What Is Geofencing And How Does It Work?….Location Based Software

TABLE OF CONTENTS:

1. What Is Geofencing In Precise Terms?
2. How Geofencing Truly Works?
3. Different Uses & Applications of Geofencing
4. Geofencing Statistics
5. Types Of Geofencing Software
6. Main Benefits of Geofencing
7. What Is Geofencing Marketing?
8. How Is Geofencing Being Used by Advertisers?
9. Costs & Pricing Of Geofencing
10. Geofencing Challenges To Consider
11. The Future Of Geofencing & Location-Based Software

What Is Geofencing In Precise Terms?

Geofencing is a location-based technology service in which a mobile, desktop, or cloud-based app or other software uses GPS, RFID, Wi-Fi, or cellular data to trigger a pre-programmed action when a mobile device or RFID tag enters or exits a virtual boundary set-up around a geographical location, known as a geofence. There are other forms of geofencing that can use multiple creatives, including programmatic video, static ads, and CTV ott advertising. That geofence can be as small as a building or home and as large as a mile or even a zip code. But it’s the placing of that defined boundary that makes geofencing possible.

Geofencing can be utilized in a plethora of ways, and the triggers can vary, including:

• mobile push notifications
• trigger text messages or alerts
• send targeted advertisements across multiple digital channels, including programmatic display
• allow tracking on vehicle fleets
• track your pets and even your spouses
• track smartphones
• disable certain technology
• deliver location-based marketing data for research purposes

As another source and according to Techopedia, geofencing is described as “A technology that defines a virtual boundary around a real-world geographical area.” Wikipedia defines it as a “Virtual perimeter for a real-world geographic area.” It’s not some complicated programming language or complex development tool.

Geofencing technology (geofences) are set up to monitor driving and walking activity in secure locations, allowing senior managers to see alerts when anyone enters or leaves that physical location that was drawn by the geofencing technology. You’re starting to see many businesses use geofencing to monitor employees in the field working for time tracking, automating time cards, and even keeping track of company property such as vehicles, fleets, tractors, etc. And, of course, many brands are using geofencing to deliver targeted messaging to people in precise areas.

How Geofencing Truly Works?

In order to ensure geofencing is set up properly, there are a few steps that need geofencing work.

First, a virtual boundary around a specific location must be drawn via GPS or RFID (Radio-frequency identification) enabled software. This can be done using polygonal geofencing software to identify points on a map. This helps define the boundary that you want to capture mobile users or devices in.  One can also use certain geofencing software to simply draw a circle of 100 feet or less on a platform such as Google Maps using APIs when developing a mobile app. The virtual geofencing will then trigger a response when the device enters or exits that area or is in very close proximity to the virtual boundary that was drawn by the developer or the administrator.

A geofence is commonly defined within the code of the mobile application, especially since users of smartphone devices need to opt-in to the location services on their devices for the geofencing to work (pick up the mobile device ID via GPS, Cellular or Wifi networks). If you go to a concert venue, you might have a mobile app you can download that will deliver information about the event regardless of whether those event attendees are inside of your virtual fence or not. Or, a retailer might draw a geofence around its outlets to trigger mobile alerts for customers who have downloaded the retailer’s mobile app. In these cases, a geofence that is managed by the retailer is programmed into the app, and users can opt to decline location access for the app.

A geofence can also be set up by end-users using geofencing capabilities in their smartphone apps. These apps, such as iOS Reminders, allow you to choose an address or location where you want to trigger a specific alert or push notification. This is called an “if this, then that” command, where an app is programmed to trigger an action based on another action. For example, “If I’m five feet from my front door, turn on my lights.” Or you might ask a reminder app to send you an alert once you reach a specific location.

Geofencing isn’t just for mobile apps – it’s used to control and track vehicles in the shipping industry and cattle in the agriculture industry. You’ll see this topic pop up in drone discussions. Nearly every drone is pre-programmed to accommodate geofencing, which is usually set up around airports, open-air venues, and even the White House. The FAA can set up these drone-resistant geofences upon request – some barriers will stop a drone in mid-air, while others will trigger a warning message to the user. Some drone geofences will ask for a user’s authorization – a process that ties the user’s identity to their drone – so that law enforcement can keep track of unmanned drones.

