Are the Benefits of Geofencing Worth It?

Location-based marketing, such as geofencing, is a popular strategy used by small and large local businesses alike. The benefits of geofencing, or other location-based marketing strategies are worth considering. Strong local marketing strategies can help you increase sales and improve brand awareness.

With geofencing specifically, business owners and leaders can harness the capability of smartphone GPS to connect with customers as they enter a certain geographic area.

The geofencing market is expected to continue growing steadily at approximately 24% annually until 2025. It’s clear that companies are taking advantage of the benefits that geofencing offers. You too can use geofencing to remind customers of your business and to connect with new visitors.

Keep reading below to learn about how geofencing works, the benefits of geofencing for local businesses, and how small businesses can create successful geofencing campaigns.

What Is Geofencing?

Geofencing allows businesses to advertise to consumers within specific geographical boundaries. For example, if a consumer enters a city in their desktop or mobile browser, they may receive app notifications, or location-based ads may appear in the search results in their browser. Some businesses also use text messages and social media ads in their geofencing campaigns.

On top of marketing, geofencing can also be used to:

  • Track deliveries or vehicles
  • Automate employee time-tracking
  • Monitor property
  • And more

A geofence can be as large as the city or town in which you’re located, or it could be as small as your individual store. Keep in mind, however, for your campaign to be successful, consumers must have GPS or location services turned on.

Businesses That Take Advantage of the Benefits of Geofencing

Approximately 95% of companies worldwide are already using location-based marketing, such as geofencing. Large and small businesses alike are taking advantage of the opportunity to attract local audiences.

Many different types of businesses can benefit from using geofencing. Some examples of geofencing campaigns may include:

  • Coupons or sales advertisements
  • Event notifications
  • Social media sharing, such as Snapchat’s location-based filters

Just about any retail or business-to-consumer (B2C) business can further their marketing strategy by using geofencing. Local businesses can especially benefit from geofencing by using it to connect with local customers on a regular basis.

The Benefits Of Geofencing For Local Businesses

Almost 90% of marketers have experienced increased sales, more customer engagement, and a deeper understanding of their audience from using location-based marketing. Below is a more in-depth look at the benefits of geofencing.

Connect With Your Audience At The Right Time

Geofencing allows you to connect with your audience when they are in a certain location. Businesses have the ability to set up a geofence around areas where your audience is actively looking to make a purchase.

For example, local businesses have the opportunity to connect with the 71% of consumers who are interested in walking around towns or neighborhoods. If a business can send notifications while people are actively exploring the area, those people are more likely to visit the business.

Increase Sales At A Specific Location

When you are able to put business or brand information in front of a customer at the right time, you’re more likely to convert them. If you get the messaging right in your geofencing notifications, smartphone users are more likely to visit your store and make a purchase.

Geofencing can be especially helpful for local businesses that are trying to connect with their audience. In addition, businesses with multiple locations can create geofencing ads that have location-specific information. For example, special sales or events may entice local customers.

Collect Customer Data

Unlike other marketing strategies, geofencing campaigns can provide data about your target audience in real-time. You can learn about how many people visit the area, how many are viewing your ads, and more. Some data can also tell you which stores your audience goes to and the areas they visit.

Businesses can use this data to tweak their campaigns quickly, such as editing ad content or resetting the boundaries of the geofence. In addition, businesses can identify opportunistic physical locations for a storefront, pop-up stores, or physical advertisements.

Personalize Your Audience’s Local Experience

If you want to stand out from your competitors, it’s crucial that you personalize your advertisements to your audience. Apart from gathering real-time data, geofencing also allows you to personal ads in real-time. For example, your ad could welcome a customer to your area or promote a current community event.

You can also use geofencing for faster A/B testing. Provide your audience with two different geofence campaigns, and you can measure any differences in engagement in real-time. This helps you further personalize your audience’s experience because you discover the content to which your audience best responds.

Increase Brand Awareness

Any time you can get your name in front of your audience is an opportunity to make them aware of your business. Geofencing enables businesses to alert visitors of a store’s location that customers may not have been aware of before.

It can also be used to keep in touch with previous customers and remind them of your presence. Whether you’re connecting with old customers or new, a geofencing campaign will help increase brand awareness.

How Local Businesses Can Take Advantage of the Benefits of Geofencing

While geofencing can be advantageous to businesses, the campaigns can be more expensive than other marketing strategies. On average, geofencing can cost $3.50-$15 per 1,000 impressions (CPM).

