How often have you seen advertisements that don’t resonate with you? We bet it’s many times, whether on TV, online, or elsewhere.
To run hyper-personalized ads that your target audience resonates with, utilizing location data and geofencing marketing would be the ideal choice for many.
Geofencing marketing allows you to narrow the location you should be advertising for, target your audience, and run highly personalized campaigns that maximize your marketing ROI.
For instance, using our location data, we helped a major jewelry brand achieve a 30% increase in conversions in their geofencing marketing campaigns. We’ll dive deeper into this later.
But first, what is geofencing marketing? How does geofencing marketing work, and what should you be aware of to avoid common pitfalls?
In this article, we’ll dig into all these questions and more, starting from the basics.
What is Geofencing Marketing: Definition and How it Works
To define Geofencing marketing, In a nutshell, it is a location-based marketing strategy that targets a specified location where your ideal target audience is present.
Geofencing marketing starts by creating a virtual “fence” around a specific area where you want to target. You can then run various ads within these perimeter or fences.
The radius of these “fences” you’ll choose is what matters the most. Ideally, you should choose locations where your target group is present, foot traffic is high, and where the demand is unmet.
To pin down such location, Geofencing marketing utilizes various location datasets like foot traffic, customer demographics, etc. with location AI platforms like GeoIQ.
Our platform helps you identify where you should focus your geofences with our location data at a Pincode and city level. This granular-level targeting would ensure that you do not end up choosing a wider fence where your target group might not be present.
Once you have established the prime location you should target, you can then run various digital marketing campaigns such as,
- Facebook ads,
- Google ads
- SMS campaigns
- Email campaigns, etc.
Geofencing marketing does help in traditional marketing methods as well. If you have the right location data, you can pinpoint where you should place your Out of Home Advertising (OOH) and (Digital Out Of Home Advertising (DOOH) such as,
- Billboards,
- Digital billboards,
- Poster ads,
- Transit ads,
- Street furniture ads, etc.
These geofencing marketing campaigns usually drive more conversions, since you’ll be targeting the areas where your ideal target group and the demand are.
Moreover, since you avoid running ads in irrelevant places, you’ll be saving money, ultimately increasing Return on Ad Spend (ROAS).
Essential Location Datasets You Should Have for Geofence Marketing
As mentioned earlier, geofencing marketing requires various datasets to make your marketing campaign effective.
The right data allows you to identify high-potential areas, target the ideal audience, and maximize the impact of your marketing efforts. Let’s discuss this in a bit more detail.
Foot-traffic Data
With hourly, daily, and weekly foot traffic trends in a particular location, you can make data-driven decisions to maximize your advertising efforts.
By analyzing foot traffic patterns at a street level, you can identify prime spots for geofencing marketing campaigns, whether it’s near a competitor’s store, a shopping mall, or a high-traffic transit station.
In short, by understanding where your target audience is and the trade area of a location, geotargeted marketing will help you save both money and time.
Customer Demographics
Running geofenced marketing campaigns will not yield results if you don’t have a strong grasp on your target’s characteristics, such as their age, income level, spending capacity, purchasing behaviour, etc.
Combining demographic data with location data ensures that your ads resonate with the audience in the targeted geofence, increasing engagement and conversion rates.
Point of Interest Data (POI)
Places where your target group will likely go are called Point of Interest or crowd pullers.
Having this data, paired up with foot traffic trends will help you strategize your location-based marketing strategy. Understanding the overall context of a location and its surrounding locations helps in creating relevant and timely geotargeted ads that attract attention.
For example, targeting people near a coffee shop during morning hours with breakfast offers might lead to higher conversions.
Demand Prediction Data
If we pair up the above-mentioned data with any existing data – both implicit and explicit – you can identify locations with high demand that are still unpenetrated.
By analyzing patterns like foot traffic, customer demographics, and purchasing behavior, you can gain deeper insights into potential hotspots.
