Explainer: Geofencing

 

There is nothing more hyperlocal than where you are standing at this minute. Reaching consumers where they are standing, in real time, with messages designed to alert them to opportunities right next to them is the proverbial Holy Grail for marketers. Although companies have been experimenting with geofencing for several years, it appears that this way of communicating with customers has reached a tipping point. Here’s what you need to know about this marketing tool.

What is it: If Foursquare and Groupon had a child, it would look a lot like geofencing. Geofencing involves establishing invisible tripwires around a specific geographic perimeter. When a registered user crosses the tripwire, a message, usually a text message, is sent to the consumer’s phone. No check-in required. The message can include time- and location-sensitive offers, deals and coupons as well weather, traffic and other location-specific news.
Why it matters: Marketers and advertisers are able to reach consumers at both the point and moment of purchase and influence consumer behavior in the most immediate way using preferences provided by the consumer. Geofencing enables marketers to be where their customers are and to provide relevant content in the moment. Technologically, unlike GPS-based location-aware services, which drain handset batteries quickly, geofencing technology relies on cell tower triangulation, which does not have that effect on handsets.
Who’s doing it: Last month, AT&T launched a five-city test drive of ShopAlerts, a geofencing platform from Placecast. It is the first mobile carrier to do so. AT&T customers in Chicago, Los Angeles, New York and San Francisco can personalize a set of preferences and receive alerts, limited time coupons and promotions based on those preferences and their locations when they enter one of the geofenced areas. The company has signed on some heavyweight retail partners, including HP, Kmart, JetBlue and SC Johnson. CBS Outdoor is redefining “out-of-home” advertising in partnership with Locationlabs. For a campaign promoting Intel’s smart TV, outdoor media throughout the New York market invited consumers to download a mobile app and answer several questions about their TV viewing habits and preferences. When those consumers entered the rotunda in New York’s Penn Station, which had been geofenced, they had personalized experiences with smart TV stations set up in the space.
Assessment: The technology affords marketers the ability to customize a message based on not only who the audience is but also where the audience is at the moment the message arrives. But however seductive the ability to meet an immediate need is, it has to be weighed against consumer squeamishness at the idea of being tracked. Marketers love Minority Report, but regular people recoil from that vision of the future. Even if marketers are scrupulous about contacting only those consumers who opt in and register preferences, there is bound to be backlash when the floodgates open and consumers are inundated with coupons. AT&T has taken a few precautions to make its pilot program palatable to its customers. The carrier says that customers will receive no more than four messages per week and has been careful to make the program an opt in, rather than opt out. Although this technology offers marketers an unprecedented ability to get chummy with consumers, there is also a very real potential for consumers to feel invaded and exposed.
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