What is Geotargeting in Online Advertising?

February 10, 2022

According to PEW Research, 85% of American adults own a smartphone. More importantly, their phone travels with them as they go about their day, giving valuable behavioral insights about their shopping habits. Geomarketing is location-based marketing that uses this phone location data to reach prospects based on their physical locations.

With Geomarketing, you’re able to deliver hyper-relevant ads based on where your prospects live or businesses they visit. The goal a geotargeting campaign is usually measured in a lift in foot traffic conversions to your conversion zones.

Geofencing vs Geotargeting?

Let’s establish three important definitions in Geomarketing:

  1. Geofencing Zones: Physical addresses that you’d like to draw a digital fence around. (For example, a competitor’s model home, a specific grocery store, a realtor office, etc.)
  2. Addressable Geotargeting: Some geotargeting vendors offer targeting options beyond just an address, allowing you to target specific addresses based on the resident’s demographics. (For example, targeting addresses in a zip code radius where household income is over $X)
  3. Conversion Zones: These are the locations your business owners, where you’d like to see foot traffic. The ad server will draw a virtual fence around your business and any foot traffic that happens after the user is shown your ad is considered a conversion. A conversion zone could be your retail location, your model home as a builder or an event location for a promoter.

In geomarketing, you designate your physical location targets and measure success when someone who walks into those targets receives your ad and then goes into one of your locations.

What’s the Difference Between Geotargeting and Geofencing?

The two terms are used almost interchangeably, as they are both part of location-based marketing.

  • GeoFENCING tends to refer to the actual virtual fence drawn around a target location (for example, drawing a targeting fence around your competitor’s model home).
  • GeoTARGETING is more of an umbrella word that allows for other means of physical targeting, including targeting based on demographics or spending habits (for example, targeting addresses of homeowners who’ve lived in their homes for over 5 years).

What’s an Example of Geotargeting?

In this example, a home builder wants to target low-funnel prospects who are interested in buying a new construction home. They know that people who walk into a competitor’s model home are interested in learning more about new construction and may be actively shopping for a new home.

The home builder will work with a geotargeting provider to set up a campaign. What happens next:

  • Step 1: Prospect A walks into a competitor’s model home, a geofencing zone the builder has identified as a target.
  • Step 2: Prospect A’s cell phone gets tagged by the geotargeting platform/ad server.
  • Step 3: While Prospect A surfs the web or uses apps, they will start receiving ads from the builder.
  • Step 4: Prospect A is considered a conversion if they walk into the builder’s model home after being served an ad.

How Does Geotargeting Detect the Users’ Location?

Technology differs slightly from ad server to ad server, but in general, geotargeting software can detect a user’s location by their GPS signals or which cell towers their phone pings. Some geotargeting vendors offer cross-platform ad serving, meaning that they can serve to a location’s IP address and serve ads across mobile, desktop, and tablets in that household.

Location-based data requires opted-in first party data for privacy compliance. Users opt-in to this type of targeting based on their mobile settings.

Does Geotargeting Work?

According to Propellant Media, 92% of users who are served a programmatic ad will not click on the ad. Therefore, geotargeting may not be the best fit to delivering high-quality website traffic.

However, geotargeting is a great fit for businesses that want to increase foot traffic to physical locations. Model homes and retail shopping centers can track measurable foot traffic as a result of a geotargeting campaign.

In a recent geotargeting campaign for a major retail client, Blue Sky Marketing executed a 30-day campaign that delivered 569 walk-in conversions at about $7.00 cost-per-lead.

Get Started with Geomarketing

Blue Sky Marketing has vetted geomarketing ad platform vendors for real estate and retail industries, and we can recommend the best vendor for your goals and budget. Blue Sky’s team can also help design the best creative assets for your campaign, as well as plan targeting and launch campaigns that deliver results.

If you’re interested in hyperlocal location targeting, let’s talk.

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