What is Geotargeting? The Ultimate Guide to Geotargeting Marketing
March 29, 2021 by
Here’s what you need to know to execute a show-stopping geotargeting campaign
Updated 4/26/2021
Geotargeting, also known as location-based marketing, allows marketers to segment their target market based on where their customers have visited, then deliver ads or content to them in order to make more relevant contact with them.
In this guide, we will give an overview of geotargeting, how it works, when it works best (and doesn’t), how much it costs, and how to get started.
Here’s what you’re going to learn as you read through this guide:
- What is geotargeting?
- How does it work?
- Who uses geotargeting and why?
- When is geotargeting a great fit?
- When is it not a good fit?
- Advantages of geotargeting
- How much does geotargeting cost?
- Where can you run geotargeting campaigns?
- How to get started with geotargeting
What is Geotargeting?
Geotargeting is a strategy where marketers use privacy-compliant location data from cell phones to create audiences and serve advertising or content to their intended audiences. Marketers utilize geofences and mobile advertising to reach their audience based on their current location to serve an ad in real-time, or they can use an individual’s previous location to serve an ad later. Marketers deliver ads using location data to meet a wide variety of advertising goals.
Over the past several years, marketers have used the term “geotargeting” to mean different things. One of the term’s earliest uses implied sending direct mail to homes in specific zip codes, reaching an audience where they lived. Marketers also combined this zip code location targeting with the demographic information associated with that zip code.
With the proliferation of the internet, personal computers, and cell phones, geotargeting came to mean building audiences from IP address, cell tower triangulation, and eventually mobile location data. Sometimes you’ll also see it referred to as geofencing advertising or geofencing mobile advertising.
How Does Geotargeting Work?
Today’s version of geotargeting begins when mobile phone users opt-in to share their location through their apps on their cell phones. When the app publisher or marketing company receives this location data, they must then decide what to do with it.
If they wish to serve the ad, content, or push alerts in real-time, they will have previously defined the locations that will trigger those actions. When someone enters that pre-defined area, they’ll receive the content or campaign at that moment.
In order to deliver ads and content based upon previously collected location data, companies must match the latitude/longitude (lat/long) data to a point-of-interest (POI), like a grocery store, restaurant, or car dealership. Advertisers are now able to build audiences made up of people who visit the locations they care about most. Once they’ve created those audiences, they build campaigns and reach their audience throughout the digital advertising ecosystem, including social media, Google, and other networks.
Using location data always requires opted-in data in order to maintain privacy compliance. Companies that create location-based audiences and analytics also aggregate the data to protect privacy. Marketers are interested in marketing to large groups that share similar characteristics and have no interest in marketing to an audience of one, nor tracking specific individuals.
Who Uses Geotargeting & Why?
Marketers don’t need to be an advertising giant like Ogilvy or Wunderman to take advantage of geotargeting. It’s a great fit for agencies or brands of any size. The main benefit is the ability to market to a highly-targeted audience. The audience that visits a particular location or group of locations is one of the most relevant audiences available.
Agencies or brands that want to deliver ads to drive foot traffic to physical locations, or reach their competitors’ customers, are ideal candidates for geo targeting marketing. Location-based marketing is typically not a good fit for companies with a single location, for sensitive locations like doctors’ offices, or for ubiquitous consumer packaged goods (e.g., toothpaste, sliced bread), covered in more detail below.
According to eMarketer, “for the first time ever, US consumers will spend more time using their mobile devices than watching TV, with smartphone use dominating that time spent.” With mobile users on their phones for a daily average of 3 hours 54 seconds, there is ample time for ad exposure.
Marketers see more success in collecting actionable data about their audiences rather than serving the current audiences inside their geofences. This way, marketers learn and understand who comes to their stores and when. They then proceed to follow up with relevant ad content delivered to their audiences’ mobile phones, encouraging more store visits and conversions.
Another effective way marketers use geofencing is through foot traffic attribution. As all marketers know, demonstrating true attribution from ad to sale is one of the most difficult aspects of modern marketing. Coupon codes or online cookies work for digital attribution, but foot traffic attribution remains difficult to solve. This is where geotargeting comes into play. Through a geotargeting campaign, advertisers visualize foot traffic and repeat visits while the campaign runs. Additionally, foot traffic attribution helps you analyze your competitors’ location data, giving you the competitive edge to geoconquest these customers. As an example, if you advertise for a restaurant chain, you advertise to customers who visit your competitors’ locations.
Download the full audiences and attribution case study.
When Geotargeting is a Great Fit
Retail
Retail marketers see tremendous benefit because the physical footprint of retail locations match directly to the GPS lat/long data received from cell phones. After matching that data to retail points-of-interest, marketers create audiences that visit these locations, as well as foot traffic analytics for greater understanding about the audience visiting their places.
In order for the audiences and analytics to have a meaningful scale, the retailers that are the best fit typically have a minimum of ten to twenty locations. However, a single location retailer, such as an independent coffee shop, can make excellent use of location-based marketing by creating campaigns that reach competitive visitors.
