As advertising becomes more expensive and consumer groups become more fragmented, some marketing firms are using geospatial data to create geofences in specific areas. This allows them to advertise to audiences more likely to become customers, while avoiding wasting money marketing to those who likely won’t buy from them.
So what is geofencing marketing, and how does it work? What are the specific reasons advertising firms are utilizing it? And how can you take advantage of it for your own marketing efforts? We’ll answer all these questions and more in the following sections:
We’ll start by explaining in more detail what it means to advertise using geofences, including why it’s becoming a popular marketing tool.
Geofencing marketing involves setting up virtual boundaries around a point or area that track whenever someone with a mobile device crosses them. When this happens, it causes a notification that advertises a nearby store, brand, service, or product to be sent to that person’s mobile device.
This is sometimes also referred to as geofencing advertising, and it’s an important new technique for more accurately targeting a company’s most likely customers. To understand why, first think about how traditional advertising works. A company sends out ads through mass media channels (e.g. TV, radio, newspapers, magazines, and flyers) that attempt to appeal to as broad an audience as possible. This is a rather random approach, though, as the people they reach may be as likely to have no interest in what the company has to offer as they are to actually want the advertised products or services.
In contrast, geofencing allows marketers to define specific spatial boundaries within which their ads will be deployed. This allows them to target nearby people who are more likely to shop at a particular business because of proximity, demographics, brand affinity, and other attributes. This is far more effective and cost-efficient than relying on wide-ranging, highly-random, and expensive mass advertising.
There are three main ways to create geofences. The first is with a centroid radius. This involves locating the center point of a building or property, and then calculating a certain distance away from that point (i.e. a radius) in every direction. This creates a general proximity zone that will send out ads whenever someone with a mobile device gets sufficiently close to a point of interest.
The second is with a walk or drive time, also known as an isochrone. This involves calculating the amount of time it takes to get to a particular point from any other location using available transportation methods. A company can then send out ads only to people who can travel to their business location within a specified amount of time. This is a more specific type of geofence that allows for marketing based on how easily people can get to a business, rather than how close they are (as nearby people may still have trouble getting to a business because of obstacles or a lack of transportation routes).
The third is with building footprints. This method uses measured polygons to represent the exact physical boundaries of a point of interest, whether that’s an entire building, a park, or a store unit in a mall. Then a business can send notifications only to people who actually set foot inside the building or on the property. This precisely targets people who, in visiting a business, are signaling a potential intent to buy something from them.
We’ve already talked a bit about how geofence-based advertising is different from traditional marketing. Now let’s take a deeper dive into four specific advantages it provides over doing things the old-fashioned way.
One reason that geofencing ads are often superior to traditional ads is that they’re delivered almost instantaneously in response to a potential customer’s actions. As a business owner, you don’t have to wait for someone to read a newspaper or magazine, or be near a TV or radio at a specific time, to be exposed to your ad. As soon as they cross your geofence, you can start marketing to them immediately.
This is also a more relevant time to reach customers, as they are right near where they are able to buy from you. In other words, you don’t have to count on them remembering your advertisement until the next time they decide to go shopping in the area near your store.
Another advantage to advertising with geofences is that they cover specific geographic areas. This allows marketers to deploy them in places where they expect likely customers to be. Contrast that with mass marketing, which is deployed throughout large geographic areas such as cities, regions, or countries. That makes it much more random in its ability to reach interested consumers.
The fact that geofence marketing campaigns can be deployed in precise locations also makes them cost-effective. Mass advertising is expensive because it takes a lot of resources to disseminate a message across a broad geographical area. That, and it’s based on the belief that more exposure is always better.
When marketing with geofences, though, you only have to pay for ads in the specific areas in which you deploy them. And if deployed correctly, they can reach a much higher concentration of people who are more likely to become customers.
Since geofences can be created in a number of different ways, they’re also adaptable to your marketing strategy. You can set them up to cover a proximity around your business, or just the grounds of the business itself so you only advertise to people already inside your store.
You can also set them up for areas within a certain transit time away from your business, or at nearby places that get high foot traffic, so people know your business is an accessible option. You can even set up geofences near competitors so that consumers will know your business is an alternative if they don’t find what they’re looking for at the right price.
Marketing is an industry that is increasingly becoming about personalization, so you can’t just set up geofences randomly around your business and expect to make tons of conversions. You need to understand who your customers are, where they are, where they go, and when they go there. Here are four tips for getting the most out of your marketing geofences.
