Demystifying Geofencing

A Comparison of App-based vs. Network-based Geofencing Recently I’ve been getting a lot of questions about Geofencing. There are a lot of misconceptions out there and a lot of misleading language. This post is designed to clear up any questions you may have and to compare and contrast App-based Geofencing and Network-based Geofencing.

According to a recent xAd report, Geofencing has become the most popular location-targeting technique and is used in 55% of location-based advertising campaigns. From mobile marketing applications to minimizing the risks of a BYOD strategy to verifying location mobile gaming applications, Geofencing can make you hyper-local, improve your ROI, reduce fraud and ensure you’re compliant.

So how exactly does it work? Let’s start with the basics. A Geofence is a layer of intelligence that allows you to make decisions or take some action based on a geographical area. It can circle anything/ any area you like – a retail store, a stadium, a neighborhood. You can build an App-based Geofence that, as the name suggests, requires you have an app to access GPS data. Or you can build a Network-based Geofence that uses carrier-grade location data and is not app dependent.

The most common misconception about App-based Geofening is that once you build your app you will be automatically notified anytime one of your customers enters or exits a Geofenced area. The truth is your customers not only have to find your app in the app store or android market, but that app actually has to be running (and killing your customers’ battery) to know if a geofence has been crossed. Now while app analytics firm Flurry tell us that 80% of American consumers’ time on mobile devices is spent in apps, if you’re constantly accessing GPS data when a customer has your app open they will notice. And they won’t be happy about it. Unhappy customers means lost loyalty and lost share of wallet.

The other disadvantage of App-based Geofencing is the additional upfront (and maintenance) cost for the app itself (the average cost for a mid-range app can range between $50-$150k).

Now I don’t want this post to take away from the brilliance of Geofencing. Understood and used correctly it can double the ROI on your marketing campaigns, increase the loyalty of your customers, and reduce operational expenses. A Geofence is a highly effective way to send locally-targeted, relevant content to your customers at times that most benefit your business. Run a happy-hour? You only need to look up the location of your customers and send them a promotional message once a day to drive traffic. Sales slow between 10-11am? Look up the location of all customers in the area at 9.30am and send them a coupon to redeem when they buy something in (what used to be) that slow hour.

Back to the comparison between App-based and Network-based Geofencing. With Network-based Geofencing you don’t need an app to run a Geofence campaign. As I stated earlier, building and maintaining an app is expensive. And even if your customers download it, if they don’t open it and run it when they’re in your Geofence it’s irrelevant. Not to mention apps only run on smartphones. Yes, smartphone adoption may be on the rise but over 40% of the population are still using feature phones. That's a lot of people you can't target with an App-based Geofence campaign. Network-based Geofence campaigns can target any mobile user connected to a cellular network. And the more people you can target the more effective your campaign will be. There are also no upfront costs involved. Cost is determined on a per-location lookup basis and can be dialed up or down as required.

In summary, use Geofences. They work. Just be aware that they may not do what you want, when you want and how you want unless you get the right one that fits your location-based requirements.

To summarize the comparison and help you decide if App-based Geofencing or Network-based Geofencing is the right choice for your business, Locaid, the world's largest LaaS (Location-as-a-Service) company, has created the following comparison chart.

Geofence comparison