Different Uses & Applications of Geofencing

• Marketing Your Business – As mentioned above, businesses and enterprises can use geofencing as a marketing tool to serve ads to people across 100,000 mobile apps and websites after that individual walks inside the geofenced location and even see the ads long after they leave the geofenced location (30 days or longer). It can also be used to trigger alerts by retailers to people who downloaded the retailer’s app and who walked nearby or inside the geofenced location set up by the retailer.
• Asset Management – Owners of assets can install geofencing technology into their assets (cards, trucks, tractors, computers, etc.) to track when those assets are taken outside of a geofenced location.
• Fleet Management – Many trucking and fleet-based companies use geofencing to track their vehicles based on where they’re going. The HERE Fleet Telematics Geofencing is a REST API that allows you to track whether or not mobile assets are located within the specified geographic areas. An asset is any kind of trackable object, such as a person, car, smartphone, or delivery package.
• Human Resource Management – Companies such as Quickbooks and other software companies are beginning to incorporate geofencing technology into their solutions. This allows employees to not only track their time but also determine if someone has truly left a geofenced location after clocking out.
• Drone Management – Drones are becoming a big deal with delivery, as well as taking imagery, videos, and more. RFIDs and GPS tracking for the use of geofencing allow drones to be pinpointed on maps. The use of drones can be better managed when a geofence is drawn, thus ensuring that the drone doesn’t leave the said geofenced area.
• Law Enforcement – Law enforcement is using geofencing to track people who may have committed a crime. It does require law enforcement to issue a warrant to a judge. These warrants compel a technology company (so far, only Google) to disclose anonymized location records for any devices in a certain area during a specified time period. Some say this is in violation of the 4th amendment, but the area is still grey for now.
• Tracking Spouses – We are seeing people who may not fully trust their spouse implement geofencing by placing and installing tracking technology on their spouse’s smartphones and even vehicle to track their location and their physical behavior.
• Tracking Animals – A number of pet owners are also using geofencing to track animals such as dogs, cats, cattle, and more. Those pet owners will place a geofence around a particular boundary. When the pet wanders outside of that boundary, an alert or trigger is set off to ensure the owner can quickly locate and find the animal. Also, pet owners use it to slightly shock the animal to change their behavior and ensure the pet doesn’t leave a particular boundary.
• Security Geofencing – Similar to animal tracking, security companies are deploying geofencing technology in the security space. This is available on modern, high-tech smart home security systems, and the set-up is very easy. You can choose a location, distance, and variety of actions using the system’s free, compatible app. The distance and location work together to define a perimeter, or fence, around a set point. Then, the app constantly monitors your location.
  • Lighting (via Smart Outlets or Bulbs)
  • Thermostats
  • Door Locks
  • Alarm Arming System
  • Television
  • Appliances
  • Lawn Speaker Systems
  • Garage Door Openers
  • Water Shut Offs
  • GPS Trackers (Great for kids!)
  • Sound Systems
• Market Research – Geofencing technology can also be used for market research purposes and to determine where people are going and the types of people based on demographic and psychographic data where they are frequenting.

Geofencing Statistics

Given the mobile-centric nature of geofencing or white-label geofencing, its adoption and effectiveness are growing in driving its purposes across many industries. There are many uses of geofencing, and there are statistics that back up the power of hyperlocal RFID tracking and marketing.

• Geofencing is compatible with 92% of smartphones. That includes IOS, Android, Google, and other smartphone software systems.
• The average consumer spends 5 hours a day on their mobile device.
• 3 out of 4 consumers complete an action after receiving a message when approaching a specific location
• 53% of shoppers visited a retailer after receiving a location-based message
• The number of smartphone users is over 220 million
• 22% of businesses say they use hyperlocal targeting
• 71% of consumers prefer a personalized ad experience.
• 80% of shoppers use their mobile devices inside physical stores
• 77% of customers will follow through with a purchase if a CTA is included in the adMobile ads with geofencing have double the click-through rate.  This is due to the hyper-local nature and granular targeting that allow for geofencing.

