The Ultimate Guide to Geofencing for Marketing and Beyond

Marketing companies and business departments are increasingly using a powerful geospatial tool: geofencing. With geofencing, advertisers are able to deliver targeted messages to specific locations and demographics, without wasting as much effort and money sending messages to people who aren’t likely to become customers. Many other individuals and organizations are also finding use cases for geofencing.

So what is geofencing? How does it work? And how and why are marketers (among other people) using it to streamline their operations? This guide will give you a quick but thorough introduction to geofencing, including the following topics:

  • What is geofencing?
  • How does geofencing work, and what does it do?
  • 7 benefits of geofencing
  • What is geofencing used for, and who uses it?

We’ll start with a brief geofencing definition in an attempt to explain, in simple terms, what geofencing is.

What is geofencing?

Geofencing is the process of drawing a virtual boundary around a real-world place with computer software. When the software detects a location-enabled device crossing this boundary, it triggers one or more context-dependent actions. A common one is sending a push notification to a mobile phone.

Of course, this is a rather reductive way to describe geofencing’s meaning. So the next section will dive into some finer details about the way geofencing works.

How does geofencing work, and what does it do?

Geofencing starts with drawing a virtual boundary around a real-world place with a computer program. Sometimes it is just a radius around a specific point, or sometimes it is a polygon representing the exact spatial extent of a place. Geofences can also be small or large, encompassing everything from a single building to the entire area covered by a postal code.

Geofencing technology is designed to pick up signals sent out by location-enabled devices – commonly mobile phones – when they cross the geofence. These signals include GPS, WiFi, cellular data, and radio frequency ID (RFID). Geofences are often built directly into the coding of mobile apps, and usually require the user to consent to enabling an app’s location-based services before the geofences will work. This is mainly done to address privacy issues with geofencing and other forms of location-based tracking.

So what does geofencing do? Quite a few things, actually. It is mainly used in marketing to send push notifications, text messages, and other alerts to nearby shoppers. But it can also be used to track people, vehicles, or items when they enter or exit a certain area, and can even be used to disable some technologies in the process. We’ll get into some specific use cases later.

Now that we’ve answered the question “How does geofencing work?”, we’ll answer another one: why use it in the first place?

7 benefits of geofencing

So what's geofencing good for? Well, the main reason to use it is to track activity across pretty much any area you want. And that area can be as broad or as precise as you want, often right down to an individual building. That way, you can monitor only the places that are important to you and leave out areas that are irrelevant to your purposes. This has major implications in advertising, but also for some other industries and use cases.

Among other things, geofencing:

  • Makes it easy to reach people: Many people these days carry a mobile phone with them to research things and stay in touch with contacts. This is especially true of those who live in urban areas, where there tend to be a lot of stores. So geofencing represents an easy way to reach potential customers without a lot of effort.
  • Allows for better-targeted advertising: Geofences allow marketers to limit their marketing efforts to specific geographic areas. They can even be tuned to send out different messaging to match consumer preferences or special events happening in the area. This allows a company to advertise to people who are most likely to become customers, at the places where those people are most likely to be found.
  • Has immediate impact: Most people don’t take more than a few minutes to start reading mobile phone messages after they receive them. Since geofences automatically send out messages as soon as someone crosses them, they represent a way to get a person to do something when they’re in exactly the right area to do it.
  • Helps a brand stand out: Stores in busy urban areas likely have many rivals nearby. Marketing with geofences lets a store or brand stay at the top of customers’ minds and gives customers reasons to shop with them instead of at competitors.
  • Costs less money: Mass advertising is expensive because it sends a company’s messaging out over a broad area. It’s also not very cost-efficient because the consumers who receive that messaging are equally as likely to be interested in it as not. Geofence-based advertising solves these two problems by only targeting specific areas and demographics that a company is likely to get conversions from.
  • Can be used to gather data on consumers: Geofencing can also be used to collect information, which can make it a very effective trade area analysis tool. A company that sets up geofences in an area can learn about things there like foot traffic patterns, popular nearby stores, how long people stay in one place, how often their messaging leads to a conversion, and which demographics convert most often. The company can then use this data to inform their other marketing efforts.
  • Can track the movement of people or other things: Though subject to privacy stipulations, geofence monitoring has applications for a number of businesses and other institutions. For example, they can track their property or products to prevent them from being stolen or used improperly. Or they can track people or animals to tell when they enter or exit a specified area. This helps to improve efficiency by curbing the unnecessary loss of assets.

What is geofencing used for, and who uses it?

