5 Tips for Building a Smarter Geofence

As location-based mobile technology gets more sophisticated, marketers are increasingly able to refine their tactics and launch more targeted geofencing and geotargeting campaigns. The number of advertisers using “geo-aware” technology in their mobile ad campaigns jumped from 17% in 2011 to 36% in 2012, according to a report by Verve Mobile, and yet there is still confusion in the marketplace over what makes a geofencing campaign useful, and when location targeting is necessary to achieve a high ROI.

To sort these issues out and discover when, exactly, a geofencing campaign becomes a useful tool for marketers, we went to the experts. Here are five strategies for creating a smarter, more strategic geofencing campaign.

1. Campaign goals should dictate the size of the fence. From a marketer’s standpoint, geofencing is only useful when it is being used to provide information that is geo-relevant. For example, an executive at Verizon Fios would only want to create a geofence around areas where his product was available. The size of a geofence should be tighter when a company is promoting specific products. If Home Depot is having a sale on snow shovels and a storm just hit New York, then the ads it’s pushing should be concentrated in the New York Area, and not somewhere warm like Miami. The goals of the campaign should dictate the size of the fence. (Are Traasdahl, Tapad)

2. Consider population density when calculating fence size. The optimal size of the geofence has to balance the targeting precision of a small geofence vs. the number of people you are likely to reach. The larger the geofence, the larger the target audience. It’s also important to calculate the population density and type of business. For a restaurant in New York City, a one-mile geofence might be appropriate — big enough to reach a meaningful audience, and small enough to reach people who can make a real-time decision to jump in a cab and visit the business. On the other hand, consider a Walmart in a rural area. Market research may show that people are willing to drive 10 to 20 miles to their nearest Walmart store, in which case that might be a reasonable geofence to reach the store’s desired audience. (Tom MacIsaac, Verve Mobile)

3. Keep relevance in mind when developing messages. The usefulness of geofencing, from a marketing standpoint, is to allow marketers to customize a message to make it as relevant as possible based on the time of day, day of week, or geographic location. Geofencing is not useful in cases when customization of the message isn’t as important, or when the service is abused. Bombarding customers every time they enter a geofence with an irrelevant message is an ineffective strategy, and having a geofence that is too large will cause engagement levels to decrease as the message becomes irrelevant to the consumer. (Linden Ryan Skeens, Thumbvista)

4. Understand the limitations of geofencing. Geofencing isn’t the end-all-be-all for location targeting. It’s important for marketers to recognize that geofencing has its limitations and is just one tool in the location-targeting toolbox. The best strategy is one that combines geofencing with other products to reach people outside the geo-fenced area. If a Walmart shopper regularly visits a store near his office, for example, then he would most likely miss a geofenced offer that was sent out while he was at home (outside the store’s fence) during the weekend. By using audience targeting products in conjunction with geofencing, marketers can maximize the likelihood of reaching the optimal recipients of an offer. (Tom MacIsaac, Verve Mobile)

5. Consumers expect transparency. Businesses need to be 100% transparent about why they want to use their customers’ locations to send trigger alerts or messages within the geofence. Developing a database of customers to target can be done at the point of sale, or by sending an email blast to an existing database. When they utilize geofencing, marketers should only contact customers who’ve opted-in. Privacy aside, deals based on location are generally seen by consumers in a positive light, as long as the business picks its timing strategically and doesn’t abuse the privacy of consumers. (Linden Ryan Skeens, Thumbvista)

Stephanie Miles is an associate editor at Street Fight.