Geofencing Advertising

Geofencing AdvertisingAs technology continues to evolve and more consumers are switching to mobile devices, mobile marketing is fast-becoming one of the most powerful ways to engage with a customer. Regional marketing – capturing a target audience within a smaller geographic perimeter, or local area – has proven effective in print and broadcast advertising. Today, the regional marketing concept is carrying over into mobile marketing sector with geofencing advertising.

A geofence is a virtual perimeter for a real-world geographic area. A geofence can be dynamically generated – as in a radius around a store or point location – or it can be a predefined set of boundaries, like neighborhood boundaries. Geofence programs allow an administrator to set up “triggers,” so when a device crosses a geofence and enters (or exits) the boundaries defined by the administrator, an SMS or email alert is sent.

A relatively new marketing tool in the mobile advertising world, some of the world’s biggest brands are using geofencing advertising to market their products. Take Gap, for example. Last year, the clothing giant conducted a two-week geofencing mobile ad trial campaign in New York, San Francisco and Chicago. The campaign reinforced traditional billboard ads with mobile messages displayed to people standing right beside those ads.

Gap worked with advertising company Titan to place conventional advertisements at bus stops and other transit locations. Titan then created geofences around those ads, which activated the mobile part of the campaign for people who were nearby. Using location-based apps on smartphones to determine the location of the potential customer and location-finding technology, Gap sent virtual ads and coupons directly to the phones of those in proximity via apps such as Words with Friends. By using geofencing Gap was able to determine who was nearby and target them specifically.

Gap is not the only brand making the most of innovative mobile advertising methods. Best Buy has teamed with Placecast and SocialVibe on a geofencing mobile effort that rewards consumers when they participate. Through the initiative, Best Buy is able to reach consumers with geo-targeted advertising, offers and rewards. Mobile gamers can win in-game rewards and other prizes by visiting a Best Buy location. Consumers can also receive discounts from the retailer by playing mobile games. When users are nearby a Best Buy location, the geofence is triggered, prompting an SMS alert to the user. The SMS message may include a brand offer, reminder or confirmation of earned virtual currency.

Setting up a geofence allows marketers to use not only the ability of reaching a consumer anywhere, but the ability to know in real time when a customer is in a prime area to be engaged. According to digital marketing expert, Stephen Warley, today’s mobile technologies are taking the concept of geofencing advertising to a whole new level in three different ways: hyper-local  hyper-personal and highly perishable. On Feb. 11, 2013, Warley wrote an article for onroutedigital.com on these levels, stating:

Hyperlocal. Not long ago, hyperlocal advertising meant targeting consumers by ZIP code or a local neighborhood. Mobile geofencing advertising will now enable business owners to deliver their marketing messages to hyperlocal audiences. For example, a business owner using mobile geofencing advertising can target customers passing near their business by establishing an advertising perimeter of one mile or even just 500 yards. Each time a registered consumer enters the established perimeter, they’ll receive a mobile alert with a special offer from that business.

New Pew research shows that 72 percent of Americans use their mobile device while shopping and 28 percent of them used their mobile device to research a product or service. To receive alerts, consumers will first have to opt in via text or download an app to receive these offers as they travel around their local area. Either a business can offer its own app or a local media publisher, like a TV or radio station, might offer an app with multiple offers from various local businesses.

What makes mobile geofencing advertising unique is its ability to increase foot traffic into any business. It entices customers not within sight of the business, but within a short walk or drive, to make a purchase they might not have otherwise. It brings the front door of the business to consumers.

Hyper-personal. Mobile devices are the most personal of all media technologies. According to the Mobile Marketing Association, 91 percent of mobile users keep their phone within reach 24/7 – even while they sleep! While advertisers can exert greater control over their hyperlocal marketing messages using mobile geofencing advertising, it also creates a more hyperpersonal consumer experience.

For example, by opting in via text or by downloading an app, consumers can choose which geofencing advertising messages they want to receive. They can filter their choices by type of business, location and even the frequency of alerts. These hyperpersonal marketing messages empower consumers to establish the parameters for engagement with local businesses. According to Moto Message, 95 percent of marketing text messages are read within 15 minutes of receiving them and they have a redemption rate of 20 percent. Giving more control to the consumer results in higher redemption rates for the advertiser.

Highly Perishable. Geofencing is a great way for retailers to drive in-store traffic and offer consumers something different. One of the most powerful features of mobile geofencing advertising is its delivery of “highly perishable” offers. The hyperlocal and hyperpersonal nature of mobile geofencing advertising requires a different type of enticement to get consumers to act. Traditional special offers advertised on billboards, in newspapers, on the radio or TV or even desktop websites, won’t work because they often have a shelf life of days or weeks. The redemption period for special offers delivered via mobile are often measured in hours or even minutes.

If someone receives a mobile alert from a business within a mile of their location, the goal of that offer is to redirect that consumer into the business right then and there. The consumer will make a split-second decision on whether or not to act on that offer, so it needs to be extra special. Not only does the offer have to be a deeper discount or bigger enticement than a traditional offer, but the redemption deadline has to be much shorter – most likely under an hour. For example, a coffee shop might send out an alert stating “Buy 1 Coffee, Get 2 Free, Redeem in Next 15 Minutes.” An offer like this one is not only very enticing to consumers, but it is a powerful way for the business to drive foot traffic during slower times.

Mobile marketing is becoming more important for businesses. Geofencing is just one tool in the marketing mix. By using audience targeting programs in conjunction with geofencing, marketers can maximize the likelihood of reaching the optimal recipients of an offer.