In 2024, the location-based advertising market stands at a whopping $57 billion. Experts project this value will grow to over $200 billion by 2030. Amidst this growth, terms like geofencing vs geotargeting often pop up in marketing discussions.
While both techniques use location data, they differ significantly in application and impact.
Today, we’ll explore geofencing and geotargeting by comparing their definitions, key differences, and practical use cases.
Let’s start with the definition of geofencing!
Table of Contents
Geo Fencing Definition
Geo-fencing is an advertising technique that marketers use to display ads or content within a specific area.
With the help of geofencing, you can create a virtual barrier, or “fence,” around the chosen location.
Only users within this virtual boundary can see particular advertisements tailored to them.
Consider you have a local gym in Austin, Texas. You may set up geo fencing to show special membership offers only within a few miles of your facility.
By doing this, residents living outside this virtual perimeter in neighboring areas like Round Rock won’t see your ads.
This method ensures your marketing efforts remain focused and efficient. Using geofencing, you can quickly target potential customers close enough to visit.
You can also adjust the size of the geofenced area based on specific goals, such as:
- Increasing visibility among nearby neighborhoods
- Focusing on those within walking distance
- Building awareness about your facility, etc.
Using geofencing, businesses can limit their advertising reach to areas with the most impact.
As a result, it helps optimize marketing resources and boost customer engagement from the local community.
Let’s move on to the definition of geo-targeting.
Geo Targeting Definition
Geotargeting is an advanced advertising technique that uses geographical location data and information about users’ interests, behaviors, and demographics.
The goal of geo-targeting is to display highly targeted advertisements or content.
This method allows advertisers to target a specific location and select audiences based on detailed criteria.
Firstly, a company identifies a location, such as a city or a neighborhood. Then, it refines the audience by applying filters such as age, hobbies, purchasing habits, the device they use, etc.
This dual-layer targeting ensures that ads are visible only to individuals who are both:
- In the right place
- Likely interested in the product or service
For instance, a children’s toy store in Orlando wants to increase foot traffic.
They might use geo-targeting to show their ads to people within Orlando who have shown interest in children’s toys. And perhaps they are parents as well.
This means the ads target not just anyone in Orlando but those likely to visit or buy.
By combining geographic location with rich consumer profiling, geo-targeting allows businesses to deliver highly customized ads.
Geotargeting increases the chances of attracting genuine interest and converting ads into sales.
Now that we have understood the definitions, it’s time to learn the differences between geofencing and geotargeting.
Geofencing vs Geotargeting: 5 Key Differences
When we compare geotargeting vs. geofencing side by side, there are five major differences.
1. Scope of Targeting
Geo-fencing involves setting up a virtual perimeter for real-world geographic areas. It primarily focuses on the location alone.
Geo-targeting, however, considers location and integrates users’ demographic and behavioral data. This creates highly personalized advertising strategies.
2. Precision of Audience Segmentation
Geo-fencing casts a wider net to target everyone within a specified area. This is useful for broad messages.
In contrast, geo-targeting allows for more precise audience segmentation.
It targets specific groups based on detailed criteria like interests and habits, alongside their location.
3. Complexity of Campaign Setup
Setting up a geo-fencing campaign is fairly simple, as you only need to select the target area.
Geo-targeting campaigns are more complex due to the need for additional data layers like user behavior and demographics.
Also, you should understand your target audience well to set up and run successful geotargeting campaigns.
In the case of geofencing, having a profound audience understanding is not necessary.
4. Usage in Marketing Strategies
Geo-fencing is ideal for brick-and-mortar businesses that want to increase foot traffic, such as cafes or retail stores.
It sends notifications to users within the vicinity.
Geo-targeting is better for businesses targeting a niche audience, regardless of their location within the targeted area.
5. Type of Engagement Triggered
Geo-fencing triggers engagement based on location entry or exit. For example, customers near a store might receive a coupon.
Geo-targeting, meanwhile, can trigger engagement based on a combination of location and the likelihood of interest. For example, it may offer a specific product ad to users who recently searched for similar items.
