What is geofencing? It’s a location-based technology that creates virtual boundaries around physical locations. When someone with a smartphone enters or exits that boundary, they can receive targeted ads, push notifications, or text messages.
Think of it as an invisible fence around your store, a competitor’s parking lot, or an event venue. Cross that fence with your phone, and marketing automation kicks in.
The technology relies on GPS, Wi-Fi, cellular data, or Bluetooth beacons to detect device locations. Most smartphones have location services enabled by default, which is why geofencing has become a practical marketing tool.
For Denver and Colorado Springs businesses looking to drive foot traffic, geofencing offers a direct line to nearby customers at the moment they’re in position to act.
This guide covers how geofencing works, what it costs, who should use it, and how to launch campaigns that produce results.
How Does Geofencing Work?
Geofencing uses location technology to detect when mobile devices cross predefined boundaries. Here’s the process:
The Three-Step Process
Step 1: Define the boundary. You set geographic coordinates around a specific location using mapping software. This could be your storefront, a competitor’s location, a convention center, or an entire neighborhood.
Step 2: Set the trigger. You decide what happens when someone crosses that boundary. Options include push notifications, in-app messages, display ads, or SMS alerts.
Step 3: Deliver the message. When a device crosses into your geofenced area, your pre-programmed marketing action fires automatically.
The technology works because the average smartphone user has 40+ apps with location access enabled.
Geofencing vs. Geotargeting
These terms get confused often. Here’s the difference:
Geofencing creates a virtual perimeter and triggers actions when devices cross it. Everyone who enters gets the same treatment.
Geotargeting combines location with user data like demographics, interests, and browsing history. It targets specific people in an area, not everyone.
A restaurant using geofencing sends a coupon to anyone walking by. That same restaurant using geotargeting sends coupons only to people who previously searched for “Italian food near me.”
Geofencing works better for immediate foot traffic. Geotargeting works better for audience building and retargeting.
What Is Geofencing Used For?
The technology spans multiple industries. Here are the most common applications:
Retail and Local Business
A clothing store sets a geofence around its location. When someone enters the zone, they receive a notification about today’s sale. Studies show geofencing campaigns can increase foot traffic by 20-25%.
The same store could geofence a competitor’s location. Shoppers at the competitor see ads for better deals nearby.
Restaurants and Hospitality
A coffee shop triggers a “20% off your next latte” message when previous customers walk by during morning commute hours. The timing and location alignment creates higher conversion rates than standard digital advertising.
Hotels use geofencing to welcome guests with check-in information when they arrive on property, then send spa offers once they reach their room.
Real Estate
Agents geofence open house locations to capture interested buyers in the area. They also target specific neighborhoods like Cherry Creek or Highlands Ranch where they have listings.
Event Marketing
Concert venues and convention centers use geofencing to engage attendees with schedules, maps, and vendor promotions. After the event, they can retarget those visitors for future ticket sales.
Fleet Management
Outside of marketing, companies use geofencing to track vehicles and equipment. An alert fires when a truck leaves its assigned route or when construction equipment leaves a job site.
Geofencing Marketing Benefits
For brick-and-mortar businesses, geofencing solves a persistent problem: connecting digital advertising to physical store visits.
Here’s what the data shows:
- 7.5% average click-through rate for geofenced audiences (compared to 0.9% for Facebook ads)
- 20% increase in store traffic from well-executed campaigns
- 2x increase in in-store visits when combining geofencing with retargeting
- 80% of consumers more likely to engage with location-relevant ads
Reach People Ready to Buy
Traditional advertising reaches people at random moments. Geofencing reaches people when they’re already in buying mode, near a store, with a phone in hand.
A person walking through Cherry Creek Shopping Center is more likely to respond to a shoe ad than someone scrolling at home.
Target Competitor Locations
You can set virtual boundaries around competitor storefronts and serve ads to their customers.
A gym could target the parking lot of a competing fitness center. A car dealership could target other dealerships on auto row. A local restaurant could target the fast food chains nearby.
This works because you’re reaching people who already want your category of product or service.
Measure Offline Attribution
Geofencing platforms can track when someone who saw your ad later visits your location. This closes the loop between digital advertising and physical store visits.
Cost-Effective Targeting
You only pay to reach people in specific locations. No wasted impressions on people 50 miles away who will never visit.
How Much Does Geofencing Cost?
Geofencing campaign costs vary based on scope, targeting, and platform. Here’s what to expect:
| Cost Type | Typical Range |
|---|---|
| CPM (Cost Per Thousand Impressions) | $4-$14 |
| Monthly Campaign Minimum | $1,000-$5,000 |
| Setup Fees | $250-$500 |
| Self-Service Platforms | From $100/month |
For a local business testing geofencing, a reasonable starting budget is $1,500-$3,000/month including agency fees. This provides enough impressions to generate meaningful data and optimize performance.
What Affects the Cost?
- Size of geofence: Larger areas cost more
- Population density: Urban areas like downtown Denver have more devices, higher costs
- Targeting specificity: Adding demographic layers increases CPM
- Campaign duration: Longer campaigns sometimes get volume discounts
- Creative complexity: Video ads cost more than static display
How to Set Up a Geofencing Campaign
Step 1: Define Your Objective
What do you want people to do? Visit your store? Download your app? Call for an appointment? The objective shapes everything else.