Types Of Geofencing Software & Technique To Consider

There are a few ways to define the boundaries you want to draw when creating your geofences. The two most commonly used ways of defining your geofencing boundaries are radii, polygonal geofences, and latitude-longitude geofences.

Circular & Radius Geofences

With circular and radius-based geofences, the administrator or software owner can go into the geofencing software, pick the area where they want to draw the boundary, and choose how many feet around that location they want it to be. It can go all the way from 5 feet and upward of 200 – 500 feet of the location you’re building the virtual geofence around.

The only downside of radius geofences is that there may be blind spotted areas that you capture from the circular geofence you don’t intend to versus picking the areas you want to really focus on or hone in. For example, most buildings are not circular. So, if you build a circular radius geofence around a square building, you may capture certain areas you don’t intend to.

Polygonal Geofences

Polygonal geofences possess more accuracy than radius-based geofences because you can use 12 to 15 points around a defined area in which you can geofence. Certain geofencing advertising platforms, such as Simpli.fi, allow for polygonal geofences. The process entails first determining the area you want to geofence and simply picking the points around the area you want to geofence. Again, the only downside with polygonal geofences is you can expect to get about 5 feet of variance capture on all lines of the geofence you build, but it is still more accurate than radius based geofences.

Latitude & Longitude Geofences

The last means of geofencing uses more of a square-based system. You typically need the latitude and longitude coordinates of the location you want to target. The geofencing software you use will then build a square that can be 10 feet to 500 feet based on the coordinate you are targeting. The biggest downside with this approach is pinpointing precisely the area, as you may end up capturing a road or a parking lot that is unintended.

Main Benefits of Geofencing

In lieu of the many ways that geofencing can be used, including fleet management, marketing, and tracking people, there are many geofencing benefits that provide a ton of advantages to companies regardless of its usage:

Very Precise & Accurate

Geofencing is one of the more accurate technology software tools on the market, given you can get all the way down to the contours of a building versus having to target a neighborhood or zip code to reach people and define a boundary in which people are leaving the defined area.

For Marketers, It Is Great For Reaching Customers & Limiting Wasted Ad Spend

Nothing is better for a market than reaching customers and individuals who are in-market for your product/service and your ability to limit marketing spending and waste on people who are most likely not to be interested in your services.

Most marketing platforms only allow you to drill down to a mile radius at the least and up to an entire city, state, or county at most.  Geofencing allows you to get hyper-local by reaching people who go to:

• Particular buildings
• Competitor locations
• Retail stores
• Parking lots
• Your own location for customer loyalty targeting
• Billboards
• Intersections and more

Great When Coupled With Other Marketing Channels

And even better, when you’re coupling geofencing marketing with other digital advertising channels such as Google Adwords, Facebook Advertising, YouTube, and even many offline channels such as direct mail, TV, and billboard, you tend to create an omnichannel advertising solution reaching people who are in-market and precisely the people you want to engage with

Provides More Efficiencies

Geofencing technology allows many companies to gain more efficiencies across their organization in tracking and measuring the efficiencies of their staff and their employees.  Think about the number of employees who no longer feel comfortable clocking in but trying to make it seem as though they’re actually at work, or a rancher who no longer has to worry about losing cattle because their geofencing boundary alerts them when cattle goes near or crosses the virtual fence, or even the marketer who instead of targeting an entire neighborhood can now target a set number of buildings.  These efficiencies provide more cost savings and limit overall waste.

Produces Great Data of your Audience

With geofencing, you can gain incredible insights into the audience entering specific geofences and those who are leaving. A great example is a casino that has over 30,000 mobile app downloads and wants to deploy geofencing. That casino can not only track those who used the app when entering the geofenced boundary around the casino, but now the casino can determine exactly who came into their casino based on demographic and psychographic variables and then use that information to reach similar people within a 30-mile radius of the casino.