Here are some other geo fencing vs. geo targeting differences:
| Geotargeting | Geofencing |
| Used in online and mobile advertising | Primarily used in mobile marketing |
| Can adjust ads based on time of day | Ads are static based on location |
| Ideal for global campaigns | Best for local, community-based campaigns |
| Relies on detailed user profiles | Uses basic location triggers |
| Useful for retargeting campaigns | Effective for immediate engagement |
| Uses IP address and GPS (sometimes) | Uses GPS, WiFi, cellular data, Bluetooth, etc |
Now, let’s move on to the use cases of geo targeting vs. geofencing.
Geo-targeting and geofencing are both advertising techniques marketers depend upon heavily to reach their target audience.
However, these techniques have different use cases and are helpful in various industries.
5 Use Cases of Geotargeting
1. Retail Industry
Retailers use geotargeting to send personalized promotions to shoppers based on their past purchase behaviors and proximity.
This method increases the relevance of ads, which in turn enhances the likelihood of customer visits and purchases.
For example, a store might target users who buy children’s clothing with ads for upcoming sales on kids’ apparel.
2. Travel and Tourism
Tourism boards customize travel ads for users based on geolocation and search histories for similar destinations.
They can target individuals living in colder climates with promotions for tropical vacations during winter months.
This strategic targeting helps capture the attention of those most likely to book a trip.
3. Real Estate
Real estate agents target potential homebuyers with ads for open houses and neighborhood listings that align with their criteria.
By focusing on interested buyers in specific areas, agents can increase their chances of selling properties faster.
4. E-Commerce
E-commerce sites use geotargeting to adjust ads based on users’ browsing histories and geographical shipping preferences.
This allows for optimized delivery promotions and product recommendations that cater to local market demands.
For instance, they could promote weather-appropriate clothing based on the user’s local weather conditions.
5. Healthcare
Hospitals use geotargeting to inform nearby residents about available health services and seasonal health campaigns such as flu vaccinations.
This not only aids in community health awareness but also drives patient visits during critical health seasons.
4. Use Cases of Geofencing
1. Event Management
Event organizers use geofencing to send timely alerts about events. They may send schedules, updates, and promotional offers directly to attendees’ phones when attendees are near the event location.
This improves communication and enhances attendee engagement during the event.
2. Automotive Industry
Car dealerships set up geofences around competing dealerships to trigger special offers to potential customers entering these areas.
Using this strategy, they can divert customers’ attention and shift their buying decisions.
3. Brick and Mortar Businesses
Local restaurants implement geofencing to push special lunchtime offers to people within a certain radius during peak meal hours.
This strategy helps increase foot traffic and sales during slow periods by offering timely deals that attract nearby customers.
4. Security Services
Security firms establish geofences around sensitive areas to control and monitor access.
They set up triggers that alter security personnel when someone enters or leaves a designated area.
Companies use both geofencing and geotargeting to get the most out of their advertising campaigns.
Many famous businesses, like Coca-Cola and Starbucks, always use these techniques.
Let’s understand how they do it by looking at two real-world examples.
Famous Geofencing and Geotargeting Examples
Geofencing: Uber
Uber is a great example that uses location-based targeting to boost driver earnings.
The company sets up geofences around high-traffic areas like airports, nightclubs, and hotels.
When passengers land or exit these venues, Uber immediately notifies them of nearby drivers who are ready to provide transportation.
This marketing strategy is beneficial for both customers and the company. Customers get the convenience while the company gets the fares.
A win-win!
Geotargeting: Hyundai
Hyundai had a brand perception of their cars as “cheap” and inefficient.
They tackled this issue with a clever geotargeting advertising campaign known as “Dealer Stealer.”
They mapped out locations of Mazda and Toyota dealerships and targeted smartphone users within those areas.
Hyundai targeted them with enticing advertising deals directly on their mobile devices.
This strategy drew over 815,000 views and persuaded 41,000 people to reconsider Hyundai as a viable option.
Pinpoint Location With GeoPlugin!
Understanding the differences between geofencing vs. geotargeting is important to select the right location-based advertising for your business.
Each technique offers unique benefits, so choose the one that closely aligns with your goals.
However, accurate audience location data is essential to successfully implementing these advertising techniques. That’s where GeoPlugin can help.
Our user-friendly API enables you to precisely determine the location of your visitors, which can help you target them effectively.
Sign up today and experience the benefits firsthand.