Part of being able to define geofencing is explaining who uses it, and for what purposes. We’ll begin by summarizing what geofencing is used for in some different industries and business roles. Geofencing is used in:

  • Market research / advertising: Trade area analysis in order to target advertisements at specific areas and demographics.
  • Asset management: Tracking when items leave a specific location, and restricting access to them if necessary.
  • Fleet management: Tracking logistics vehicles to make sure they’re going to the correct destination(s).
  • Drone management: Issuing a warning or deactivating a drone if it enters or leaves a certain area.
  • Pet and livestock care: Alerting owners if pets or livestock wander off a property.

So what is geofencing used for – or what can it be used for – specifically in these scenarios? Here are a few more in-depth examples.

1. Converting customers from competitors

A clever way that some marketers have used geofencing is by placing geofences around locations owned by competitors. That way, when people enter rival stores, a company can send them targeted advertisements showcasing things like better product selection, lower prices, or discount opportunities. That may be enough to get consumers to at least visit the advertised company (especially if they don’t already know where the company’s stores are located). They might even buy something, and that could be the beginning of a full-on brand loyalty switch.

2. Measuring conversion rates of ad campaigns

Marketers can combine the advertising and data-collecting capabilities of geofences to gauge how effective their campaigns are. For instance, they can create advertising geofences to count how many people entered the areas where they’re serving digital ads, or were exposed to a physical advertisement (such as a billboard). Then they can create visit attribution geofences around the businesses they’re advertising to measure how many people actually entered stores.

3. Connecting a business’s offline and online presences

Another way companies can use geofence-based advertising is to increase online customer engagement. They can set up geofences to notify people who enter their stores (or even just pass by) of where to find their website or social media accounts. This can prompt people to go online for more information, news, and even discounts from the company. Customers can also go on social media to ask questions or provide feedback, helping the company improve its products and services.

4. Providing services or information from within apps

Many modern companies have their own mobile apps, or are partnered with companies that have apps. They can use geofences to mark out certain points of interest and offer useful information about them. For instance, they can point out which nearby locations have free WiFi available. Or, if it’s an app for a particular brand, the app can notify the user when they’re near a store that sells that brand’s product. This helps to keep the company or brand at the top of consumers’ minds because it isn’t just selling to them; it’s doing something to help them out.

5. Tracking, securing, and recovering property

Businesses can install location-enabled devices in their products or office supplies. Then they can set up geofences to track whenever one of these items leaves their office, warehouse, etc. This can help reduce expenditures by limiting theft that requires them to repeatedly replace their assets.

This is especially important for computers and other digital equipment that is meant to only be used on the premises because it contains confidential information. A geofence can be programmed to automatically lock these devices if they are taken outside the building or office complex.

6. Coordinating logistics operations and systems

Companies that maintain fleets of trucks for delivering products or otherwise moving things around can make use of geofences as well. They can set up geofences as virtual checkpoints along their trucks’ routes. On a basic level, this can help them make sure their trucks follow their prescribed routes, as well as actually make it to their destinations and back.

Companies can also use these geofences to do things such as test different truck routes for speed efficiency, accounting for things like traffic and weather. As an extension, they can also compare the average time spent on specific routes with how long a particular truck is spending on a route. This can help them evaluate things like driver performance and fuel efficiency.

7. Ranching and pet care

Ranchers can create geofences around their properties and then attach tags, collars, or other location-enabled implements to their livestock. That way, if an animal breaks through a physical fence or wanders away, the geofence can immediately alert the ranchers as to where and when it happened. This allows them to quickly find the animal before it gets too far.

As an added bit of security, geofences can be programmed to give livestock very mild electric shocks when they cross one. These shocks aren’t enough to harm the animal, but they may be enough to deter it from going somewhere it isn’t supposed to. Some who own pets that like to run around outdoors also use geofences this way.

8. Protecting people and property from drones

Flying drones can be used for things like racing, delivering items, and taking photos or videos. However, they can be dangerous or privacy-invasive if they are used improperly. That’s why organizers of sanctioned activities can set up a geofence location so that the drones only operate within that specific area. If a drone is piloted outside of this zone, the geofence can warn the operator or even shut down the drone if necessary.

For anyone who has ever wondered, “What does geofencing mean?”, we hope this overview has given you an idea of what geofencing is, how it works, why it’s used, and what it can be used for. Of course, to make geofencing work properly, you need to have accurate location data with which to build your geofences. Let SafeGraph take the worry out of that for you with our trusted Places and Geometry datasets for points of interest and building footprints, respectively.


To learn more about geofencing, check out our blog.