How Does Geofencing Work in Digital Advertising?

Are you pretty happy with the local ads you’ve seen recently on your smartphone? Maybe you walked into a mall, then saw a Facebook ad for a store you like. That could be because of geofencing technology. Geofencing technology is the latest hot strategy in the digital advertising world. Next, we’ll explain why. 

What is Geofencing Technology?

So, what is geofencing technology? Geofencing technology helps companies target their coveted audience by providing a virtual perimeter. If you utilize geofencing technology, when a member of your potential target audience steps inside that perimeter, they will activate ads or push notifications for your business. Hopefully, this will persuade your audience to visit your physical location.  

It might sound like a novel idea, but geofencing technology is being used every day on platforms you probably use, too. Like Facebook, and in pay-per-click advertising. But how does geofencing technology work? In this article, we’ll explain more about how geofencing technology works, some different kinds of geofencing ads, and how geofencing might be able to help your business. 

How Does Geofencing Technology Work?

Geofencing technology is a location-based marketing strategy. That means it uses GPS signals to know when a potential customer enters the perimeter. 

For example, your business can set a boundary near your physical storefront where you wish to target customers. These can be set up pretty much anywhere. 

Geofencing is a highly specific digital advertising strategy that allows you to target customers based on how close they are to your storefront. Generally, a business might use a geofence around an event or a conference. Where you place your geofence depends on who you want to target. 

For example, if a company is having a big sale and wants to make potential clients aware, they can set up a push notification for whenever the client enters the geofence. 

What is a Geofence?

A geofence is usually used by a business to target a specific audience within a specific geographic boundary. The boundary is invisible and created using GPS technology. It is called a “fence” because that is what it looks like on a GPS map! 

How Does Geofencing Target A Particular Audience?

When your chosen audience steps inside your geofence, they are targeted with ads for your product, service, or storefront. The ads could be push notifications, texts, or even pay-per-click ads. Let’s discuss the different kinds of geofencing advertisements you can use to target your audience. 

Push Notifications

First of all, if you aren’t sure, a push notification is a message that is sent through an app and appears on your cell phone’s home screen. The app doesn’t have to be open on your phone for you to receive a push notification. It shows up on your phone, just like a text. 

So, for example, perhaps you have opened a sporting goods store and there is an app that goes with it. You can use a geofencing campaign to send those people who have downloaded your app notifications when they are near your store. If you are having a sale on sports jerseys, and someone is nearby who has downloaded your app, a push notification will show up on their phone that tells them about your sale. Hopefully, they will be inspired to head inside and check it out! 

Text Message

You can also target your customers with text messages, if you have their phone numbers. You can send an automated text message with geofencing technology to your customers when they are within your geofencing perimeter. You can simply remind them via text that they’re nearby your store, or let them know about a sale or a new product you’re featuring. It’s up to you! 

PPC Ads

We all know that a regular pay-per-click, or PPC, campaign is an excellent advertising strategy to make contact with your target audience. But did you know that platforms like Google Ads also offer location targeting? It’s just geofencing, but without the perimeter. 

In this instance, the ad will be available when the possible client walks inside your geofence perimeter. For example, maybe you own a deep-dish pizza spot in Chicago. Some friends visiting the city are strolling down the street, and they’re looking for the best pizza restaurant. Since you serve deep-dish pizza, you can use the keyword “deep dish pizza” in your ads. 

Then, you can use geofencing technology to put a perimeter around, for example, a two-block radius around your restaurant. Then, anyone who is searching for your keyword (“deep dish pizza”) within that radius will see your ad. 

But, keep in mind that just because you used that particular keyword in your ad doesn’t necessarily mean that a potential restaurant-goer will definitely see your ad. First, you have to decide how much you can pay when someone clicks on your ad. If you are paying less than your competition for that keyword, unfortunately, the tourists will see their ad and not yours. 

So, if you can outbid your competition for the keyword you need, geofencing works well for pay-per-click ads. 

Is Geofencing Precise?

Geofencing is very precise. Geofencing technology uses a combination of GPS, cellular data and Wi-Fi data, which makes sure that your geofence is as accurate as possible. Since there are cell phone towers and Wi-Fi routers all over these days, the accuracy of geofencing borders is anywhere between 100 and 200 meters. 

However, in some rural places where there are fewer cell phone towers and Wifi hotspots, it might be more. Geofencing is the most accurate when smartphones have their Wi-Fi enabled and their GPS services activated. There are many brands that use geofencing and have great results. 

How Much Does Geofencing Cost?

Now, if you are interested in utilizing geofencing technology for your own company’s digital advertising strategy, you are probably wondering how much it costs. 

Unfortunately, because geofencing technology is relatively new, we can’t tell you exactly how much it will cost you. Plus, all agencies are different and will charge differently for this kind of technology. However, there are some factors that can affect the price of a geofencing campaign for your business: 

How Much You Are Willing to Spend on Your Ads

If you decide to go the route of pay-per-click ads as part of your geofencing campaign, it is important to consider your budget. If you are using long-tail keywords, which are more specific, your ads will probably be much cheaper than if you are using general keywords. General keywords are a lot more popular and draw a lot more competition, which means they are more expensive. 

How Many Locations You Have

Each location of your business that you need a geofence for will increase the price of your geofencing campaign. If you only have one location, obviously your campaign will be cheaper than if you have five stores you need to target with geofencing. 

Depending on a variety of factors, a monthly budget for a geofencing campaign will most likely cost you between $1,000 and $10,000. 

Are You Ready to Start a Geofencing Campaign?

If you’re ready to get started with a geofencing campaign as part of the digital advertising strategy for your company, reach out to us at SEO Design Chicago today!