Geotargeting Vs. Geofencing: Location-Based Ads 101

January 12, 2024
7 minutes

Getting to know your audience is crucial for effective ad campaigns. 

Learning your potential customer’s age, education, interests, places they like, and similar things can become that (not so) fine line between success and the infamous “could be better..."

Based on this information, you can create a more accurate image of your target audience, therefore, send them the right message.

One of the ways to do it is to take advantage of location data which allows you to show your ads to people (aka your potential customers) in specific locations. This data is often referred to as geotargeting or geofencing, which, despite being two different terms, are often used interchangeably and, most importantly, incorrectly.

In this post, you’ll learn:

  • Key differences between geofencing vs. geotargeting
  • Benefits of each
  • How geotargeting and geofencing work, and when to use what

Let’s dive in and never confuse one for another again.

What is geotargeting?

Geotargeting definition

Geotargeting is location-based advertising that allows you to show content to users who meet specified criteria in a specific geographical location. It is usually defined by entering location details into the platform you’re using, e.g., DSP, Facebook, etc.

This targeting type usually focuses on a wider area, like a region, country, or city, and enables businesses to refine their audience by adding additional parameters besides place.

For example, if you want to promote your barbershop in New York City, with geotargeting you can target only men instead of targeting everyone.

Geotargeting example: CanalBox 

CanalBox, a telecommunications company based in Rwanda, wanted to promote its new fiber internet service available in several different cities across the country. 

The campaign was created to highlight locations where people can now “get unlimited fiber internet at their homes.” Therefore, CanalBox used geolocation targeting to advertise only to those who actually could order these new services instead of showing ads to everyone, everywhere.

Geolocation targeting helped the telco to avoid serving ads to people who live in places where this service is not available, preserving precious impressions and clicks.

CanalBox ad promoting fiber internet in Rwanda

Geotargeting benefits

  • Precise targeting. Geotargeting is always combined with several other filters, enabling hyper-personalized advertising. This helps focus on a narrower audience and target only potentially interested people instead of everyone.
  • Better ROI. More precise targeting allows brands to reach people who are more likely to buy. Therefore, it helps allocate marketing budgets more effectively and improve overall ROI.
  • Universal. Geotargeting has many use cases and can work wonders for any business, regardless of the industry.
  • Valuable insights for future campaigns. Geotargeting provides additional data (like interests, demographics, etc.) that businesses can use to optimize future campaigns for the best performance.
  • Better brand awareness. Geotargeting can put you in front of the local audience and help position yourself as an expert in the area. 

What is geofencing?

Geofencing definition

Geofencing and geotargeting are often seen as the same thing. Yet, although geofencing falls under the umbrella of geotargeting, they have a couple of differences that clearly distinguish one from the other.

Geofencing is a term used to describe a type of location-based advertising that allows you to target all users within a specific area by drawing a virtual geographic boundary or a “fence” around it.

Using geofencing, you don’t have to choose any other targeting criteria (although you can if you still want to narrow down your audience), meaning that all users entering the area you’ve predefined will trigger ads, without any exclusions. 

This targeting option can work as long as the user stays inside virtual boundaries or can be used after they have already left the geofenced area (retargeting).

Geofencing example: Sephora

Sephora, a French cosmetics brand, used geofencing to attract nearby customers to their physical stores and increase sales.

The company set up a campaign that let them show recommendations, store news, personal offers, or purchase history to its app users who crossed a virtual border drawn around Sephora stores.

Sephora’s app would then send a push notification with relevant information or an incentive to drive a passerby inside.

Sephora geofencing example

Geofencing benefits

  • Reaching users at the right place and at the right time. Since you can create a geofence around a specific geographic object, you can target potential customers within this parameter and increase their chances of visiting.
  • Quicker conversions. Geofencing can help boost local sales just because of the reason mentioned above. Matching ads and locations increase relevance; therefore, can instantly get interested nearby leads through the business door.
  • “Stealing” customers from the competition. No one said you couldn’t draw a geofence around your competitors’ establishments, luring them to choose your business instead. One of the best-known examples of this is a highly successful Burger King’s idea to use a 600-foot geofence around McDonald’s restaurants and offer everyone entering it to better go to the closest Burger King and get a whopper for one cent.
  • Better customer experience. Higher relevance and personalization that geofencing advertising offers are what makes it so valuable to brands. Buyers expect companies to understand their preferences and offer tailored content, and tend to stay with those that succeed in doing so.