This comprehensive view allows you to fine-tune your geotargeting strategy, ensuring that your ads reach audiences with a genuine interest in your products or services.
How Our Location Data Helped Achieve 30% Increased Conversion in Geofencing Marketing?
At GeoIQ, we assisted a major jewelry brand in India by providing our location data to identify high-demand locations where their digital ad campaigns should be targeted.
The process of identifying these high-demand and untapped locations using various datasets is called demand prediction, as you may already know.
Demand prediction, traditionally, relies on internal data – such as sales figures, web traffic, and order histories – to forecast demand. The problem is that these forecasts show demand patterns only after they have emerged.
To tackle this and to identify underpenetrated markets before they develop, we applied our location data at a granular level across multiple locations along with the store’s existing datasets.
By analyzing data at a granular level, the brand could identify areas (catchments) with similar characteristics. By targeting these look-alike markets, brands can address potential untapped demand at the city or Pincode level.
By analyzing location data, we were able to identify three key market types for a specified area:
1. High-potential, underpenetrated market: Areas with strong growth potential but low current penetration.
2. High-potential, highly penetrated market: Locations where the market is well-penetrated but still holds significant potential.
3. Low-potential, low-penetrated market: Regions with limited growth opportunities and low penetration.
All these three market types can help you refine your marketing strategies accordingly.
For example, in a high-potential, highly penetrated market, you can focus on cross-selling by running ads for complementary products.
To capture new customers, the brand went with the underpenetrated market with high potential to run their digital ads.
Through our location data and demand prediction, we helped them achieve these results:
- 30% rise in conversion rate.
- 45% increase in Click Through Rate (CTR).
Similarly, geofencing marketing could utilize location data to run marketing campaigns in different channels.
How Geofencing Marketing Can Benefit You?
You can Run Targeted & Personalized Ads
Since you run ads after digging through footfall data, their characteristics, and more you can run more personalized, targeted, and timely ads. Your ads will strike a relevant feel among the customers.
Helps in Reducing Advertising Cost
By pinpointing locations where you should NOT run your ads will ultimately result in reducing overall advertising cost.
This ensures that marketing budgets are spent more effectively, and maximizing return on ad spend (ROAS).
Results in Higher Engagement Rate
Whatever the advertising medium you choose, be it digital ads or traditional ads like OOH or DOOH, you can expect your customers to engage with your ads better with geofencing marketing.
You can Expect Higher Conversion Rates
Geofencing marketing targets a specific audience already in or near a location of interest, so there’s a higher chance of them engaging with the ads as we mentioned earlier. This will indeed result in higher CTR and conversion.
These are just some of the benefits associated with location-based marketing.
What You Should Be Aware of When Choosing Geofencing Marketing?
Security and Privacy Concerns
Location-based marketing, just as the name suggests, relies on collecting and processing user location data, which can raise privacy concerns. So, it’s vital to understand from where you’re gathering location data. The data you collect should abide by government norms.
For example, since GeoIQ operates in India, we’re ISO-27001, HIPAA, and SOC-2 (Type 2) compliant.
Accuracy of Location Data
Geofencing marketing campaigns depend on accurate location data. Poor data quality can lead to ineffective campaigns that target the wrong areas or audience segments.
We collect data from more than 650 government and trusted public data sources such as national surveys and ministry reports, satellite data, etc. This ensures data accuracy while addressing privacy or security concerns related to data in geofencing marketing.
These challenges can be easily tackled by choosing a reliable location AI platform and altering your retail marketing strategies accordingly.
4 Common Mistakes to Avoid in Geofencing Marketing
Setting Up Too Large Fences
One of the most common mistakes in geofencing marketing is that you might end up choosing large geofences for your marketing efforts.
for example, if you are geofencing at a Pincode level, a single pin code would have high-rise apartments with higher rentals but also slums too.
