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Location-Based Marketing: Geotargeting vs. Geofencing

July 24, 2020 Sarah Cavill

Shutterstock_1771141148 GPS map, pin address location on mobile apps. Double exposure of man hand using laptop computer searching target place on night cityscape. Business and technology, marketing plan concept

Location-based marketing is an integral part of many marketing campaigns. Retail and restaurant brands in particular implement location-based marketing to reach consumers looking for deals and who are ready to buy. By understanding the difference between geotargeting and geofencing and seeing how brands effectively deploy these tactics, businesses can begin to implement more focused digital marketing strategies. Changes in consumer behaviors including related to dining out and shopping during coronavirus have also impacted how marketers are tackling their location-based campaign optimizations.

Opting-In May Be Required For Some Types Of Location Targeting Campaigns

Although display ads are one of the most common ways to deploy location targeting, geotargeting campaigns sometimes begin with opt-ins from consumers, which can be facilitated by offering rewards or discounts for opting-in or encouraging opt-ins when placing online orders. 

What Is The Difference Between Geotargeting And Geofencing?

Geotargeting and geofencing have some similarities, but it is important to understand the differences between these two types of location-based targeting. While geotargeting typically focuses on a defined audience within a location using IP addresses and demographics, geofencing generally targets a broader population, serving ads or promotions to anyone that enters a certain “fenced-off” area. The two location-based marketing tactics are similar in that they often focus on local promotions and news that can grab a potential customer’s attention in the moment. 

How Are Brands Using Location Targeting In Their Marketing Strategies?

Many brands leverage location-targeting tactics with successful results. Here are four businesses that made geotargeted digital marketing strategies work for them:

Purple Mattress: No one likes to be hot while they’re sleeping, which Purple Mattress leaned into with a location-based social media strategy that targeted audiences in hot climates. According to an article in Street Fight, “Running location-based ads has allowed Purple to get granular with its messaging. For example, [Purple’s digital advertising director] says when the company tested running ads exclusively in Phoenix, Arizona, it tightened its copy from ‘Sleep Cool, with Purple,’ to ‘Hey Phoenix, Start Sleeping Cooler.’ Unsurprisingly, [Purple] found that the ads with targeted copy ended up having a higher click-through rate.”

Burger King: In a move sometimes referred to as geo-conquesting, Burger King’s Whopper Detour campaign offered 1¢ Whoppers to anyone who downloaded the Burger King app while inside (or close to) a McDonald’s. The campaign generated 1.5 million app downloads and 3.5 billion earned media impressions.

domino's carryout deal

Domino’s Pizza: Domino’s is well-known for hyperlocal opted-in, geotargeted SMS campaigns that might suggest consumers order in on a day when it’s too hot to cook, or too cold to go out or to celebrate a local occurrence in their area. Location-based targeting was one of many ways that Domino’s turned their business around, with more than 65% of U.S. sales coming from digital avenues.

Nathan’s Famous: The hot dog brand, spurred on by the need to drive business during coronavirus, updated their digital presence to better create and serve ads to customers within a certain radius of their local Nathan’s Famous. According to Marketing Dive, by using “audience segmented data and geotargeting,” the chain reported “that after one month, more than 100,000 customers within a four-mile radius of the three test locations saw the ads.” The geofenced ads were also more cost effective and 10 times more efficient than the brand’s prior more traditional efforts, like mailers.

How Has Coronavirus Changed Location-Based Marketing?

Brands have to be mindful that the ads they are serving are not showing or highlighting a different experience than the one actual consumers are having, due to coronavirus related differences from state to state. This need for more localized advertising, particularly as different phases open around the country, has led to a rise in local advertising and very specific messaging, allowing brands to feel more confident that their campaigns resonate with specific audiences in certain locations.

Leon VanGelder, Vice President SMB, Local and Inside Sales at Pandora, recently shared that its advertisers are using “geotargeting options to tailor appropriate messaging to particular cities and states around the safety measures they are putting in place.” Additionally, value, like promotions and coupons, already a successful aspect of geotargeting, has played a key role during the pandemic, especially with quick-service restaurants. As of June 11, Sparkfly, an offer management solutions company, saw “a 48% increase in promotion redemption on its platform since the lowest period of activity the week of March 4, 2020 as clients looked to drive customers back in store.” Some brands are using local campaigns to get a read on the local consumer mindset and comfort level before going wide with national campaigns, a best practice use of location targeting regardless of other outside factors.

The deployment of targeted location marketing strategies offers brands the chance to reach local consumers, avoid potentially expensive national campaigns and create loyalty with promotions, offers and information specifically relevant to the audiences they reach.

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About the Author

Sarah Cavill

With more than 20 years of writing, editing and reporting experience, Sarah Cavill brings to Digital Media Solutions (DMS) a fine-tuned and diverse set of skills. Her work has been featured in notable publications including The Daily Muse, CBS Local, Techlicious and Glamour magazine. Sarah has a passion for current events and the deep-dive research that goes into the content development and brand identity of DMS Insights. In her role as Senior Marketing Communications Writer, Sarah contributes to the pitching, researching and writing of multiple stories published each week surrounding digital and performance marketing innovations in pop culture, news, social media, branding and advertising.

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