Very Mobile Centric

Geofencing is compatible with 92% of smartphones. Thus, many companies can use and deploy geofencing because most consumers have a mobile device that renders geofencing effective for marketing, tracking, security, and data collection.

Track People & Employees Better

Fleet management, HR, security, and even law enforcement are now using geofencing to track people and employees better. Platforms such as QuickBooks are beginning to use geofencing for this.

How Is Geofencing Marketing Being Used By Advertisers?

Reaching customers in precise areas is undoubtedly the most utilized use of geofencing. The various types of locations include:

• Competitor Locations
• Your Own Location (Customer Loyalty)
• Retail Locations
• Trade Shows/Events
• Individual Buildings & Hospitals
• Streets and Cross Sections
• Households
• Sporting Events

If you have a physical storefront or location, you can also measure foot traffic to your location based on those people who have seen or clicked on your ads and then visited your location. A great example is if you run a car dealership, geofencing your competitors can help you determine those who saw or clicked on your ads from your competitor dealerships and then determine those who came back to your dealership.

And lastly, use geofence as a compliment to your other digital & offline marketing channels. Depending on the industry you’re in, geofences can reach people who are in the market as well as those who fit the ideal customer profile. But when those same people are exposed to a direct mail piece, an OTT or TV Placement, or even a Google ad, they are more likely to connect with your brand compared to those who are not.

Tips for Implementing Geofencing into Your Marketing Strategy

For those people who are not using geofencing for security or fleet management but rather for marketing, here are some sound geofencing tips you can use to implement into your marketing strategy:

Take Into Account The Industry & Total Addressable Market

Geofencing works better for certain industries compared to others. A great example is comparing B2B versus B2C industries. Because of the higher customer value and the longer purchase cycle, geofencing tends to work better for B2C industries like retailers, car dealerships, real estate developers, restaurants, and even healthcare.

However, even within the B2C work, geofencing works better for certain industries than others. For example, you can use geofencing to reach car shoppers who are in the market by targeting other car dealerships. Or, as a real estate developer, you can geofence real estate developments, knowing those who visit are likely to be in-market shopping for homes.

So take that into consideration and think about who you are reaching (people in the market for your product and/or services) and the likelihood that a person will be interested in buying from you.

Use It More For Reaching People Researching Or In-Market For A Product/Service

Similar to the last point above, it’s best used when identifying people who are in the market for your service. Another great example is a personal injury attorney who wants to reach accident victims. PI Attorneys may think geofencing ER Hospitals is a great strategy, but you have to think about how many of the people at the ER got into an auto accident. Versus towing locations or actual car repair collision centers may produce a higher volume of auto accident victims. These are people who are most likely to be in the market or researching your business. This philosophy holds true across many other industries as well.

Cap Your Ads Served To Get More Reach

Capping your ads served extends the reach of your geofencing marketing ad budget. If you set your ads to 8 ads per day per person, you will serve more ads to people each day but not gain more reach. Compared to setting your ads to 3 per person per day, your geofencing campaign now reaches 2 – 2.5 times more people.

Google Examples & Uses Of Companies Selling Geofencing Applications

Propellant Media

Propellant Media is a geofencing marketing and omni-channel advertising agency that uses geofencing to target people in precise areas. They use multiple geofencing strategies, including polygonal, radius, and latitude/longitude geofencing, to precisely reach customers who are walking or driving to particular boundaries drawn virtually on behalf of clients they support. Their geofencing is for direct brands, but it also can be white-labeled for reselling to their other set of clients.

ArcBest

ArcBest is a multibillion-dollar freight and logistics solutions provider that solves complex supply chain challenges.  ArcBest uses its geo-fencing technology for LTL, trucking, and shipping/logistics solutions to track everything from fleets of vehicles to shipments that have been shipped out.

