What is Geofencing?

If you’re anything like me, you’ve probably received a message or promotional ad from a company you’re familiar with simply by being in its vicinity. You probably thought something along the lines of, “How do they know I’m here or nearby?” Well, if you must know, this is a marketing tactic known as ‘Geofencing.’ But what is geofencing and why are more businesses taking advantage of it?

How Does Geofencing Work?

If you want to define geofencing in layman’s terms, it can best be described as a virtual fence put up around a certain location or geographical area. It’s a technology that can use GPS, cellular, Wi-Fi or Bluetooth technology to define a boundary. When we enter one of these boundaries, a business can send us push notifications with ads, updates or coupons to entice us to walk into their store. Cool, right? Alright, maybe it’s creepy, but you can’t deny how innovative it is.

Geofencing isn’t just tied to receiving a push notification on your phone the second you step within the boundaries set up by some business nearby. Geofencing also works to show users ads while they’re doing normal things online. For example, you might be near your favorite burger place and scrolling through a couple of blogs. If that burger joint is using geofencing, the ads that pop up on your screen might be related to their business.

You should also know that geofencing isn’t the same as geotargeting, though they both rely on a person’s location as part of their marketing strategy. When a company employs geotargeting, they’re going one step deeper into the process and selecting specific types of people who step foot into the established boundaries. In this case, the burger joint you love might be specifically looking to market its latest menu item to a specific demographic or to people with certain buying habits or interests.

If you’re a business owner, or even just a consumer, you may be asking how this works?

All you need for this concept to work is a smartphone and an app. If you utilize an app designed for a certain brand or service, it can detect when you enter its predetermined boundary and send you timely/pertinent alerts. Examples may be:

  • coupon to a local store or restaurant
  • An alert regarding an event you may be interested in nearby
  • A company like Uber letting you know there is a driver near your location

The hope is that these incentives and timely messages will engage the consumer with the brand. PlotProjects states that, “studies have shown that users are far more responsive compared to other types of mobile advertising such as banners, as notifications are far more personalized and better delivered to the user.”

Why Geofencing Helps Your Business

So how does this benefit you? Well, if you’re a business owner, you can potentially increase engagement with your brand and bring more traffic to your store. If you’re a consumer, you may be able to take advantage of a promotion you otherwise wouldn’t have known about. Or maybe, if you’re hungry, you’ll be able to get a free order of fries with that sandwich you’ve been craving.

In recent months, geofencing has taken on a new and inventive twist as quick service restaurants clamber for customers. In December 2018, Burger King used geofencing in an ingenious way after announcing what it called its “Whopper Detour” campaign. The campaign encouraged users to download the burger giant’s BK app, then offered them a 1-cent Whopper when they were within 600 feet of a certain rival’s red and yellow restaurant. Those users would then be directed to the closest Burger King to cash in their Whopper offer.

Things turned out pretty well for Burger King, too. According to Burger King CEO José Cil, the company’s BK app was the most downloaded Apple app for several days and resulted in more than 1.5 million downloads directly connected with the campaign.

The move toward increased geofencing tactics is a smart one for most businesses, restaurants included. According to the Pew Research Center, nearly every American (95%) owns a cellphone of some sort. More than three-quarters of those people, 77% of them, own a smartphone.

Not to mention, those who own a smartphone tend to be spending a lot of time using it. How much time you ask? The University of Lancaster performed a study with 23 people ages 18-33 to see how much time they spend online, and the results were impressive. The subjects checked their phones an average of 85 times per day and racked up close to five hours on them! Based on these results, if people happen to be near your restaurant and checking their phone, it’s just another opportunity to appeal to them.

Geofencing, when combined with social media, also throws another tool into a restaurant’s growing marketing toolbox. Let’s say you’re a big Snapchat user and love showing off to your friends every location you hit while on your vacation. Companies like McDonald’s have used location-based filters to help users share their experience with others and get a little bit of free advertising at the same time. For smaller restaurants and mom-and-pop shops, you can create your own Snapchat filters to share with customers for them to use when they stop by!

With so many people accessible by their mobile device and always connected to it in some way, it makes sense for businesses to take their advertising to where their audiences are. In the same way a billboard captures your eyes while driving along the interstate, an ad showcasing your local eatery while they’re scrolling on their smartphone is likely going to draw similar impressions.

So, the next time you’re walking in the mall and the burger chain 50 feet away sends you a coupon, they’re not stalking you, they just want you to eat there.

(Content updated February 22, 2019.)