What Is Geofencing And How Does It Work?

What Is Geofencing And How Does It Work?

Geofencing is a location based technology RFID (Radio Frequency ID) enabling many different businesses and enterprises to accurately track, market to, and effectively alert administrators when a person has entered or exited the virtual geofence.  There are many uses of geofencing beyond marketing and to better understand the complexities behind it, we must explore all the nuances centered around geofencing.

TABLE OF CONTENTS – JUMP TO A SECTION

  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. How Is Geofencing Marketing Being Used by Advertisers?

  8. Costs & Pricing Of Geofencing

  9. Geofencing Challenges To Consider

  10. The Future Of Geofencing

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 or mobile device enters or exits a virtual boundary set up around a geographical location, known as a geofence.  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.

What Is Geofencing Marketing? 30 Geofencing Companies You Should Know

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 smart phones
  • 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.”  While Wikipedia defines it as “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 manager to see alerts when anyone enters or leaves that specific area 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 many brands are using geofencing to market to people in precise areas.

How Geofencing Truly Works?

In order to ensure geofencing is set up property, there are a few steps that’s needed to have geofencing work.

First, a virtual boundary around a specific location must be drawn via a GPS or RFID (Radio-frequency identification) enabled software.  This can be using polygonal geofencing software to identify points on a map to define the boundary that you want to capture people 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 API’s when developing a mobile app.  The virtual geofencing will then trigger a response when the device enter or exits that area or is in very very close proximity of 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 the smart phone 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 mobile 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 off 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, cattle in agriculture industry and – you’ll see this topic pop up in drone discussions. Nearly every drone is pre-programmed to accommodate geofencing, which are 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 users’ authorization – a process that ties the user’s identity to their drone – so that law enforcement can keep track on 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’s of mobile apps and websites after that individual walked inside the geofenced location and even see the ads long after they left the geofenced location (30 days or longer).  It can also be used to trigger alerts by retailers to people who downloaded the retailers app and that individual 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, truck, tractors, computers, etc..) to track when those assets are taken outside of a geofenced location.
  • Fleet Management – Many trucking and fleet based companies are using 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 to allow employees to not only track their time, but to determine if someone has truly left a geofenced location after clocking out.
  • Drone Management – Drones are becoming a big deal with delivery but also for taking imagery, videos and more.  RFID’s and GPS tracking for the use of geofencing allow drones to be pinpointed on maps.  And the use of drones can be better managed when a geofence is drawn thus ensuring that 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 spouses smart phones 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 such.  Those pet owners will place a geofence around a particular boundary and when the pet wanders outside of that boundary, an alert or trigger is set off to ensure the owner to 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 set up is very easy. Using the system’s free, compatible app, you can choose a location, distance, and variety of actions. 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 use 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, it is growing both in its adoption and effectiveness in driving its purposes across many industries.  There are many uses of geofencing and there are statistics that back up the power of hyper local RFID tracking and marketing.

Types Of Geofencing Software

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 they want to draw the boundary around, 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 or hone in on.  For example, most building are not circular.  So if you build a circular radius geofence around a square building, you may capture certain areas you don’t intend it.

Polygonal Geofences

Polygonal geofences possess more accuracy than radius based geofences because you can use 12 to 15 points around a defined area you can geofence.  Certain geofencing advertising platforms such as simpli.fi allows 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 using 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 of the coordinate you are targeting.  The biggest downside with this approach is pinpointing precisely the area as you may end up captures a road or a parking lot that is unintended.

Geofencing Latitude and Longitude Coordinates

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 the usage of it:

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, Great for Reaching Customers & Limiting Wasted Ad Spend

Nothing is is better for a market than reaching customers and individuals who are in-market for your product/service and your ability to limit marketing spend 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 omni channel 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 measure 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 limits 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 who 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, 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.  And thus, geofencing can be used and deployed by many companies because the bulk of consumers have a mobile smart phone devices that renders geofencing effective for marketing, tracking, security, and data collection.

Track People & Employees Better

Geofencing is now being used by fleet management, HR, security, and even law enforcement to track people and employees better.  Platforms such as Quickbooks is beginning to use geofencing for this usage.

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

2X industry average

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 if you’re a car dealership geofencing your competitors, you can 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, using 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 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

Geofencing works better for certain industries compared to other.  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.

But even within the B2C work, geofencing works better for certain industries even more than other.  For example, you can use geofencing to reach car shoppers who are in market by targeting other car dealerships.  Or as a real estate developer, you can geofence real estate developments know 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 who are in-market for your product and/or services and likelihood that 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-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 are a great strategy, but you have to think 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-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 ads more to people each day but not gain more reach.  Versus setting your ads to 3 per person per day you are now reaching many 2 – 2.5 times more people with your geofencing campaign.

Examples Of Companies Selling Geofencing Applications

Propellant Media

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

 

ArcBest

ArcBest is a multibillion-dollar freight and logistics solutions provider that solves complex supply chain challenges.  ArcBest using their 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 midsized 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 their 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 built in geofencing which is a virtual fence that helps to 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.

geofence-example

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 their 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 this campaign, 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
A notification that can appear when the user leaves 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 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 te 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 smart phone 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 – Same as for mobile push notification, it can also be used for sending out alerts to people.  These 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 os $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 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 market research companies such as Gimbal that allows you track people.  These cost for this type fo service ranges from $500/month to $10,000/month.

Geofencing – 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 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 compared to polygonal geofencing.  And even if you use polygonal geofencing, their tends to be 5 – 8 feet of variance on all sides of the geofence you build, so beware as you build those fences, you 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 the benefits of this technology, there is a scope of their information being 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 accurately capture and target those IOS Smartphone Devices with geofencing.

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 from them. Thus making it a pointless and un-ambitious strategy, which is a loss for the senders.

The Future of Geofencing

There are some cautions with geofencing, especially when it comes to privacy with marketing.  Just 4 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 from MarketsandMarkets, the geofencing industry is expected to grow over 27 percent by 2022, citing “technological advancements in use of spatial data and increasing applications in numerous industry verticals.”

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