Businesses must have the following resources to increase their chances of success with geofencing:

  • A marketing budget that can sustain your desired geofencing campaign
  • People dedicated to monitoring the campaign and making changes as needed
  • A deep understanding of your target audience and the local area
  • Knowledge of how to set up an effective geofencing campaign

It’s important that businesses have a deep understanding of their audience and how to set up a successful campaign to ensure they’re not wasting their marketing budgets. Take a look at the tips below to take advantage of the benefits of geofencing.

Know Your Audience

Knowing your audience allows you to create ad content that is more likely to catch their attention. At the very least, you need to have demographic information, such as age, gender, and more. It’s also highly useful to know additional data, such as your audience’s interests and shopping habits.

You can use data from previous customers, social media, and other interactions to learn what kinds of offers your audience will like. In addition, you can gather more data from your geofencing campaign to edit your ads and increase your ROI.

Know Your Competitors

There are many benefits to completing a competitor analysis. You can learn about how your audience has reacted to your competitor and their advertising campaigns. This data can be used to give you direction and inspiration for your own marketing plans.

In addition, geofencing allows your business to set geofence boundaries anywhere, including your competitors’ locations. If you’re able to place ads in front of your audience while they are shopping at a competitor’s store, you may be able to convert some of them to your business.

If you want to create a geofencing campaign around your competitors, be sure to have a general idea of their pricing and sales events so that you can create offers that will entice your customers.

Set Up Effective Geofence Boundaries

While some business owners may think it’s better to invest in a larger geofence, this isn’t always the case. If you make your geofence too large, you might be targeting customers who are too far away to want to take advantage of your offer.

The size of your geofence will depend heavily on how people reach your business and what the rest of the area looks like. If you are located in a walkable location, you may want to have a smaller geofence that people will see while they’re walking through the location.

On the other hand, if people primarily drive to your store, you can widen your geofence to capture people who are entering the area and will only have only a few minute’s’ drive to you.

Another great use of geofencing is during events. For example, if your business has a booth at a festival, you can set your geofence to encompass the festival grounds and let attendees know you’re there.

With these examples in mind, it’s important to remember that your geofence boundaries are an important factor that will determine your ROI. You don’t want to spend too much when you could be spending less and get the same number of visits from people nearby.

Create High-Quality Ad Content

To increase the chances that your audience will respond to your geofencing campaign, you need to make your ad content relevant and actionable. Make sure it’s specific, has a great offer, and personalizes your audience’s experience.

You may want to give your audience a sale price or discount, tell them about a specific item, or mention something specific to them. This could be as simple as including their name in the ad or welcoming them to the city or location.

Your ad should be actionable. One study revealed that marketers using location-based marketing had the most success with the following calls-to-action (CTAs):

  • Learn more
  • Shop now
  • Buy now
  • Click here

If you don’t make it easy for your audience to follow through with your offer, the less likely they are to do it. Therefore, make sure you write ad copy that gives them specific information and makes it easy to contact you, make a purchase, sign up for your event, etc.

Use Metrics To Track Effectiveness and Gain More Benefits of Geofencing

With any marketing plan, you must track metrics to determine if your campaign was effective and how you can improve in the future. Metrics to track for geofencing campaigns include:

  • Ad impressions or views
  • Click-through rate (CTR)
  • Cost per mille, or cost per 1,000 impressions (CPM)
  • Cost per click (CPC)
  • Conversion zone visits, or how many people visit your store after seeing your ad
  • Cost per visit
  • Cost per action, such as a phone call or sale
  • Walk-in rate, or the percentage of people who come into your store

These metrics can help you understand if people are seeing your ad and how they respond. If you find that your audience isn’t responding to your ad the way you want them to, you’ll know it’s time to make some changes.

Let OMG Help You Gain the Benefits of Geofencing

One of the fastest ways to gain the benefits of geofencing? Hire OMG do it for you!

We recognize that as a business owner or operator, you need to focus on running your business. Learning the ins and outs of geofencing may not be what you or your team has the time to do.

That’s where OMG comes in. The OMG digital marketing team can create, optimize, and manage your geofencing campaign from start to finish for you. Specifically, we’ll develop a campaign that aligns with what you’d like to achieve in your business, create a strategy that brings foot and/or web traffic to your business, monitor the campaign’s performance and tweak for best results.

Want to chat about how OMG can help you create an ROI-driven geofencing strategy for your local business?

Complete the form below and we’ll set up a strategy session with you.

About O’Rourke Media Group

O’Rourke Media Group operates in six states with a full-service digital agency and 24 publications and hyperlocal websites. Our team of marketing experts specialize in providing customized digital marketing strategies and solutions for any size business and budget. We’re also a hyper-local community news publisher with an engaged audience of print subscribers, digital subscribers, website page views, social media followers, and email newsletters.