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Geofencing vs Geotargeting and Which Do You Need?

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Geofencing VS Geotargeting

Geofencing and geotargeting — terms that sound similar but hold vastly different meanings. While both terms denote the use of a marketing strategy within a specific region, these tactics involve drastically different approaches to geographic market segmentation. Read on for a brief overview of geofencing vs geotargeting, as well as insights into which approach is a better fit for your campaign:

Geofencing: Using a Virtual Barrier to Attract Customers

Geofencing involves drawing a virtual fence within a predetermined radius. Businesses that rely on geofencing are able to target advertisements to recipients within a specific zone, such as a trade show or another special event. Largely regarded as more accurate than geotargeting, geofencing uses GPS to ensure that consumers are tracked based on their current coordinates. Collected data highlights how long targeted consumers spend in a specific area — and whether they return.

Many businesses favor geofencing because it drastically improves engagement among local customers. Ad recipients are more likely to convert if they are within a short trip of a given business — especially if they receive an enticing coupon. Geofencing can also be used to attract consumers away from the competition. Dunkin’ Donuts, for example, famously used an early geofencing campaign to convince customers to ditch their usual coffee shop. As RetailDive notes, this effort proved most effective among customers who were not particularly brand loyal.

The primary disadvantage of geofencing? Ads are only targeted based on the consumer’s physical location — demographic information does not play into this strategy. It’s therefore not an ideal strategy for brands intent on attracting a specific type of customer.

Geotargeting: Incorporating Segmentation into Your Geo-Based Strategy

Geotargeting also limits advertisements to a defined region, but takes the effort one step further: only consumers within a specific demographic are targeted. For example, a geotargeting campaign may exclusively seek consumers between the ages of 18 and 29 within a certain geographic region. This strategy is primarily popular among companies with a niche market. In most cases, geotargeting campaigns must be deployed across a larger area — an entire city instead of a single neighborhood, for example. Companies on the search for narrowly-defined types of consumers must simply cast a wider geographic net.
Some industries are more likely to benefit from demographic geotargeting than others. HVAC companies, for example, may specifically want to target their ads to homeowners or those within a specific age bracket. Their message might be wasted on a teenager or a senior living in a retirement community.

Geofencing Vs Geotargeting: How to Choose the Right Approach for Your Campaign

Your use of geofencing or geotargeting will largely depend on whether you want to attract consumers within a certain demographic. If you’re open to all customers in a narrowly-defined geographic area, you’re probably best suited to geofencing. If, however, you prefer to display ads only to those within your target market, geotargeting may be your best bet.

Both geotargeting and geofencing could play a critical role in your regional advertising efforts. Determine whether you prioritize proximity or consumer segmentation, and craft your geo strategy accordingly. Your efforts could lead to immediate conversions and a more dedicated customer base.

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