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Geofencing — also called location-based marketing — is a type of mobile ad targeting that involves a two-step process as follows:

• Mapping out a specific geographic area where you want digital ads to appear.
• Triggering the ads when someone enters the virtual fenced-in area.

Geofencing goes beyond standard geographic targeting by homing in on very specific locations down to streets — or even buildings like malls or restaurants — and serving ads to consumers who enter those “fenced in” areas.

The ads themselves only show when someone crosses the virtual fence. They manifest in a variety of ways, including alerts on smartphones or internet-enabled devices, ads on digital billboards, and app notifications.

Keep in mind that geofencing relies on app notifications and GPS information, both criteria that consumers must opt into before they can receive the ads.

A creative example of a successful geofencing campaign was Burger King’s Whopper Detour, a campaign that resulted in millions of downloads of the Burger King app and over a half a million coupon redemptions from the promo.

In a move that can be construed as either brilliant or evil (or a bit of both), Burger King targeted consumers who were either inside a McDonald’s restaurant or within 600 feet of one.

Read: [Why your startup should market content, instead of your product]

When a consumer entered one of the geofencing locations, the Burger King app pushed a coupon notification that enabled the user to get a Whopper at Burger King for just a penny.

Location-based marketing outperforms industry averages

Geofencing is an extreme version of location-based marketing, and it tends to outperform industry metrics across the board. Factual, a location data company, commissioned a study in which 80% of the marketers surveyed said that location-based marketing gets higher response rates and more customer engagement than traditional forms of marketing.

Location-based campaigns also tended to produce improved ROI and increased brand lift for marketers’ campaigns.

Consumers are receptive to location-based ads, with 80% of consumers indicating they want location-based alerts and three-quarters of consumers completing an action after receiving a message when they approach a physical location. It’s no wonder that businesses are embracing this latest trend in location-based marketing.

In fact, location-targeted ad spending is projected to increase from 12.4 billion in 2016 to 33.3 billion by 2021 — 45% of total mobile ad spending.

How is it executed?

Geofencing campaigns are executed by geofencing marketing providers like Propellant Media and ThinkNear. Once you select a vendor, account setup and targeting are fairly straightforward.

First, you need to select your geofencing area (or multiple areas). The drill-down can be very specific and may include addresses, buildings, parking lots, or radius proximity targeting (e.g., X number of miles around a certain location).

Then advertisers need to figure out how the ad will be triggered — generally, this is done via a mobile app, Bluetooth “Beacon” devices, or a mobile device (e.g., a text message on the user’s phone).

Finally, as with any digital marketing campaign, it’s important to tie your geofencing campaign to a specific goal, such as brand lift/engagement, coupon downloads/activation, app downloads, sales, or other actions, such as social media follows or likes.

Geofencing has its limitations

There is a certain creepiness factor in targeting ads at the exact moment that somebody enters a specific location. Businesses who operate within sensitive industries, such as healthcare providers, lawyers, and accountants, should keep this in mind when implementing a geofencing campaign.

Geofencing, by its very nature, is highly targeted and will potentially reach a much smaller audience than a broader ad campaign would. The Burger King campaign was so successful (and far-reaching) because there are more than 14,000 McDonald’s locations throughout the United States. Burger King also augmented this campaign with other types of advertising, including billboards and search ads.

As with any digital media campaign, consumer privacy should be at the forefront of the planning process with geofencing campaigns. Nobody wants to feel like a brand is stalking them or somehow using their personal information to create invasive ads.

Some geofencing examples to inspire your next marketing plan

Burger King isn’t the only company that was successful at leveraging geofencing to increase app downloads and sales. Here are a few more examples of how companies integrated geofencing into their digital marketing campaigns.

• Gain consumer insight — Cox Automotive, an Australian online auto exchange, geofenced 3,500 car dealerships and used the analytics from the campaign to ascertain which lots their customers were visiting, how long they stayed, if they took a test drive, and if they made a purchase.
• HotelTonight, an online travel app that helps consumers find low-cost or discounted hotel rooms, pushes notifications about discounted rates to users who are a few miles from a participating hotel after 3 p.m.
• Beauty and makeup retailer Sephora added a “store companion” feature to their app that’s triggered when a user enters a Sephora location. The feature allows customers to instantly access account information, including past purchases. The feature also provides product recommendations and reviews.

 

Here’s a closer look at the text promoting the Sephora app’s in-store companion, which reads, “Opt into notifications and location services to never miss an OMG deal, brand new launch, or exclusive offer — ever.”

The possibilities are as limitless as your imagination

The above examples are just a few ways that companies have incorporated geofencing into their digital ad campaigns.

While location-based targeting is a natural fit for companies with mobile apps (or who run mobile app campaigns), it can be incorporated into campaigns targeting desktops and laptops.

In fact, pretty much any device with internet access is fair game for a geofencing ad, so don’t be afraid to brainstorm some ideas around this exciting new tactic.

Make sure to establish some upfront goals and, as with any tactic, test and measure performance to see what works and what doesn’t.

This story was originally published on ClickZ. Republished here with permission.

This article was originally written by J. M. Dooley for Better Marketing, a publication providing advice that works and covering digital and social media marketing, tools, and case studies.