Another audience targeting technique includes targeting mobile audiences at complementary locations. For example, if a client owns an ice cream chain, their marketing team may want to target audiences in nearby restaurants who may be hungry for dessert after their meals.
Learn more about how VISIT Local delivers meaningful, measurable foot traffic for retailers.
Auto
For auto dealerships, geofencing mobile advertising is an excellent strategy as they need to reach their audience quickly and effectively. Automotive marketers know that once a customer arrives on the lot to purchase their new car, the sales cycle is almost complete. Marketers use both real-time geofencing as well as geo targeting by looking back over a seven to fourteen-day period. This shorter time window ensures they’re reaching people not only while they’re on the lot, but while they’re still considering their purchase.
Dealerships also use mobile location data to geoconquest their competitors’ prospects. They create audiences based on visitors to competitive lots, serving promotions with the goal of bringing them to their lot instead.
Digital Out of Home (DOOH)
Digital out of home is one of the fastest growing forms of marketing. DOOH refers to the digital billboards or signs you’ve seen at shopping malls, gas stations, kiosks, and in taxi cabs.
Since its viewership can be very large and widespread, marketers need a more accurate picture of who is seeing their ads and if their campaigns impact conversions or foot traffic. Geofencing companies draw polygons around the digital signs at kiosks to build audiences of those passing by the sign. This gives DOOH companies a more complete picture of their viewership and helps them make smarter media buying decisions. If a different area gets more foot traffic, the mobile location data will show that there is more potential for viewership in a different physical area. Similarly, the owner of the asset can move the screen to that location, charging more to advertise based upon the foot traffic data.
See how Reveal Mobile OOH helps you measure offline and online campaign impact.
Direct to Consumer (DTC)
DTC companies are brands that promote directly from the manufacturer to the end consumer, typically online. Examples include Warby Parker, Casper, MVMT Watches, and others.
DTC companies are perfect for geotargeting because they typically begin as digital native companies and they can easily geoconquest customers that visit physical locations that sell similar products. They do this by delivering geotargeted ads across social media, mobile, and desktop to the audiences that visit their competitors. When direct to consumer brands open brick and mortar stores, they also measure retail foot traffic and analyze their digital campaign effectiveness through foot traffic attribution.
When Geotargeting Isn’t a Great Fit
Lack of scale
Some locations, such as single store businesses, do not produce enough data to create actionable audiences. Building meaningful audience sizes for a location-based campaign is easiest for businesses with large retail footprints, several locations, and high daily foot traffic. In contrast, a single-location business typically doesn’t have enough foot traffic to create sizable audiences — unless it covers a large area, such as an auto dealer.
One way to overcome this challenge is to build audiences that visit competitive locations. A local coffee shop deploying geotargeted mobile advertising might look to reach visitors to Starbucks, Dunkin, and Caribou Coffee.
Omni-present consumer packaged goods
Geotargeting is not a great fit for products that are found everywhere, like toothpaste, candy or chips. Since these products are found in numerous different stores, marketers for these products have more success using different strategies, like demographic targeting.
However, geofencing mobile advertising does work with specialty brands and items found only in specific stores. For example, marketers for a specialty dog food brand found only in Whole Foods can geotarget shoppers who visit pet boutiques and health stores. These audiences show similar characteristics and shopping patterns to those who would buy specialty dog food, driving foot traffic to the locations where it is sold.
Sensitive locations
Certain locations, such as healthcare offices, can pose a challenge for someone trying to build a geotargeted audience, given the sensitive nature of the visit. Marketers and geofencing companies adhere to privacy compliance firms’ requirements for the usage of data, as well as relevant legislation.
The Network Advertising Initiative, the Digital Advertising Alliance, and TrustArc stipulate acceptable business practices and how their member companies must handle opt-in permissions. By adhering to these codes of conduct, geofencing and location data companies ensure audiences are not created around sensitive locations, primarily healthcare-related, nor will they engage in any discriminatory practices.
Looking for More Info? Download “Understanding & Selling Location Based Marketing”.
Advantages of Geotargeting
Increased Engagement with Personalized Content
When someone sees your business is in their vicinity, it automatically piques their interest. If a customer knows you are close by, it reinforces a customer experience and establishes a relationship.
Make Business Relevant To Locals
No matter where you are located, there are more people near you than you realize that are looking for exactly the services that your business provides. Geotargeted ad helps you use technology to bring you together. Establish yourself as part of the community and connect with your locals via geotargeting tools. It encourages local visits and is part of the worldwide movement that encourages people to “shop local.” They may be more inclined to refer you to people they know that need your services.
Improve Your Customer Experience
When a customer knows you’re local to them, it showcases your brand as reliable and trustworthy. In effect, it breaks down a barrier that many businesses have difficulty with when trying to connect with people outside of their range. It allows people who want to work with you to find you and for you to improve your brand visibility locally.
Save Time
When a customer knows that you are close by and wants to visit your store, it saves you both time. Geotargeting connects you with your neighbors who are waiting to “buy local,” and the right advertising methods are all it takes to reach them.
