To Geofence or Geotarget -- That’s the Question

Amrita Hemdev
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By Amrita Hemdev
May 16, 2018
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There's no bigger advertising fail than seeing an ad for ski equipment on a hot sunny day in Arizona. By serving mobile ads based on users’ geographic locations, brands can avoid these types of costly blunders and use messaging through digital ads that boost click-through rates and engagement.

Mobile device usage continues to soar, with Americans spending five hours per day on mobile phones. Year over year, the time users spend on mobile apps is increasing. Let’s do the math: five hours out of the roughly 16 hours a day when we are active is close to 30% of our time. This just goes to show how important mobile is in people’s lives.

Mobile advertising offers a clear route to consumer engagement. Consumers primarily interact by clicking on ads to find out more about the brand or to check out deals offered by the brand. To bridge the gap between online and offline user experiences, advertising agencies are increasing their spending on geotargeted ads.

According to eMarketer’s report, U.S. mobile location-targeted ad spending will more than double between 2017 and 2022. BIA/Kelsey estimates U.S. mobile location-targeted ad spending will reach $22.1 billion in 2018, up 29.2% over 2017, and climb to $38.7 billion by 2022.

 

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Many consumers rely on location-based services to run their favorite apps, including those for weather, navigation, car-sharing, and dating. At the same time, other prominent apps have generated high levels of engagement with location-based options, including geo-filters and tagged photos in social networks, locally relevant responses in search, and augmented reality games overlaid on the real world. For instance, Snapchat users now share 3 billion geo-filters a day, up from 1 billion in August 2016.

Location-based mobile advertising is useful because it's targeted and personalized, treating consumers as individuals with unique wants and needs.

These geo-services have narrowed the gap between customers and businesses. Advertisers have recognized the power of these services; 90% of ad campaigns are using geofencing and geotargeting as essential advertising tools. For the average Joe, these two concepts are similar, but there are key differences between the two.

Geofencing and geotargeting services--it’s all about the game of location.

To correctly make use of location-based targeting, understanding the meanings of geofencing and geotargeting is the first step. Understanding the difference makes it easier to understand why, when, and how the appropriate targeting is determined.

A closer look at geo-targeting

Geotargeting, sometimes called zoning, refers to the method of delivering specific content based on a user’s location. It involves the practice of reaching a geographically-defined universe through cable zones, creative versioning (AdTag/AdCopy), or household aggregation.

It refers to delivering ads to people who meet specific targeting criteria and are within a defined radius. The critical difference with geotargeting is that it hones in on particular consumer targeting criteria like demographics, behaviors, interests, and a person's locations. This targeting tends to work better for larger geographical audiences because demographics and keywords can more specifically define ads.

Geotargeting is the process of showing ads to individuals within a specific area who meet your criteria. For example, you could target all individuals in Los Angeles who visited your website in the last 30 days. In that way, not everyone within your defined area will be targeted, but only the potential consumers who have a better chance to convert as your customer, see your ad. Another example is targeting people within a defined area (a square) who are between 18 and 30 years old. The image below illustrates how the results would look.

 

geotargeting

 

A closer look at geofencing

Geofencing is a digital advertising strategy that defines an area around a store or a place of interest where you can serve mobile ads with messages that acknowledge the user's location. It refers to drawing a virtual barrier around a location using your device’s global positioning system (GPS) or Internet Protocol (IP) address, which is just like your virtual address. Digital ads inside a geofenced area can be seen on a desktop, a tablet, or a mobile device as the potential customer is browsing the web.

Technically, geofencing can be any size radius from a particular location, anywhere from a mile to state-wide. But most people use geofencing to target a very tight range around an area. By using geofencing, the advertiser shows ads to a person inside the geofenced radius if they are browsing the web, alerting them to a local deal or the distance they are from a particular store location.

Locations like universities, stadiums, and neighborhoods are often tightly targeted to an audience in that location that would likely be interested in local deals, businesses, or services. For example, a San Francisco Giants jersey seller would target AT&T Park during the game to attract the potential consumers who would be interested in buying the jersey.

Geofencing is simply a process of defining an area that you will advertise in. You set the boundaries. It could be a 20-mile radius around your shop, the state of California, a specific city, or any other area of choice. Everyone within the fence will receive ads. The image below illustrates how the results would look.

 

geofencing

 

Which one is the right strategy for your business?

Localized digital advertising via geofencing or geotargeting could deliver better results than reaching out to a broad audience because your promotional efforts are specifically targeted at people who are likely to buy from you.

You don't need a huge advertising budget to implement one of these location-based marketing strategies. Local stores, local service centers, startups, and professionals such as dentists and consultants can implement this strategy to build brand awareness, attract more customers, and drive sales.

When it comes to deciding which one is the best for your business, think of who your target customer is. If you are interested in advertising to a population of all ages and all interests, geofencing is perfect for you. If you are only interested in hitting just a specific consumer demographic that is more niche, then you should be doing geotargeting.


Your customers are checking their smartphones more than 80 times a day. You can track their locations via their mobile devices and apply that data to deliver a better and more useful experience to users.

Our innovative, intelligent tools enable you to bridge the audience gap between traditional and digital worlds, expand your offerings to better reach your local audience, and significantly grow your revenue.

ZypMedia specializes in local digital advertising. We can help you place your digital ads in front of today’s mobile-engaged audience while helping you drive sales and generate a positive ROI. Learn more about the digital products we offer and contact us to get started.

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Amrita Hemdev

Amrita is an inbound marketer. She studied marketing and project management at UC Berkeley and proceeded to work in a fast-paced, digital advertising tech startup, with a goal of increasing brand awareness. She is currently the Content Marketing Coordinator at ZypMedia. Passionate about digital marketing and having five years of experience in this field, she also started her digital marketing and creative agency, Sociato, based in India.
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