Quickbooks

Quickbooks is a payroll and account software used by many small to mid-sized businesses. Recently, Quickbooks began incorporating geofencing technology to help HR and companies better track their employees and set boundaries around areas in which their employees are going to ensure they are not “lying” on their time tracking.

Arlo

Arlo is a security company for consumers who want to protect and monitor their homes more effectively. Arlo’s built-in geofencing, which is a virtual fence, helps discover when something or someone enters or exits a pre-defined zone. You can use Arlo Geofencing to arm, disarm, or resume schedule modes when your mobile device is In Zone or Out of Zone.

Uber

At Uber, a geofence refers to a human-defined geographic area (or polygon in geometry terms) on the Earth’s surface. We use geofences extensively at Uber for geo-based configurations. This is important for showing users which products are available at a given location, defining areas with specific requirements, such as airports, and implementing dynamic pricing in neighborhoods where lots of people are requesting rides at the same time.

BMW

BMW has a very unique means of geofencing for some of its electric vehicles. What is special about BMW eDrive Zones is that as soon as a BMW plug-in hybrid* with the activated service drives into a low-emission zone or similar inner-city area designated as an eDrive Zone by means of geofencing, the model switches to pure electric mode – without any additional intervention by the driver.

Taco Bell

Taco Bell uses its mobile app and geo-fencing as a way to drive sales. Whenever a customer drives by a store, they receive a push notification, which encourages them to order food. After launching such geofencing campaigns, Taco Bell reported a 6% increase in sales, and the average order amount from the mobile app was 20% higher than in-store orders.

Apple Maps

Region monitoring (also known as geofencing) is a way for your app to be alerted when the user enters or exits a geographical region. You might use region monitoring to perform location-related tasks. For example, the Reminders app uses them to trigger reminders when the user arrives at or leaves a specified location, as shown in Figure 1.

Figure 1 Notifying the user upon leaving a geographic region

Google API

Sometimes, users want to use a particular app when they are in a specific type of location, such as an airport or a supermarket. However, users have to navigate to that app and then take a specific action within it while they are near the area of interest.

The geofencing API allows you to define perimeters, also referred to as geofences, which surround the areas of interest. Your app gets a notification when the device crosses a geofence, which allows you to provide a useful experience when users are in the vicinity.

MGM Grand

MGM Grand is a casino and hospitality company that uses geofencing to track those who downloaded their app and to measure engagement and visitors to their locations. They have especially used it in the sports betting world. In certain regions around the country, you are only allowed to do sports betting in particular casinos, not at your home or outside of the casino. So, some people must download the MGM Grand app, and the app must be triggered from your smartphone device, noting that you are inside the vicinity. If you are not, the mobile app will not allow for any sports betting.

Costs & Pricing Of Geofencing

Geofencing costs and pricing can vary depending on the use case.  So, we decided to break it down by use case:

• Mobile push notifications – there are mobile push notification companies that use geofencing primarily for retailers. We’ve seen costs range from $100 – $1000/month to implement into your existing mobile applications.
• Trigger text messages or alerts – Similar to mobile push notifications, it can also be used to send out alerts to people. The cost for this service is actually a bit less, ranging from $20 to $500/month.
• Geofencing Marketing Costs – this is traditional geofencing marketing technology. Most Demand Side Platforms will charge. A minimum of $10,000/month, but there are few that charge less, such as Propellant Media and other digital advertising technology companies.
• Allow tracking on vehicle fleets – given the geofencing is baked into the software, these costs can range from $1,000/month to upwards of $100,000/month, depending on the overall need.
• Track your pets and even your spouses – this type of geofencing meaning is usually less expensive and can cost a consumer anywhere from $25/month to $100/month

Deliver location-based marketing data for research purposes – there are geofencing, meaning market research companies such as Gimbal, that allow you to track people. The cost for this type of service ranges from $500/month to $10,000/month.

