What is Geofencing? Everything You Need to Know

Geofencing is to make a virtual perimeter in a real-world environment. This perimeter can be narrowed down to a rooftop, property border, or radius around any business building. Watch the video below to get a better understanding of the basics of geofencing and how it can drastically impact your advertising initiatives.


How does geofencing work?

Geofencing is a location-based advertising service that triggers an action when a potential customer enters a geofenced competitor’s location.
For example, if you own a collision repair center and want to gain a bigger share of the local collision repair market, you might place a geofence around the property of a competing body shop. If you do this, a mobile ad for your body shop will appear as the potential customer is within the geofence that surrounds your competitor’s business.

This can be extremely beneficial to you if you offer lower rates for specific services like tire rotation or oil change services.

How does geofencing work on mobile?

There are multiple ways geofencing can be used in the mobile space. Most commonly, the mobile device will communicate via GPS. Phones can communicate with other devices to trigger action when the phone leaves or enters an area. This form of communication is commonly used within applications for items like household thermostats and tracking devices for logistics.

How does geofencing work without an app?

The location can come from a cell tower, Bluetooth, or Wifi. Most commonly in terms of advertising, we can use location from someone else’s app to advertise via mobile advertising exchanges. A geofence is made to communicate with a request of where we want ads to appear or capture mobile IDs within the designated geographic area.

What kind of business should use geofencing?

Many businesses and industries can benefit from a geofencing campaign if the strategy makes sense. From the auto repair industry to restaurants, geofencing can have a dramatic impact in lead generation and customer retention through campaigns that center around recruiting employees, branding initiatives, awareness, and sales.

What type of reporting is common with a mobile advertising campaign using geofencing?

Our reporting offers key performance indicators (KPI) such as conversions, while common metrics are clicks, impressions, and CTR (click-through-rate).

What is a click-through-rate (CTR)?

Commonly referred to as CTR, a click-through-rate is the amount of impressions it takes to get a click. There are many calculators out there, but the formula is clicks divided by impressions x 100.

Can geofencing campaigns track conversions?

Yes, geofencing marketing campaigns can track conversions for online or offline attribution. By tracking consumer conversions, we can tell you where your customers are going to first out of your list of geofenced locations.

How much does geofencing cost?

Geofencing cost can vary based on location and population. However, ultimately the success of the campaign will boil down to how strategically your ad placement plan is implemented.

What are some reasons geofencing cost may vary?


Where do you want to be seen? This is one of the most important questions to answer when developing your campaign. Remember, if you want to be seen at your competitor’s location, there’s a good chance someone else will too. The more interest there is for a certain location, the higher the bidding war will be for those ad impressions.

App Placement

Physical location isn’t all that matters. App Placement can play a pivotal role in determining your geofencing campaign cost. Placing ads in specific apps (and specific places within those apps) can have an impact on overall price and conversion quality.

Quantity and Scale
Quantity and scale matters significantly when determining campaign cost. For example, placing 35 geofences within a specific zip code will most likely cost you more than placing a large geofence around the entirety of the area. Generally speaking, the larger the zip code is, the lower the cost. This is mostly due to population and  potential competition. With a larger geofence, you might be including businesses that have no ad competition, which means that no one is bidding against you. While this might end up costing you less, you might also not be serving ads to the perfect potential customer. That person may have been shown a competitor’s ad in a location where you had been outbid. These are all factors that you should be considering when trying to determine the perfect “cost vs. quality conversion” ratio.

3P takes all of these factors into consideration when creating a plan and detailed reporting for our clients.

Can any place be geofenced?

For the most part, there aren’t limitations on creating geofences. However, there are limitations in some areas based on what type of advertising you run for ethical purposes. For example, the state of Massachusetts passed a bill that limits certain advertising around health care facilities. Also, in most instances, hospitals and schools are off-limits.

What is the difference between geofencing and geotargeting?

Both geofencing and geotargeting utilize location as a fundamental factor for determining ad placement.

Geofencing is a mobile tool that makes a virtual perimeter to create an action within the perimeter using location-based services. Geotargeting uses location as well but in a broader sense and can include users with a behavior of visiting an area or have interest in that area. Geotargeted tactics use zip codes, DMA (Designated Market Area), city, or state segmentation.

To put it simply:

Geofencing targets everyone within a very specific location (like a business property). Geotargeting targets everyone who fits a specific demographic within a broader area (like a city).

Can we retarget based on geofencing a location?

Yes, there are ways to passively monitor or proactively collect mobile advertising IDs that visit a specific area(s) with the purpose of re-targeting. Keep in mind, many potential customers will need several impressions of your ad to gain their attention. This means that initiating a retargeting campaign will be a great way to nudge these people into the customer funnel. There’s a good chance they simply forgot to check out your business or take advantage of the offer you were promoting. Hitting them with a reminder never hurts.

How can geofencing work for my company?

A mobile advertising campaign using the tool of geofencing to target in on a more effective audience can help multiple industries in everything from hiring employees, selling services, growing brand awareness and more.

Why Choose 3P Marketing Solutions to initiate your geofencing campaign?

Geofencing has been proven to increase engagement and drive sales. 3P Marketing Solutions has proven to use it to help grow businesses like yours. If you’re interested in taking your business to the next level with this revolutionary technology, fill out the form below or talk to us here!


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