What Exactly is Geofencing?

You own a Ford dealership. There’s a Chevy dealership down the street.

You like to poach your competitor’s customers, so you stand outside the Chevy dealer’s door waiting for customers to walk out. When they do, you tell them about all the better deals you offer, and they follow you right down the street to buy Fords from you.

OK, you probably don’t have the nerve to do that. But if you utilize geofencing, you can accomplish pretty much the same thing.

Geofencing is a technology that establishes virtual boundaries around areas you specify. While it has many uses – including security, child location and telematics among others – it is also used very effectively to push targeted ads to individuals based on where they are physically located at a given time.

When that car shopper walks into the Chevy dealer, chances are he’s already given his phone permission to identify his location. The use of most common apps comes with that permission, whether people realize it or not.

So while he’s checking out the new Chevy Trax, look! An ad has just been pushed to his phone letting him know about the deals you’re offering down the street on new Ford Fusions!

The reason it’s so effective is that there are few indicators of a person’s buying interest more accurate than where he or she goes. If you’re in a pizza store, you’re probably willing to buy a pizza. If you’re in a lawn equipment store, you probably would be open to buying a mower – and you’re almost certainly a homeowner.

So geofencing hits the consumer’s interest, but it also hits that interest at a time when it’s at the top of the consumer’s mind. Targeting doesn’t get much more effective than that.

And all the major online advertising platforms – including Google Adwords, Facebook and Instagram – support geofencing. And it isn’t limited to phones. In fact, since a user has to be in a certain kind of app to receive geofencing ads, it sometimes works better on a laptop or a tablet, which a user might typically spend longer periods of time looking at.

Which device works best will obviously depend on the circumstance. There might not be many people sitting on their laptops in a car dealer’s showroom, but there could be a lot of them in a mall coffee shop, where you could be pushing specials for just about every store in that particular mall.

The key to doing well with geofencing is understanding the parameters of the geofence – who’s there and what goes on there? – and making sure that the desired action you’re pushing actually works for these parameters. Pushing ads to people in a geofence may be a lightning-in-a-bottle type opportunity, but if you hit it right, it can be a pretty powerful lightning strike.