As an advertiser, location is your secret weapon. If you’re looking to reach entire cities with tailored ad messaging or hoping to create hyper-focused, real-time interactions as soon as someone steps into a store, location-based marketing is a valuable skill to understand. Geofencing vs geotargeting are two of the most widely used techniques in this space. While both geofencing and geotargeting fall under the umbrella of location-based marketing, they serve different purposes and can be applied in unique ways.
How Location-Based Targeting is Done
If you walked into a store recently and started seeing promotions for their products on your phone a few minutes later, you may be wondering how your device knew what to tell you. Advancements in technology have made it easier than ever for advertisers to reach customers in specific locations with precision, and it can be done using several methods. For example, 5G technology enables fast data transfer and real-time location tracking, improving the responsiveness of location-based marketing efforts. Additionally, AI-powered location intelligence uses machine learning to analyze large volumes of location data, offering deeper insights into consumer behavior and preferences. Beacon technology and IoT devices are also becoming more widespread, allowing businesses to send hyper-targeted notifications to users when they are near specific physical locations. Finally, the rise of privacy-centric solutions, such as decentralized tracking and encrypted data protocols, helps businesses strike the right balance between personalized marketing and user privacy.
What is Geotargeting?
Geotargeting is a specific kind of location-based marketing that allows businesses to reach their audiences by pinpointing their location using data such as IP addresses, zip codes, and even GPS coordinates. Geotargeting helps companies tailor their ad messaging to a specific geographic area, ensuring that the content or ads they present are relevant to the user’s location. For instance, a restaurant chain will display ads with promotions only to people within the same city or nearby zip codes. Geotargeting offers specificity, but it can also cover large areas, making it a great method for advertisers who want to target broader audiences in multiple regions. It provides a scalable market-view, which helps marketers adjust their campaigns to reach city-wide, state-wide, or national audiences. It is a versatile option for companies aiming to spread their message widely while still maintaining a level of relevance based on location.
What is Geofencing?
Geofencing, on the other hand, is another location-based marketing strategy that uses virtual perimeters—or “fences”—around very specific physical locations. When a user crosses into or out of a geofenced area, advertisers can automatically trigger targeted ads and content delivery to their mobile devices. This approach provides a more granular level of engagement, ensuring that the message reaches consumers at precisely the right moment when they are nearby. Geofencing is particularly powerful for businesses with physical locations, such as retail stores, local restaurants, or event venues. By targeting users within close proximity, geofencing can effectively drive foot traffic and influence in-the-moment decisions. For example, sending a discount offer when a potential customer is near a store can incentivize them to visit immediately, leading to an increase in sales and improved customer conversion rates.
Geofencing vs Geotargeting: Key Differences
There are three key differences when it comes to geofencing vs geotargeting:
- Precision and Reach: Geofencing offers more precise targeting by focusing on users within a specific physical area, such as a store or neighborhood. It triggers ads and notifications when a they cross a virtual boundary, making it ideal for businesses that need to connect with nearby customers in real time. Geotargeting, on the other hand, casts a wider net by targeting users based on larger geographic data like cities or zip codes, making it better suited for reaching broader audiences across multiple regions.
- Use Cases: Geofencing is best used when immediate action is needed, such as driving foot traffic to a retail store, restaurant, or event. It targets people who are already near a location and are more likely to respond to time-sensitive offers. Geotargeting is more effective for businesses that want to engage users at home or in other locations across a wider area, such as online stores or service providers aiming to build brand awareness or promote special deals.
- Consumer Reach: While geofencing focuses on a smaller, more targeted audience within specific boundaries, it may not reach as many consumers overall. However, its precision often results in higher engagement and conversion rates. Geotargeting, with its ability to cover larger areas, reaches more people but may lack the hyper-local focus that increases the relevance and immediacy of offers for users already in proximity to a business.
Other Variations of Location-Based Marketing
Beyond the more common geofencing and geotargeting, marketers can explore other approaches to location-based targeting like hyper-local geotargeting and DMA geotargeting to fine-tune their campaigns. Each technique offers unique advantages depending on the business type and its goals.
Hyper-Local Geotargeting
Hyper-local geotargeting takes traditional geotargeting and zooms in to an ultra-precise level, targeting consumers within just a few blocks, a street, or even a single building. This technique is especially beneficial for small businesses like restaurants, boutiques, or local events aiming to capture nearby foot traffic. By reaching potential customers who are in close proximity to their storefronts, businesses can deliver highly relevant, real-time offers that prompt immediate action, such as dining at a nearby café or attending a local event.
DMA Geotargeting
DMA (Designated Market Area) geotargeting, on the other hand, focuses on larger regions, defined by Nielsen Media Research, typically for broadcast television advertising. These regions group consumers based on common viewing habits and media markets, allowing advertisers to target specific demographics and optimize campaigns by area. DMA geotargeting is a powerful tool for advertisers looking to expand their reach within clearly defined media markets, ensuring that ads are seen by audiences who are more likely to engage based on their local broadcast preferences.
Best Practices: Implementing Location-Based Marketing
When choosing between geofencing vs geotargeting, it is important to carefully consider your options. Geofencing is highly effective for driving immediate actions, like bringing customers into a nearby store, while geotargeting is more commonly used to reach a broader audience across various locations. To maximize ad effectiveness, it is important to align your location-based strategy with your goals—using geofencing for hyper-local promotions and geotargeting for campaigns aimed at larger geographic areas.
Respecting user privacy is something to keep in mind when implementing location-based marketing. Both geofencing and geotargeting rely on sensitive location data, so businesses must ensure they are transparent about data collection and usage. This includes informing users about how their location will be used and obtaining consent where required. Moreover, adhering to regulations like GDPR or CCPA is essential to avoid legal issues and maintain consumer trust.
Real-World Success Stories: Geofencing vs Geotargeting in Action
Let’s take a look at some real-world cases where location-based marketing drove significant results for the company:
UNIQLO’s Global Success with Facebook Check-ins
In 2012, UNIQLO wanted to boost their annual sales with a fresh approach, so they launched the “UNIQLO Check-in Chance” campaign on Facebook. The idea was simple yet effective: customers could check in at any UNIQLO store for a chance to win 100 yen, redeemable only during the sales period. The campaign turned these Facebook check-ins into a geotargeting tool, sparking excitement across stores worldwide and drawing significant foot traffic. The campaign saw over 200,000 check-ins in just three days, resulting in a surge in sales and a massive spike in social media engagement.
Hyundai’s Clever Geotargeting to Steal Customers
Hyundai took a bold approach to attract customers from their competitors with a campaign called “Dealer Stealer.” By geotargeting customers near Mazda and Toyota dealerships, Hyundai delivered mobile ads to potential buyers while they were shopping at rival stores. This tactic placed Hyundai’s promotions right in front of an already interested audience, ultimately leading to impressive engagement rates and increased consideration of Hyundai vehicles. This clever use of geotargeting enabled them to connect with buyers at the perfect moment when they were ready to make a purchase decision.
In conclusion, location-based marketing techniques such as geo targeting, geofencing, hyper-local geo targeting, and DMA geo targeting have become increasingly important for advertisers and chief marketing officers. By using these techniques effectively, businesses can improve the relevance of their advertising and drive foot traffic to their physical locations. It is important, however, to use these techniques in a way that respects user privacy and complies with relevant regulations.