Geofencing Disadvantages – Challenges To Consider

The benefits of using geofencing technology are many but, and any company that want to use geofencing should strongly consider adding it a s solution to gain more cost efficiencies or reach or track people in very precise areas. However, there are a few challenges faced by the users and the management.

Some Inaccuracies

As mentioned previously, geofencing is not 100% accurate. For example, if you used radius-based geofencing, you tend to capture a few areas. You may not intend to compare it to polygonal geofencing.  And even if you use polygonal geofencing, there tend to be 5 – 8 feet of variance on all sides of the geofence you build. So beware, as you build those fences, don’t build them too close to a highway, or else you’ll capture all the driving traffic on those highways.

Privacy Concerns

As the users need to disclose some of their information in order to avail themselves of the benefits of this technology, there is a scope for their information to be stored by these location-based companies. Legislation such as CCPA out of California and even GDPR out of Europe are working with those companies who store such data to ensure the data is housed properly and people are given proper permission to opt out of apps.

Even recently, Apple has made updates to its IOS 14 System, making it challenging for both app developers and location-based advertising companies to capture and target those IOS Smartphone Devices with geofencing accurately.

Relevant Messages

Another major challenge is that if retailers do not have a complete record of specific users, then other users who are not relevant at that point in time will receive communications, i.e., notifications. Thus making it a pointless and un-ambitious strategy, which is a loss for the senders.

What is the difference between GPS and geofence?

A geofence is an area around a single GPS coordinate or a shape created by drawing lines between three or more GPS coordinates. The phone’s GPS location is compared to the geofence areas in the system to determine if the user is inside or outside a geofence.

GPS (Global Positioning System) and geofencing are two different but related technologies used in location-based services. GPS is a satellite-based navigation system that enables precise determination of a device or user’s location on the Earth’s surface. It uses a network of satellites to provide real-time position tracking, allowing users to determine their coordinates and navigate to a specific destination. On the other hand, geofencing is a technology that utilizes GPS, cellular data, or Wi-Fi signals to create virtual boundaries or geofences around specific geographic areas.

Geofences are used to trigger predefined actions or alerts when a device or user enters or exits the defined area. These actions can include sending notifications, activating certain functions or features, or capturing data related to user behavior. In summary, GPS is a navigation system that provides accurate location information, while geofencing uses this location data to create a virtual perimeter.

Why do businesses use geofencing?

Geofencing allows businesses to target certain groups of users in specifically designated areas. Its implementation can benefit companies in many different ways, such as driving local foot traffic to a storefront or delivering localized ads to nearby mobile devices.

Businesses use geofencing as a powerful tool to enhance their marketing and customer engagement strategies. Geofencing allows businesses to target specific geographic areas and deliver personalized, location-based content or offers to their target audience. This can help increase foot traffic to brick-and-mortar stores, drive online traffic to websites or mobile apps, and ultimately boost sales and conversions.

Geofencing also enables businesses to gather valuable data and insights on customer behavior and preferences, which can be leveraged to refine marketing strategies and improve overall customer experience. Additionally, geofencing allows businesses to send timely and relevant notifications, alerts, or promotional messages to users within a specific area, increasing the chances of engagement and conversion. With its ability to harness the power of location-based targeting, geofencing has become an integral part of modern marketing strategies for businesses of all sizes and industries.

The Future of Geofencing

There are some cautions with geofencing, especially when it comes to privacy with marketing. Just a few years ago, Massachusetts was one of the first states to enact a consumer protection law that objected to the use of location-based advertising in targeting people based on particular healthcare diagnoses.

The Attorney General blocked an ad campaign from Copley Advertising, which was hired by a Christian organization to set up a geofence around women’s health clinics that would target women in the waiting room or nearby with anti-abortion ads.

However, despite questions about security, it doesn’t seem that geofencing will lose its popularity any time soon. According to a press release published in Globe Newswire, the geofencing industry is expected to grow at a compound annual growth rate of 16.3% during the forecast period (2023-2031), citing “growing adoption of the technology in logistics and increasing technological innovations across industry verticals.”