather, and decide on your radius. A walking radius suits high foot traffic areas like shopping strips, while a driving radius makes more sense for standalone locations like trade suppliers or car dealerships.

Once the boundaries are set out, the creative needs to match the proximity. Someone five minutes from your door responds better to an immediate, urgency driven offer than someone still ten minutes away who might need a softer introduction to your brand first. Finally, tracking setup should be in place before the campaign goes live, not after, so you can attribute store visits, calls, and conversions back to the specific geofence that triggered them.

Where geofencing actually delivers your ads

A common misconception is that geofencing only works through one ad format, when in reality it can deliver messages across several channels at once. Mobile display ads are the most familiar, appearing in apps and mobile browsers as someone enters your target zone. App based push notifications work similarly but require the user to already have a relevant app installed, which usually means retailers or venues with their own branded app. SMS triggers, sent via a connected CRM, bypass the need for an app altogether and tend to get read within minutes, making them useful for time sensitive offers.

Social retargeting overlays let you follow up with someone on Facebook or Instagram after they’ve entered a geofence, reinforcing the message they saw elsewhere. Programmatic ad networks tie all of this together by buying inventory across thousands of sites and apps based on location signals, giving your campaign reach that a single platform can’t match on its own. Most successful geofencing campaigns use two or three of these delivery methods together rather than relying on just one.

How Much Does Geofencing Marketing Cost?

Geofencing marketing cost ranges according to how large your geofences are and how many you have. You will notice that the geofencing marketing range will cost you between $4 to $15 per thousand impressions, called the cost per thousand impressions or CPM.

Some factors that go into determining your geofencing marketing campaigns’ cost include:

• Geofence Size

The first factor affecting the cost of geofencing digital marketing is the number of geofences you set up and their size. A larger geofence may lower CPM because the higher volume of traffic can drive the cost per impression down.

There is no limit on how large a geofence can be, but an excessively large geofence loses its effectiveness. The right size typically depends on your marketing goals. A good strategy is to set up a geofence around a five-minute walking or driving radius around your business.

• Data Layering

Smartphones have revolutionized how companies can advertise to their potential customers, but the number of factors, or layers of data needed, is also an influence on geofencing technology cost. Demographic targeting, behavior targeting, and re-targeting all cost something in addition to location data. They are a good investment as it ensures you are targeting your audience effectively.

• Number of Geofences

To make sure your geofencing marketing strategies are highly targeted, multiple geofences may be created. Adding more geofences will increase the cost.

• Geofencing Reporting Level

The level of reporting that business owners want for geofencing marketing campaigns also plays a crucial role in the cost. Remember that not all services will offer the same level of reporting, and you may have to pay a bit more to get the level of detail that you want.

Take the metric for number of impressions, for example. Some geofencing services will just show you overall figures for campaigns. Meanwhile, others will break down the number of impressions you get for each location.

Understanding measurement and attribution in geofencing campaigns

Knowing whether a geofencing campaign is working comes down to attribution, and this is where many businesses fall short. Store visit attribution uses location data to match a device that saw your ad with one that later walked into your premises, giving you a rough estimate of ad driven foot traffic. Call tracking works alongside this by assigning a unique number to your geofencing campaigns, so any enquiry that comes through can be traced back to the ad that prompted it. Most platforms also let you set a conversion window, the period of time after someone sees an ad in which a visit or call still counts as attributed, which typically ranges from a few hours to several days.

For businesses with an in-store point of sale system, offline conversion imports can match ad exposure to an actual purchase, closing the loop between ad spend and revenue. It’s worth keeping in mind that GPS accuracy has real limitations, particularly in dense urban areas or multi storey buildings, so attribution data should be treated as a strong directional signal rather than an exact figure.

6 Benefits of Geofencing Marketing

Geofencing is a powerful tool that can help your local business get the most out of your marketing campaigns. Taking advantage of geofencing will give your business the following benefits.

1. Enhances Local Sales

The world of internet marketing has allowed businesses to access a global audience and, therefore, a global market. You already use strategies like local SEO to reach a more relevant local market, and geofencing is an important addition to this. Simply put, by targeting people around your business, you increase your chance of turning them into customers.

Savvy stores include limited-time offers in their geofencing ads or rotate the promotions, changing them daily or at least several times a week. This will encourage shoppers to take advantage of your geofencing notifications, texts, or ads.

2. Is Cost-Effective

Geofencing marketing is cost-effective on multiple levels. For instance, it saves you money on overall marketing because it targets and retargets perspective audiences effectively.

Of course, the precision of geofencing is one of the biggest factors that makes it cost-effective. After all, you don’t have to pay to show an ad to everyone to ensure that it reaches the right people. You can just send it to the people who are within your virtual limits and therefore more likely to convert.

Remember that mass advertising is not only expensive, but it is also much harder to craft a message that appeals to everyone. More focused ads let you make more efficient use of your advertising budget and your time and energy.

Even better, when deployed properly, your geofencing ads will reach a much higher concentration of your target audience.

To make it even more cost-effective, geofencing gives you a variety of data and analytics that you can use to optimize your marketing. We’ll discuss what data to look for more below when covering tips for geofencing advertising.

3. Provides Flexibility

With geofencing marketing, you can be more flexible with your marketing strategies, as you can use the technology in multiple ways. The most obvious options are to set the geofence within a certain distance of your store or even within the store itself. It depends on whether you want to target people driving or walking by your store or you only want to target them once they are already inside.

You can also set up geofencing in areas with high foot traffic, especially where that traffic is relevant to your business. So, a store selling running gear could set up geofencing near a local outdoor track. Or set up geofencing in an area that is a set distance from your store. Take this a step further and set it up by a turn that drivers would have to make to get to your location.