So, the Target Group’s characteristics and spending patterns can vary drastically within a pin code, hence identifying granular catchments with the right TG is the key to maximizing ROI and reducing wasted ad spends.
Make sure you understand these things before you set up your geofences:
– Proximity to your business or POI/Crowd pullers
– Customer behavior and movement patterns
– Ad and content Relevance
Over-Saturation of Ads
There’s a fine line between marketing and being too desperate to sell. Make sure the ads you’re running strike a balance between these two.
For example, if you’re running location-based ads through any digital medium, sending too many ads or notifications can lead to ad fatigue and drive customers away.
Similarly, out-of-home advertising (OOH) backed by geofencing marketing may create fatigue if you place it too frequently in some cases, though it largely depends on your business.
Not Utilizing Exclusion in Marketing
Though you can pin down locations with your ideal target group and unmet demand, there would still be people who aren’t under the demographics you want to target.
So, If you’re running digital ads backed up by location-based data, you should have an exclusion list in place to avoid the irrelevancy of ads.
For example, you may want to target people of a particular age group based on your product. In this case, you should cap the age limit in the advertising platform you’ve chosen.
For traditional advertising mediums, this flexibility isn’t generally possible – except in the case of digital out-of-home (DOOH) advertising, where you can dynamically change the content based on footfall trends at different times.
Not Deciding on Budget and Ideal Marketing Channel
Choosing the right marketing channel is paramount for the success of any geofencing marketing campaign. One common mistake businesses make is not defining an ideal channel to reach their target audience.
Each channel – whether it’s social media ads, SMS marketing, Google Ads, Out-of-Home advertising, or DOOH – has its strengths, audience reach, and cost implications.
So, research which of these channels your target audience will most likely be and your overall marketing budget before jumping into geofencing marketing.
Not Optimizing Your Geotargeting Ads
Running geofencing campaigns without a proper strategy to measure and optimize along the way is a significant mistake some could make.
Always ensure you track some of the Key Performance Indicators (KPIs) Let’s go through some of the KPIs you should be tracking now.
KPIs You Should Track in Geofencing Marketing
Click-Through Rate (CTR)
Always measure how often users who see your ad end up clicking on it. A high CTR generally indicates that your geotargeted ads are relevant and engaging to your target audience.
Conversion Rate
Track the percentage of users who take a desired action after clicking on your ad, such as making a purchase or signing up for a newsletter. This helps in assessing the effectiveness of your campaign in driving actual results.
Foot Traffic Increase
This should be monitored both in the case of digital and traditional ad mediums. Oversee the change in the number of people visiting your physical location from targeted geofencing areas. This will help determine if your geofencing campaign is bringing in more customers.
Cost Per Acquisition (CPA)
Evaluate the cost associated with acquiring a new customer through your geofencing campaign. A lower CPA indicates a more efficient campaign in terms of cost and targeting.
Engagement Metrics
Look at user engagement metrics like time spent on the site, page views, or interactions with content after users click on your ad.
Return on Ad Spend (ROAS)
Calculate the revenue generated for every dollar spent on your campaign. This helps in understanding the overall profitability and effectiveness of your geofencing marketing efforts.
Regularly monitor these KPIs to fine-tune your geofencing campaigns for better targeting and higher ROI.
Conclusion and Next Steps
Geofencing marketing involves several crucial steps to ensure campaign success.
Always make sure your virtual perimeter effectively targets your ideal audience and has a high demand for your products to achieve better engagement and conversion rates.
Remember, geofencing can be applied across various advertising mediums. So, carefully select the medium that best suits your business goals before launching your campaign.
How GeoIQ Can Help In Geofencing Marketing?
As we said, you need to choose the virtual perimeter carefully where your target group, demand, and high foot traffic are present.
Our location AI platform can provide all these crucial datasets to make your geofencing marketing better.
Reach out to us at hello@geoiq.io to assist you in providing key location data to boost your geofencing marketing efforts!