Step 2: Choose Your Locations
Options include:
- Your own location (to engage people nearby)
- Competitor locations (to intercept their customers)
- Complementary businesses (to reach people with related interests)
- Event venues (to capture attendees)
- High-traffic areas (to maximize reach)
Start with 3-5 locations. Expand once you see what works.
Step 3: Set Your Radius
For retail, a 1-mile radius typically works well. For destination businesses, you might go wider. For hyper-local targeting like a shopping center, you might go as small as 100 feet.
Step 4: Create Your Message
Keep it short. Mobile notifications get seconds of attention. Lead with the offer or value proposition.
Example: “Flash sale today only. Show this message for 20% off your purchase at [Store Name].”
Step 5: Set Timing Parameters
Match your campaign timing to when customers make decisions. A breakfast restaurant doesn’t need geofencing at 9pm. A bar doesn’t need it at 7am.
Step 6: Measure and Adjust
Track impressions, click-through rates, and store visits. Most campaigns need 2-4 weeks of data before you can make meaningful optimizations.
Geofencing Privacy Considerations
Location tracking raises legitimate privacy concerns. Here’s how responsible geofencing works:
User consent is required. Geofencing only works on devices where users have enabled location services and agreed to share data with apps.
GDPR and CCPA apply. If you’re collecting location data, you must comply with applicable privacy regulations including GDPR and CCPA.
Transparency matters. Users should understand what data you’re collecting and how you’re using it.
Opt-out must be easy. Users should be able to disable location tracking at any time.
For businesses, this means working with reputable platforms that handle compliance properly. Cutting corners on privacy creates legal risk and damages customer trust.
Who Should Use Geofencing?
Geofencing works best for businesses with:
- Physical locations that depend on foot traffic
- Local customer bases within a defined geographic area
- Competitive advantages worth promoting
- Marketing budgets of at least $1,500/month
- Mobile-savvy customers who respond to digital offers
Industries That See Strong Results
- Retail stores
- Restaurants and bars
- Fitness centers and gyms
- Automotive dealerships
- Real estate agencies
- Healthcare clinics
- Professional services with walk-in traffic
- Event and entertainment venues
When Geofencing Doesn’t Make Sense
It works less well for:
- Online-only businesses
- Companies with very long sales cycles
- Products requiring extensive research before purchase
- Markets with low smartphone adoption
- Businesses with budgets under $1,000/month
Geofencing Market Statistics
The geofencing market is expanding:
- Global market value: $2.2 billion in 2023, projected to reach $12.2 billion by 2032
- Compound annual growth rate: 21%
- Consumer preference: 70%+ favor location-customized ads
- Engagement rates: 80% of consumers more likely to engage with location-relevant ads
Getting Started with Geofencing in Colorado
For Colorado businesses considering geofencing, local expertise matters.
Markets like Denver, Colorado Springs, Boulder, and Fort Collins have distinct customer behaviors. A campaign that works in LoDo might need adjustment for suburban Aurora or mountain-town Vail.
Working with an agency that understands Colorado geography, traffic patterns, and consumer behavior saves time and ad spend.
Questions to Ask a Geofencing Provider
- What platforms do you use for targeting and tracking?
- How do you measure store visits and conversions?
- What’s the minimum campaign commitment?
- How granular can targeting get?
- What’s your experience with businesses in my industry?
- How do you handle privacy compliance?
Work with Creative Options Marketing
Creative Options Marketing builds location-based campaigns for Colorado businesses across retail, hospitality, healthcare, and professional services.
We handle geofencing strategy, setup, creative, and optimization so you can focus on serving customers who walk through your door.
Ready to reach customers where they are?
Schedule a Free ConsultationFrequently Asked Questions About Geofencing
What is geofencing with an example?
Geofencing creates a virtual boundary around a physical location. When someone with a smartphone enters that boundary, they can receive targeted advertising. For example, a shoe store could set a geofence around a nearby shopping mall. Anyone who enters the mall might see an ad for the shoe store on their phone.
What is the difference between GPS and geofencing?
GPS is the technology that determines a device’s location using satellite signals. Geofencing uses GPS (along with Wi-Fi and cellular data) to create virtual boundaries and trigger actions when devices cross those boundaries. GPS is the underlying technology; geofencing is an application of that technology.
Is geofencing legal?
Yes, geofencing is legal when implemented properly. Businesses must obtain user consent through app permissions, comply with privacy regulations like GDPR and CCPA, and provide clear opt-out options. The location data collection must be disclosed in privacy policies.
How accurate is geofencing?
Accuracy depends on the technology used. GPS-based geofencing is typically accurate to within 10-30 feet outdoors. Wi-Fi and cellular methods have wider ranges. Bluetooth beacons can be accurate to within a few feet for indoor applications.
Does geofencing work without an app?
It depends. Some geofencing requires users to have a specific app installed. Other methods work through the mobile advertising ecosystem and can reach users through any app with ad placements. Push notifications require an app; display ads don’t necessarily.
What data does geofencing collect?
Geofencing collects device location data (latitude and longitude), timing of visits, dwell time in locations, and device identifiers. This data is typically anonymized and aggregated. Specific user identities aren’t usually collected unless they’ve created an account with the advertising platform.
