What is Geofencing?

Sheikh Ahmad October 16, 2023

Geofencing is one of the most popular technologies for mobile devices and it has been available for the last several years. While the geofencing has many benefits, it also has some drawbacks. This post will aim to answer the most commonly asked questions about geofencing including;

What is geofencing?
What is geofencing used for?
How much does geofencing cost?
How does it work?
When should I be using geofencing?
What are the benefits of geofencing?

Geofencing is a virtual boundary against a real-world geographic area. For example, a geofence can be created around a specific real-world location on the map such as a store, office etc. As soon as the customer enters the radius of the defined virtual area, they will receive a push notification on their mobile device. There are many ways to connect with your customers through geofencing including security alerts, engagement characteristics, notifications, coupons, and more.

Research studies have revealed that geofencing can increase user engagement by almost three times.

How much does geofencing cost?

So how much exactly geofencing costs? Does it require any hardware installation? Luckily, the set-up doesn’t require any hardware infrastructure, unlike NFC, Wi-Fi and beacons. All you need is a mobile device so there are no costs of initial setup. The only cost that you will need to take care of when using a geofencing is the marketing cost.

The following factors determine the cost of geofencing;

The platform – Geofencing can be integrated into multiple platforms including Google Pay Per Click, Instagram, Facebook, and Snapchat. Integration doesn’t cost extra except in some cases such as Snapchat which charges approximately $5 per 20,000 square feet. It should be noted that the bid price for ads on social media and PPC can be slightly increased when running geotargeted ads.

Tools – If you are using a third-party tool like Koupon Media and GroundTruth for your geofencing campaigns, then you will need to pay the additional cost to use these tools which help businesses target a specific audience and get more people to visit their physical premises.

The number of geofences – The cost of geofencing increases with each geofence you create. You may also want to target your competitors and multiple locations which add to the cost.

The size of your geofences – The size of the virtual radius of the targeted geographic location also affects the cost.

How does geofencing work?

Geofencing technology used mobile network triangulation as well as GPS to identify the user’s mobile device location and proximity in relation to a virtual geofencing area. When the user enters the real-time geographic area with defined virtual boundaries such as store, mall, pit stop, fuel station, etc., they will start to receive push notifications on their mobile device.

Geofencing has become a popular marketing tool in recent times thanks to the growing number of mobile and social media users. Geofencing can be employed with a range of tactics by a company. Here are some examples to enable you to understand how geofencing technology can benefit your business.

Geofencing will enable you to reach nearby potential customers with promotional offers as they pass by – resulting in a definite increase in foot traffic at your store.
Uses customer’s location and suggest relevant products and services.
Improve visitor engagement during events like seminars, conferences, festivals, business gatherings, and more.
Figure out what strategies work best when targeting a specific audience with an ad.
Trace and track employees who do fieldwork. The technology is especially useful in the real estate business.
Competitive edge by building a virtual geofencing around their position and pushing special promotions so the customers come to you.

What are the benefits of geofencing?

Geofencing can have several benefits for your business including but not limited to the following;

It is easy to use and implement
It can increase the number of visitors to a specific point such as your store
Help you introduce new offers and promotions to your customers
The only technology that works perfectly outdoor
Offers great return on investment
Enables you to create a personalized experience for your audience

Is geofencing the right choice for my business?

Geofencing can be helpful for any business. If you wish to increase the walk-in customer traffic in your retail store by pushing special offers, geofencing can be a great tool. Geofencing enables businesses to notify their customers of their latest promotions.

Another valid business case is that you want to ensure people will have Bluetooth turned on to receive beacon proximity campaigns indoors. You can simply create a Geofence campaign that will trigger a notification reminder “Turn on Bluetooth to receive more special offers”. This significantly increases conversion rates for beacon campaigns.

Geofence and Beacons complement each other so that you can use both of them at the same time.