Unleash the Power of Location: Programmatic Geofencing vs. Geotargeting

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 programmatic 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 Programmatic Geofencing

When we talk about geofencing marketing, a good place to start is by imagining a virtual boundary (or “fence”) in a certain location. This border is created by a business when it sets up targeting for its programmatic ads. Anyone who enters the fence then becomes a target for the ad, and when they leave the fence, they stop being hyper-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 Does Programmatic Geofencing Work?

A simple way to think about how geofencing campaigns work is to imagine you own a ride-sharing company. You may then want to create a geofence around a place 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 marketing involves potential customers after you set up specific parameters in your demand-side platform:

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

Benefits of Geofencing Marketing for Advertisers

Let's look at the above example of a ride-share company. We can see many benefits of geofencing efforts for advertisers to use this feature in their programmatic display targeting. Here is what geofencing marketing 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 local customers when they are close to you or in an area where they are likely to need your service.

Boost local sales

Geofencing campaigns are the key to local marketing. 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, so your ad spend won't be in vain.

Provide a personalized experience

71% of consumers prefer a personalized ad experience. Geofencing campaigns allow you to personalize ads when audiences are in a certain location. We'd say, these ads won't be 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 to 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 marketing. 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.

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 sending push notification 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 messaging and performance based on physical 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 advertising. 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.

Location-Based Advertising Tips for Better Performance

Both geo-targeting and geofencing marketing will make good use of your ad arsenal. 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 too large geofence will mean you are targeting mobile users who find visiting your store inconvenient, as it's too far to travel.

Make your ad formats 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 can help increase sales. With a white-label DSP, you get this kind of info by retrieving additional user 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 on your advertising. By using your own DSP, you stop paying the middlemen and take full control over your programmatic display advertising.

How to Set Up Geofencing in a Demand-Side Platform

Geo-targeting is one of the oldest features that were present in Google Ads 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 marketing 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”.

• 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.

• Go to the “Campaigns” tab, create a new campaign or select an already created one, and pick “Geofence” in 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 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 display advertising. It is used to target specific, location-based ads to people within the geofence. Once a local customer 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 relies on targeting 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?

  Some of the main benefits of geofencing include a better allocation of budget, being able to deliver hyper-relevant ads, boosting local sales, or generating hype for special events.

• How accurate is geofencing?

  Geofencing offers a combination of signals, including GPS, WiFi, and/or Bluetooth, and accuracy can vary, but it 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 in a DSP, but it's not commonly used within an ad server. Geotargeting, on the other hand, is an essential parameter you'll encounter in most servers. Epom DSP supports geofencing with up to a 100 m radius.