A big issue with mass marketing is that it often blindly reaches out to people who have absolutely no interest in the products or services being offered. But marketing geofences can suffer the same problem if they’re set up with little regard for who they’re going to target.
That’s why it’s important to research the demographics of nearby populations before you set your business’s geofences up. This will give you hints as to which census block groups will most likely yield customers, so you can position your geofences accordingly.
Depending on your marketing strategy and your business’s geographic situation, certain methods of creating geofences may work better for you than others. For instance, let’s say your store is surrounded by competitors you want to take market share away from, or complementary businesses you want to cross-promote with. In this case, you may want to create geofences based on building footprints. This lets you target those exact locations while avoiding other unrelated businesses.
In another scenario, you may want to take advantage of your business being close to one or more popular tourist attractions. Here, you might want to set up radius-based geofences with help from point of interest data and property data. Or if your business is accessible to other nearby areas where people tend to hang out, you may want to create isochrone geofences based on mobility and transportation data.
Just as important as knowing who is close to your business and where they go is knowing when they’re going to be there. You need to calibrate your geofences to deliver appropriate marketing messages for certain times of day. For example, if you run a restaurant, using geofences to advertise your breakfast special when it’s already 8:00 PM is likely not going to result in many conversions.
Also keep in mind that people from particular demographics may be more likely to visit specific places at certain times of day, or on certain days of the week. So be sure to adjust the messaging your geofences are sending out to target the right people at the right time. Mobility data can help you determine when people visit specific stores or neighborhoods.
Whether you’re using POI, property, mobility, demographics, or transportation data to inform the building of your advertising geofences, make sure you get it from reliable sources. If your calculations, polygons, or other data are incorrect, you could end up with some very big problems.
For example, you might overextend your geofences’ reach and thus overrepresent your audience. Or you might position your geofences near census block groups that aren’t your target audience. Either way, you’ll end up overpaying for marketing that’s reaching people who are likely not going to become customers anyway.
On the other hand, having incorrect data may cause you to set up geofences that are too small or otherwise fail to catch at least some of your target demographics. This may make it look like your advertising campaign was unsuccessful. But the reality is that it just underperformed because bad data prevented it from reaching the people you most wanted to connect with.
Whether it uses geofences or not, you’re going to want to measure how impactful an advertising campaign is in driving sales or other goals for your business. But how you do that when using geofences for marketing may be a bit different than what you’re used to. After all, you’re tracking stats that are based on physical places, but some of them may be digital in nature.
Here are some top metrics to consider:
So what does advertising using geofences look like in action? Here are a couple of geofencing advertising examples: companies who have honed the precision of their marketing campaigns by using geospatial data.
Billups was trying to accurately measure impressions and conversions on its outdoor ads. Part of the solution was cross-referencing anonymized mobile device GPS data with POI data. This let them estimate the route someone took and what billboards they encountered along the way.
Tracking online conversions related to these ad impressions is easy due to web technologies such as cookies. But it’s more difficult for physical stores because anonymized mobility data can’t always accurately reveal whether a person visited a specific store. The person may have just parked in the parking lot or visited an adjacent store, for example.
That’s why Billups turned to polygon-based property data. They used it to build geofences that matched the building footprints of the stores they wanted to measure conversions for. This allowed them to accurately determine if a person who saw one of their ads visited a particular store.
Media Storm was running advertising campaigns for its clients to re-engage customers who had simply visited stores. The goal was to turn these visitors into purchasers, and preferably keep them coming back. They began by tracking anonymized GPS locations from mobile devices, but it wasn’t that helpful in determining if a person had visited a client’s store – or even a competitor. The reason for this was that they didn’t have accurate information on the precise locations of their clients’ stores, or those of their competitors.
Centroid-based proximity models were ineffective as well, especially in crowded environments such as malls or downtown city neighborhoods. They ran the risk of including people unrelated to the conversions of their clients or competitors. These included visitors to nearby buildings or pedestrians out on the street.
The solution was to use property data, based on polygons that matched the building footprints of client and competitor stores, to construct geofences. When Media Storm combined these with the anonymized mobility data it had licensed, it was able to determine exactly how many people had visited a client’s or competitor’s store – while ignoring people who were nearby but were not visitors – much more accurately.
There you have it: an introduction to why and how to use geofences to power advertising campaigns. Of course, you’re going to need accurate geospatial data to build them, and a great place to start is with SafeGraph’s Geometry data.