Geotargeting Versus Geofencing: What’s the Difference?

Geotargeting and geofencing are two terms that entrepreneurs often come across when reading about location-based marketing. While both strategies sound similar, they require their own distinct tools and offer completely different outcomes.

In a nutshell, geotargeting is about personalizing content based on location, while geofencing is about triggering notifications as a mobile device and its user leave or enter a given area.

Here’s a detailed overview of geotargeting as opposed to geofencing so you can select the best option for your needs.

Location Size and Scope

Geotargeting campaigns in the form of hyperlocal ads or internationalized website versions can span several countries and regions. Such tactics are employed by many e-commerce sites that cater to international audiences. For instance, different versions of an organization’s homepage are shown based on a particular user’s country, region, language, or even interests.

Geofencing grids, on the other hand, may encompass an entire state, most notably in industrial applications. Construction and retail warehouses, for instance, use geofences for fleet monitoring and management.

Technologies Used

Geo-targeting tools are the same digital marketing apps in any marketer’s arsenal. Search engine or social media advertising platforms are often adequate for running basic geo-targeted campaigns. Sometimes, plug-ins and special scripts are involved, as in the case of geo-redirection or localization. Tools like IP Geolocation API are also used to verify the physical locations of IP addresses harvested for campaigns.

Geofences rely on Global Positioning System (GPS) and Radio Frequency Identification (RFID) to define a designated geographic boundary for a campaign. Geofences are set up with mapping software installed on a GPS tracker. Third-party marketing software or APIs may be needed to operate geofences.

Types of Location Data Used

Marketers usually create geo-targeted ads based on multiple variables, with historical location data topping the list. These include social check-ins and IP addresses sourced from data loggers in apps and devices, network firewalls, cookies, and web beacons. The last two collect information on users’ frequently visited sites, interests, and demographics.

Geofences, on the other hand, depend on GPS and RFID signals to determine the presence of devices within proximity. A tag and signal frequency can identify a device. Some geofencing apps also reveal users’ exit and entry events and dwelling time in geofenced spaces, which are useful for predicting customer intent.

Customization Features

The level of customization that marketers can get with geotargeting is superior to that with geofencing. Geo-targeting tools, such as ad platforms, offer functionalities for editing creative assets, setting the geographic scope based on pin locations or radii, and targeting customers based on their demographic and income profiles. They can include or exclude audiences or target customers based on intent.

Conversely, dedicated solutions for geofencing, including customer relationship management (CRM) software, only let users change the shape and size of a geofence, settings for radial reach, and event triggers, such as users’ device types. The target customers for geofences cannot be determined.

Cost and Practicality

A geofencing application can cost tens of thousands of US dollars to build. Apart from the initial cost, users would have to subscribe to other software that lets them configure geofencing triggers.

Geo-targeting software subscriptions, in comparison, can cost anywhere from US $20 to over several hundred dollars a month. Most offerings come in a pay-as-you-go or monthly subscription basis. Geotargeted social media ads are also billed according to the cost per impression or click model.

Relevance

Studies show that geofences are great for boosting customer retention and loyalty, as in the case of Sephora’s store companion. This app feature is activated when customers step inside a geofenced zone near a Sephora branch, reminding them of their previous purchases and the cashback credits they still have in their accounts.

Geotargeting is also as effective when it comes to attracting nearby customers or when they most need a product or service. An example is Domino’s geo-targeting campaign, which sent text message offers to customers within a fixed radius according to their ZIP code or city.

Geotargeting Versus Geofencing: Which Is Better?

Your choice all boils down to your campaign objectives, the type of customers you’re trying to draw in, and your marketing budget. As explained previously, both tactics have their pros and cons.

When placed in strategic points in malls and supermarkets, geofences are highly effective in converting customers who are on their path to a purchase event. At the same time, geofences may not be at their best because of technical limitations.

Geotargeting, on the other hand, allows marketers to target customers more precisely. Nowadays, myriads of advanced marketing tools are available for marketers to tweak and perfect their regional campaigns. Through these tools, marketers can aim for high-converting customers based on gender, age, personal preferences, and purchase history.

Arguing about geotargeting versus geofencing is moot. Both provide marketers a creative yet cost-effective way to discover new customers, recapture former ones, and, most importantly, increase customer loyalty. IP Geolocation API is one tool that can help facilitate their efforts by giving them access to near-real-time and precise IP location intelligence.