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Unleashing Power of Geos: Difference Between Geofencing vs. Geotargeting

Jan 29, 20217 min read
Kate Novatska
Kate Novatska, AdTech Expert

Geofencing and geo-targeting go hand in hand like Hansel and Gretel especially when you need to target an audience in a specific location. Yet just like siblings — they function differently. Are you already in the club of 84% of marketers who know the superpowers of the targeting twins and who to call in your case?

Knowing the difference between geofencing vs. geo-targeting is the first move in stepping up your marketing game. It will help you understand what campaigns need each type of targeting and why.

In this article, we will look in detail at what both concepts mean, how they compare, and what exactly you should do to set up geofencing and geo-targeting in your demand-side platform. You will leave with an understanding of how to apply geofencing in your digital advertising strategy and be able to distinguish between these two types of location-based targeting.

What is Geofencing and How Does it Work?

When we talk about geofencing, a good place to start is by imagining a border (or “fence”) in a certain location. This border is created by a business when they set up targeting for their programmatic ads. Anyone that enters the fence then becomes a target for the ad, and when they leave the fence they stop being targeted.

Geofencing definition: it's a type of location-based targeting where you create a “fence” on a map rather than enter location details and target all users within the defined area.

how geofencing works

A simple way to think about how geofencing works is to imagine you own a ride-sharing company. You may then want to create a geofence around a location such as an airport or stadium. Areas that are crowded and where people often need transport but will not be with their own car, because they are returning from a vacation, or have consumed alcohol at a sporting event or concert, are a good place for you to target as there will be many people in need of your service.

Here is a sequence of how geofencing works after you set up specific parameters in your demand-side platform that supports geofencing:

Icon 1
A consumer opts-in the campaign and gives consent to share their GPS data.
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The consumer enters the fence and a mobile carrier locates the consumer.
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A DSP receives info that this consumer falls within set targeting parameters.
Icon 4
The ad is shown to the consumer on the mobile browser or inside the app.
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The consumer converts and visits the store or uses the service.

Benefits of Geofencing for Advertisers

If we look at the above example of a ride-share company, we can see there are many benefits of geofencing for advertisers to use this feature in their programmatic ad targeting. Here is what geofencing is used for:

Reach customers easily

You can reach customers in the right place at the right time. If you run a brick and mortar business, you can target customers when they are close to you or in an area where they are likely to need your service.

Boost local sales

Geofencing helps you boost your local marketing campaigns. For example, if you are having an in-store sale, you can set a campaign to run within 2 miles of your stores to advertise your sale and bring in more foot traffic. And according to stats, 3 out of 4 consumers complete an action after receiving a message when they head to a specific location.

Provide a personalized experience

71% of consumers prefer a personalized ad experience. Geofencing allows you to personalize ads for when audiences are in a certain location. I'd say, these ads won't hyper-personalized (that's more of geo targeting's territory), but hyper-relevant to your target audience

Entice customers away from your competition

Let's say you own a cute independent coffee shop. But there is a Starbucks down the street that is getting all the customers. You can use geofencing to offer a promotion for people when they are walking past your cafe and entice them away from Starbucks.

Definition of Geo-Targeting and Its Algorithms

Now you've wrapped your head around geofencing, let's take a look at geotargeting. Geofencing and geo-targeting are often thrown around interchangeably, but they have clear distinctions.

Geo-targeting goes a step further from geofencing. Here you specify a country, city, or a wider area where all people will be targeted. However, here you not only specify the consumer's location but also define other parameters by which your DSP or any other software with the geo-targeting feature will form an audience to show your ad.

how geotargeting works

For example, you own a pizza restaurant. You have just introduced a new vegan pizza. You want to target those within the same district where your restaurant is located to come and try your new pizza. However, you know not everyone will want to try it. So you may decide to add additional criteria such as people with interests in health, dieting, animal rights, vegetarian diets, environmental issues, etc.

With geo-targeting, you can set additional parameters and refine your targeted audience within your selected geographical area.

Benefits of Geo-Targeting for Advertisers

Segmenting your campaigns with geo-targeting can help ensure your ads are getting to the desired targets. Some of the major benefits of using geo-targeting in your marketing strategy include:

Better Budgeting

Geo-targeting allows for more effective use of marketing budgets. Segmenting your targeting beyond simple location and also including interests or behaviors can make your ad budget go further by ensuring your ad is not displayed to people who are not interested in your product/service.

Smart for small business expanding

This one you can't do with geofencing: there is no reason to build a fence far from your location. Geo-targeting helps small businesses test new geos where they are unsure of the consumer's buying potential by showing personalized ads to the target audience. Coming back to the pizza restaurant, you can advertise your new pizza not only in your district but also in neighboring ones or in the suburbs, especially if you offer delivery.

Great optimization potential

Analyzing campaign performance based on location can help you focus your marketing on the areas where you are getting the best results.

Geofencing vs. Geo-Targeting Difference: Comparison Table

Both geofencing and geo-targeting are powerful location-based marketing techniques that you might want to include in your programmatic campaigns. However, their purpose, mechanism of work, and use cases are distinct. Let's see the summary of the differences between geofencing vs. geo-targeting in the table below.