Differences between geotargeting and geofencing

As you can see, geotargeting and geofencing are very similar in nature, yet generally, they have one key difference that can help you distinguish one from another:

  • Geotargeting ads are focused on specific details of customers within a chosen area
  • Geofencing ads are delivered to everyone who crosses a virtual fence, regardless of their behavioral data (if not chosen otherwise).

Let's place geotargeting and geofencing side-by-side to make it even clearer and resolve this question once and for all. 

We’ll focus on the purpose of each targeting option, how they work, whom they allow you to target and how accurately, and who can benefit from these targeting options the most.

Geotargeting vs. geofencing comparison table

1. Purpose

Geofencing can also be defined as a smaller component of geotargeting, and both of these terms serve a similar purpose – to show location-appropriate ads.

However, while geotargeting is mainly used for brand awareness and future conversions (like learning about an NYC-based barbershop and visiting it sometime later), geofencing focuses on hyper-relevance and instant results (getting a personalized offer from Sephora and visiting a nearby store now).

2. How does it work?

Both targeting types require you to select a specific location where you want to show your ads. The difference lies in how that location is defined and the technology used.

Geotargeting defines locations based on the user’s IP address (sometimes also GPS) that you can combine with other targeting options, like demographics and behavior. This targeting type is usually used to serve ads in the broader area, like cities, countries, or regions, and is defined by simply entering location details.

In comparison, geofencing works based on GPS data that is often combined with other signals, like WiFi, cellular data, Bluetooth, and RFID. The location is defined by creating “a fence” around a particular object or narrower area, e.g., a supermarket or a street, to target people on the move.

Geolocation signals for geotargeting and geofencing

3. Target audience

Since geotargeting usually combines several different targeting criteria, it allows you to reach a more precise audience that belongs to some category in a selected geographical area. 

With geofencing, you can potentially target all users who enter the geofenced area, thus, your target audience is everyone who happens to be nearby.

4. Accuracy

Both these targeting types are accurate, yet the final result also highly depends on your location data partners and customers’ privacy settings.

Since geofencing uses a combination of different signals, the accuracy can vary up to 10 meters in urban areas equipped with many cell towers and WiFi routers.

Geotargeting, when used solely based on IP address, can be up to 95% accurate when done on a national, state, or city level.

5. Recommended for

Geofencing can work great for retail stores, restaurants, airports, hotels, event managers, or similar businesses that could benefit from targeting users nearby, within specific boundaries.

On the contrary, geotargeting can be used by any business/organization and for multiple purposes. For instance, universities can target students in a specific city. For a student to see the ad, they don’t need to enter the university campus or any other chosen area – it’s enough to use the internet in the city/country/region the ads are aimed for.

Practical use cases to inspire your next campaign

Geotargeting McDonald's restaurants in London using DSP

How to use geotargeting

  • Create climate or weather-related promotions
  • Target specific language speakers
  • Promote local events
  • Target specific interests, e.g., book lovers in the area
  • Create ads relevant to specific cultures
  • Promote personalized services for travelers
  • Promote niche products/services

How to use geofencing

  • Target your competitor’s customers
  • Attract foot traffic to your store
  • Offer personalized deals
  • Target people for job openings
  • Promote real estate
  • Create countdown banners

Add location targeting to your marketing strategy

Location-based targeting is a perfect opportunity to reach more local people and increase the number of conversions. Whether it’s geotargeting or geofencing, they can both put your brand in front of your potential customers, boost ad relevance, and significantly impact purchase decisions.

It’s essential to clearly define what you want to achieve with your campaign to be able to choose the right targeting type. 

But if you feel like you could use a helping hand from a professional, reach out to the Eskimi team or book a demo with us to ace your geolocation campaigns.

Philip is the CMO of Eskimi. When he’s not busy growing the Eskimi brand, he spends his time with family and playing ping pong.
Philip is the CMO of Eskimi. When he’s not busy growing the Eskimi brand, he spends his time with family and playing ping pong.
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