How Much Do Geotargeting Campaigns Cost?
Geotargeting campaigns cost about the same as other types of targeted campaigns. Pricing usually takes two forms. 
A common approach to pricing is to apply a markup to the existing CPM on impressions served. For example, if a campaign costs $5 CPM as standard pricing, a marketer can expect a $1–$3 markup on the CPM, depending upon the granularity of the audience targetings.
Second, the cost can be based upon the number of devices in the target audience, essentially buying a list. This expense is either absorbed into the campaign cost, or, for an agency, be passed along to the client. This also typically increases the CPM on the campaign from somewhere between $1 and $3, depending upon the targeting, the destination, and the type of campaign (display, video, sponsored content, etc).
Discover how to grow your agency with geofencing marketing.
Where You Can Run Geotargeting Campaigns
Thinking back to where geotargeting originated, location-based campaigns are still very effective across print, TV, radio, and digital. Capabilities and sophistication levels differ based on the channel.
When evaluating geotargeting for digital campaigns, they are the simplest and most effective when tied to mobile advertising, given that this is where the majority of location data originates.
Social media allows multiple approaches, with the simplest being their existing targeting options. These platforms allow marketers to easily build audiences that live, work and visit nearby locations, cities, zip codes, designated market areas (DMAs), counties, and states. Facebook, Instagram, Twitter, and Snapchat also allow marketers to upload their own data to create custom audiences. These sites match their audiences to a list of mobile advertising IDs that encompass the location-based audience.
Want to learn more about this approach? Check out our Guide to Building Custom Audiences on Social Media.
To run geotargeting advertising throughout the mobile ecosystem, there are numerous approaches and tools available. Products like VISIT Local make it easy for marketers to build location-based audiences and then push them to demand-side platforms for campaign delivery and measurement. There are also numerous self-serve tools available for creating and delivering geotargeted ads, such as GroundTruth’s self-serve platform.
The major ad networks themselves also provide geotargeting capabilities, with the ability to select predefined audiences of things like car shoppers, McDonald’s diners, etc. While these are easy to find and use, they provide a limited level of precision targeting.
Important Considerations for Geotargeting
When a marketing team is considering implementing location-based marketing and geotargeting into their strategy, they must first determine how customized they want their audiences to be. They need to ask themselves, do date ranges matter? How many locations do they wish to build audiences from? Do I want an audience on a regional, national, or international scale? Do I need to target people based on current or past visits? Do we just want audiences that have already been pre-built for us?
Get Started
Ready to dive deeper into geofencing marketing? Register for one of our upcoming webinars.
The simplest way to start with geotargeting is to use the tools built into social media sites and Google. Their tools allow marketers to choose where ads are served based on where their target audience lives, works and is nearby at that moment. Marketers may serve ads to those audiences based on many location groups, such as state, city, zip code, and county, and refine to those who have shown interest in their brands.
The next level of sophistication with geofencing is to purchase pre-built audiences from audience marketplaces such as Kochava or adsquare. From those companies, marketers can purchase pre-selected cohorts of people with similar attributes and visits such as an audience of “Target shoppers” or “Disney World visitors.” Using an audience marketplace will give marketers a more targeted audience, but they lack transparency and customizability into exactly how the companies have built and determined those audiences. They will not have as much control over date ranges, nor be able to easily visualize competitive visits, nor have easy access to attribution measurements.
The most sophisticated form of geotargeted marketing is to work with a mobile audience and analytics provider. These companies allow marketers to have control over the locations and dates range from which they want to custom build their audiences of real-world visitors. They also enable a wide look back period, so you have full control over finding audiences. They can scale their audiences from one location to regional, state, or even on a national scale. A location-based marketing platform also analyzes foot traffic so that marketers can understand audience performance before, during, and after campaigns. In fact, actual foot traffic that marketers can attribute to specific campaigns is precisely what advertisers need to demonstrate business outcomes from marketing efforts. It’s a best practice in geotargeting to get past impressions and clickthrough rates, and focus on metrics tied to sales or revenue. This becomes possible with sophisticated foot traffic attribution reports. For those advertisers who need to tie ads directly to location visits, pixel-based attribution is the right way to go. 
Depending on the brand or client, marketers want to capture different audiences over different date ranges. A marketer for a car dealership may test reaching an audience that visited their lot in the last few days since they’re likely in the final stages of making a car purchase. However, marketers for a high-end clothing company want to capture shoppers over several months, given the fact that these audiences don’t visit retail locations weekly, but only a few times per year. With a location-based marketing platform, marketers have the power to build these custom audiences to achieve their ultimate goal: to deliver the right message to precisely the right people at exactly the right time.
Finally, a great geotargeting campaign also requires excellent creative and messaging. Without a relevant and engaging message, audience targeting may produce less impactful results. One of the best examples of this occurred in late 2018 when Burger King let their app users unlock a 1-cent Whopper if those users came within 600 feet of a McDonalds.
