As the purchaser of several homes during my lifetime, I have always ascribed to the theory that location is the most important aspect of a property. You can change anything else about a home—paint, landscaping, fixtures, facades—but few people go to the trouble of moving a home to a new location. Yes, it’s been done, but only the rare individual will go to such lengths.
What’s true in real estate is also true in advertising: location matters. This is not a novel concept to advertisers and their agencies. Since the dawn of advertising, media buyers have considered location as part of their strategy. If potential customers, particularly the right customers, can’t see, hear or read your ad, you might as well not bother.
What’s exciting today is that instead of waiting for your target to see your ad at a specific location, you can reach them at their location, with pinpoint accuracy. Again, this is not a new strategy, but the level of accuracy in targeting today is striking.
Geo-Fencing Delivers
New technologies like geo-targeting, geo-fencing and beaconing are key tools for businesses promoting their products and services based on a customer’s physical location, past purchasing habits, interests and potential needs. Geo-fencing in particular has garnered high adoption rates by advertisers, showing promise in delivering clicks and conversions that put your average web-based banner ad to shame. Vouchercloud, a geo-fencing platform delivering coupons and offers to people within 200 meters of a participating store, reports click-through rates of up to 45 percent.
What is beaconing? Beacons use Bluetooth technology to send one-way signals to local mobile apps. They deliver hyper-contextualized content (ads, offers, sale notifications) to users based on their location. This is also called proximity marketing.
By definition, geo-fencing is a location-based mobile technology that lets you specify a precise, geographic area for a specific mobile use or application. In terms of marketing, this virtual “fence” allows you to target people, via their mobile devices, within that defined area. Once you set up parameters for your geo-fence, consumers are targeted based on the GPS of their smartphone or other mobile device.
Geo-fences can also be dynamic, changing, growing, or shrinking based on pre-determined criteria. For instance, if you’re using mobile advertising to attract people to your retail clothing store, you may want a wider geo-fence during slow times, such as weekdays, and a narrower geo-fence during the busier weekends. This offers control over the ads to ensure your advertising reaches consumers effectively at any given time.
Where is Geo-fencing Useful?
Opportunities for geo-fencing are limited only by the advertiser’s imagination; many companies are thinking outside the box when pushing offers and information to consumers. Popular uses of geo-fencing include:
- Showing ads to consumers when they are physically near your business, increasing the chance that they may “drop in”
- Targeting new consumers by sending them special offers or coupons when they are near your business
- Targeting consumers visiting related businesses in your area; for instance, targeting the area around a nearby salon and sending coupons from a local drugstore for a special sale on beauty products
- Sending your daily specials at lunchtime to consumers/business people in your area
- Targeting consumers near a competitor’s location and making them an offer to come to your location
Some Caveats…
As with all media, geo-fencing has good points and challenges. Nordstrom found this out the hard way in 2013 when they used in-store geo-location to track customers and cue staff to “magically” appear when someone needed assistance or information about merchandise. Nordstrom customers were creeped-out, feeling as if they had been stalked.
With that in mind, it’s important to note a few drawbacks to geo-fencing:
- To see a geo-fencing ad, consumers must be on their phone within the geo-fencing area. If the phone is in their pocket or purse, the ad may be missed. By the time they reach for their phone, they may be out of the advertiser’s immediate service area.
- Additionally, users must be within a mobile app or browsing the web for the ad to reach them. If a consumer is on the phone or merely texting, the ad will be missed.
- Beware of the stalker effect. If you go overboard with your geo-fencing ads and communications, consumers may feel as if Big Brother is watching their every move.
- If consumers turn-off their phones’ geo-location service, ads will not be able to pinpoint their locations—so nothing will be delivered. As more marketers use geo-fencing, there is a risk that more and more consumers may turn off geo-location services or only use them selectively.
- Geo-fencing works well when consumers are walking or sitting and have the opportunity to look at their phones. It is not effective if consumers are in a car or on public transportation as the opportunity to divert their route to a specific store is limited.
What does the future hold for geo-fencing? It’s difficult to know for sure, but according to Pew Research, nearly two-thirds of Americans own a smart phone, and individuals look at these devices more than 200 times per day, on average. This offers a lot of opportunity for advertisers to make an impression. And, as national advertisers like Pizza Hut and Starbucks use geo-fencing to reach consumers literally on the doorstep, smaller advertisers are bound to follow suit. The targeted nature of geo-fencing makes it very appealing to advertisers looking to get the most out of every ad dollar.
