Geofencing: What is it and how does it benefit advertisers?

Geofencing is a virtual fence around a physical location. Its purpose is to tag people who visit that location, then serve ads to that audience. It can be a consistent fence or a temporary fence – the latter of which is usually targeting a special event like a trade show or seminar. It is a component of our broader Targeted Display & Video product.

When is geofencing useful?

Geofencing is best used to target a niche audience. There is no benefit fencing a location that attracts a general audience, such as a grocery store.

One popular use of geofencing is fencing a competitor’s location in an attempt to steal away a lead, or perhaps to recruit its employees. Be careful, however, as everyone who visits that location will be tagged so it’s possible to tag an unintended audience.

Special events that an advertiser knows its intended audience will attend can also be effective geofencing opportunities. For instance, the KMOT Ag Expo attracts 30,000 farmers and ranchers annually, or a home show may attract a similar crowd of homeowners with disposable income.

Geofencing limitations

While geofencing has advantages, there are also numerous limitations to this tactic. There is a strategy behind effective geofencing.

First, the fence has to be strategically placed around a location where an advertiser’s target audience will be physically present, while at the same time avoiding a location where it may tag an unintended audience. Striking this balance isn’t always easy.

Privacy laws regulating hyperlocal targeting are increasingly becoming stricter. Geofencing is banned entirely in several U.S. states. Currently it is allowed in North Dakota, however.

A minimum number of devices must enter the fence during the fencing period. This is in response to increasing privacy regulations, as well as to ensure there is sufficient audience to target.

Geofencing isn’t allowed around several restricted places, including most healthcare institutions and K-12 schools.

Geofencing isn’t very effective at immediate conversions during short buying cycles. While ads are eligible to be served to anyone the moment they enter the fence, it’s uncommon for them to serve that rapidly. Generally, tagged individuals will see ads up to 30 days after entering the fence.

GPS tracking must be enabled on the device to be tagged. While most people have this feature activated, not everyone does.

Most geofencing can only be narrowed to a radius of 50-100 meters. This can be problematic if fencing a dense area. A busy street or neighboring building located within that range will tag unwanted devices.

Geofencing alternatives

Most of the time, an advertiser can use behavior targeting to reach the intended audience with more precision. This can include qualifying online behavior. You’ve probably experienced this if you’ve ever researched a vacation or a product, then are served ads for that after.

In addition to online behavior, behavior targeting can target a wide variety of personal characteristics, including occupation, education, demographic, and income. We can even use predictive behavior and create look-a-like audiences to expand the target to a comparable audience who might not otherwise qualify.

We can help you devise the right strategy to reach your audience efficiently, with or without geofencing.

What is the difference between geofencing and geotargeting?

The biggest difference is that geofencing is more precise. It can be applied down to 50 meters of a specific address, whereas the narrowest geotargeting can be applied is by zip code.

Another key difference is that geotargeting only serves ads to devices inside the targeted location at that precise moment, where geofencing follows the device anywhere after it enters the fence. With geofencing, a visitor from South Dakota who enters a fence in North Dakota, then travels back to South Dakota is still eligible to see the ad once they return to South Dakota – or go on vacation somewhere. With geotargeting, only people currently in the geographic target are eligible to see the ad (however that has its own limitations worthy of a separate conversation).