Yet another idea is to set up geofencing near competitors’ locations. Use it to encourage shoppers to buy from you if they can’t find what they want or even to just buy from you instead thanks to promotions.

You don’t just get access to all these ideas with geofencing – you can also typically change them quickly and seamlessly. If you notice a campaign isn’t working, figure out what’s not working and fix it.

4. Allows for Personalization for Customers

Whenever you fine-tune your marketing strategy, you have the ability to personalize it for your clients. After all, you can more easily collect data that can then be used to optimize your offers.

You will also get more demographic information about your local audience, including their interests. You can then use that data to maximize sales. Imagine if you notice that local customers prefer a specific product. In that case, you could adjust your promotions or ads to feature the product more heavily.

5. Occurs at the Right Time

One key element of geofencing digital marketing is the fact that it targets your audience at the exact right time. The ads are sent nearly immediately based on the actions of the customer, such as entering your store or within a set distance of it. You don’t have to wait for a customer to see your ad on a billboard. You control the campaign’s timing.

Not only do you control the timing of the ad with geofencing, but that timing is when your audience is most likely to find the ad relevant. They are right next to your store, so they can act on the ad immediately. This reduces the risk of them forgetting about the ad or not having time to take advantage of it.

6. Improves User Engagement

Geofencing marketing also improves user engagement. This comes from a combination of the above factors. You are sending more relevant ads to a highly-targeted audience at the right time. This encourages customers to take advantage of the ads immediately or at least view them as relevant. At the same time, it prevents customers from feeling overwhelmed by irrelevant ads, something which could be frustrating and hurt the user experience.

Geofencing Marketing Tips

There are several ways you can market your business and many of them cost money. To help keep your marketing on a budget, follow these geotargeting tips.

1. Define an Effective Geofence

To define an effective geofence, you will need to effectively research your audience and your goals. You need to find an area to target where people will likely be interested in your business and be close enough to reach it easily. Your chosen area should experience heavy foot traffic from leads that you can target.

Looking for complementary businesses is an excellent strategy, such as the outdoor track mentioned for a running store’s geofencing. Or if you have an apartment complex that needs new tenants, you could use geofencing at a nearby supermarket, gym, or coffee shop.

Keep in mind that the best geofencing boundaries will be smaller. Otherwise, you are likely to promote your business to people who aren’t interested as well as those who are. When determining the right radius, think about whether your customers are more likely to drive or walk and use that as the basis for the distance.

2. Come Up with Attractive Ads and Offers

There are many ways you can attract new customers, but the most effective is to create ads that are attractive to your client base. This is where understanding your audience is crucial, as you need to know what will appeal to them.

You can use any of the typical offers you would in other ads, but choose it based on your audience. The following are some suggestions:

• A welcome gift
• A discount code
• A buy-one-get-one-free code
• Branded swag

3. Include Compelling CTAs

When designing your call-to-action, think about it being clear and actionable in order to be effective. For instance, ‘Stop by for our specials!’ is less actionable than, ‘Stop in and mention this ad for half off!’ The second will likely get you better results.

You must also keep in mind that your ads need to be developed to not look self-serving or spammy. Opt for inviting a potential customer to try it over telling them to use it. Your CTA should help you get the clients you are looking for without appearing to target them. At the same time, create a sense of urgency to maximize conversions.

4. Track Your Campaign’s Results

There are many metrics you should track when you are using geofencing marketing. Understanding impressions, the click-through rate, and other metrics will give you an idea of what your campaign is doing.

Some of the most important geofencing metrics to consider tracking include:

• Impressions
• Clicks and click-through rate
• Website visits
• Walk-ins
• Calls
• Cost per thousand
• Cost per call
• Cost per click

One of the biggest benefits of using geofencing marketing is that you track more data, so you get more insights into your marketing strategies’ performance. This increased access to data makes real-time revenue easier to generate.

5. Use A/B Testing

Once you start tracking geofencing data, you will also be able to test various versions of ads. Use A/B testing to compare two versions of text messages and see which one works better. This is crucial for making the most of your marketing budget.

Best geofencing use cases by industry (Australia)

Geofencing works differently depending on the industry, and Australian businesses across several sectors are already using it effectively.

• Retailers often set up geofences around competitor locations to intercept shoppers before they walk in, offering a better deal or highlighting stock a rival doesn’t carry.
• Automotive dealerships use a similar conquest strategy, targeting people who visit rival dealerships or attend car shows, since anyone physically shopping for a vehicle nearby is a highly qualified lead.
• Healthcare providers take a gentler approach, using geofencing to send appointment reminders to patients who are near the clinic, reducing no-shows without needing an intrusive marketing message.
• Trades businesses tend to use geofencing around their service radius rather than a single point, making sure they’re only spending on leads within a distance they can realistically service.
• Hospitality venues lean on proximity marketing around events and nearby attractions, reaching people who are already out and looking for somewhere to eat or drink.

Across all of these examples, there’s a commonality: the closer the geofence gets to matching genuine buying intent, the better the return.

Reach Your Ideal & Local Audience

There’s no one-size-fits-all solution for reaching your target audience, but there are plenty of tools that can help you reach your goals. Podium helps local businesses like yours reach the right customers at the right times.

By combining Podium’s text marketing solutions with your email marketing and geofencing efforts, you’ll be able to send targeted messages, increase sales, and grow more efficiently than ever before.  If you’re ready to take your marketing efforts to the next level by implementing a text marketing strategy, check out our library of 500 ready-to-use texting templates.