Feature Geofencing Geo-Targeting
Purpose Provide a hyper-relevant ad experience for quick conversions of leads in a specific location. Provide a personalized ad experience and raise brand awareness for better conversions in the future.
How Does it Work Sets a fence around specific geolocation, which is quite narrow. Sets a wider geographical location such as district, city, or country
Targeting Parameters All leads entering the virtual fence can be targeted. Once they come in, they see an ad in the mobile browser, mobile app, or receive a push notification. Only leads that belong to a specific category are targeted. Geos are wider and may include leads from a specific district, city, or even a country.
Who Needs It Brick and mortar business owners, event advertisers Almost every business, regardless of its type

Location-Based Advertising Tips for Better Performance

Both geo-targeting and geofencing will make good use of your advertising armory. Here are some top tips to unleash location-based marketing potential to the fullest.

Make your geofence the right size

Geofences should be used for local marketing around your store or small specific areas such as outside of a stadium. Creating a geofence too large will mean you are targeting customers with whom visiting your store would be too much of an inconvenience as it's too far to travel.

Make your ads actionable

With location-based advertising, you want your audience to take immediate action. For example, if you own a coffee shop you can display an ad with a CTA like “Today only, buy one get one half price coffees!” The limited-time on the offer encourages audiences to take immediate action.

Use contextual targeting

This targeting option will show your ad on pages with relevant content. For example, an ad for your restaurant in an article about local restaurants. With a white-label DSP, you can get this kind of data retrieving additional audience data. You can request any kind of data from your partner supply-side platforms and get it with the ad request.

How to Implement Geofencing in Your Marketing Strategy?

Geofencing is something you are probably itching to include in your marketing strategy as you understand more about it. But where do you start?

There are specific geofencing platforms that specialize in delivering location-based digital marketing solutions.

However, there are also many all-in-one tools marketers can use that support geofencing and geo-targeting along with many other powerful tools and features. These can be a great option for keeping advertising organized and simple, allowing you to run everything all in one place.

Advanced demand-side platforms like Epom have geofencing that allows you to target audiences based on their real-time location. They usually also offer a ton of other great features such as multilayered optimization and powerful analytics.

The white-label DSP solution also has the huge advantage of saving you a lot of money in your advertising. By using your own DSP you stop paying the middlemen and take full control over your programmatic advertising.

white-label & self-serve DSP white-label & self-serve DSP

How to Set Up Geofencing is a Demand-Side Platform

Geo-targeting is one of the oldest features that were present in DSPs and other online advertising platforms that allow for at least some targeting. Geo is the primary attribute by which advertisers segment their audience. So, most of us already know how to implement geo-targeting within any ad tech platform.

Geofencing is a newer feature that arrived in software a while back. For example, Epom announced it in the Epom white-label DSP 3.7, which was not long ago. Some ad tech providers don't offer geofencing, so it's still unclear for some advertisers how geofencing works. To clarify that, let's set up geofencing in the Epom white-label DSP.

  • Go to the “Geo-fence” tab and select “add geofence”.

    geofencing in a DSP

  • Pick the city in which you want to create a fence, then pin the spot on the map (you can pin multiple spots at the same time), define the radius of your fence, and press save.

    Geofencing setup: selecting radius and spot on the map

  • Go to the “Campaigns” tab, create a new campaign or select the already created and pick “Geofence” in targeting options.

    Geofencing setup: targeting options

  • Select the right geofence (here you can enable multiple geofences as well). Now this geofence will be active as any other targeting parameter you set in this campaign.

    Geofencing setup: activating the right geofence

Geofencing vs. Geotargeting FAQ

  • What is geofencing?
    Geofencing is a location-based marketing practice, where advertisers use software with a geofencing feature to create a virtual fence around a specific location and target all the users within this location.
  • What is the purpose of geofencing?
    Geofencing is used in programmatic advertising. It is used to target specific, location-based ads to people within the geofence. Once a person leaves the geofence they are no longer served these ads.
  • What is geotargeting?
    Geotargeting is a location-based marketing practice that targets users that fall under set targeting parameters within a specific region.
  • What is the difference between geofencing vs geo-targeting?
    Geofencing targets everyone within a virtual barrier. With geotargeting, a virtual barrier is also used, however, not everyone within this barrier is targeted. The audience is defined by behaviors, interests, etc.
  • What are the benefits of geofencing ads?
    Some of the main benefits of geofencing ads include a better allocation of budget, being able to deliver hyper-relevant ads, and boosting local sales.
  • How accurate is geofencing?
    Geofencing uses a combination of signals, including GPS, WiFi, and/or Bluetooth, and accuracy can vary but can be accurate from up to 10 meters in urban areas with many cell towers.
  • What is mobile geofencing?
    Mobile geofencing is a feature that works primarily based on a mobile device's location.
  • Can I run geofencing ads in a DSP or ad server?
    It's possible to run geofencing ads in a DSP, but it's not commonly used within an ad server. Geotargeting, on the other hand, is an essential parameter you'll meet in most servers. Epom DSP supports geofencing with up to a 100 m radius.

Boost your targeting to new heights and run hyper-relevant geofencing ads? Sign up for Epom DSP and claim your 14-day free trial to test them out!

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