When looking for ways to stretch ad dollars, geofencing may provide specific advantages and lower costs. “Geofencing is a strategy of getting your brand to smartphone users only using ads that are relevant to them,” says Michael Hammelburger, CEO of The Bottom Line Group, an expense reduction consulting firm. “These users are within a virtual distance or boundary around your pizzeria’s location.”
Consider the following scenario: Travelers pass through your area and crave pizza for dinner. As they approach your restaurant, they receive a message on their phones. The notification provides information on your place and offers a promotion of 20 percent off their bill. These travelers might be more likely to stop and try out your pies, as the ad has targeted them while they are in proximity of your location and enticed them with a discount. “A mobile pop-up can connect customers to your restaurant if you hook them using a location-based discounted offer,” Hammelburger says.
Before setting up a geofence, however, you’ll want to understand what it can do—and what it cannot. Making the most of this ad strategy also involves recognizing costs and using best practices to turn a profit. Read on as experts explain everything you need to know about geofencing and sales.
How Geofencing Works
Geofencing is similar to how it sounds: when you run an advertisement, you can draw a virtual “fence” indicating where you want the ad to be seen. “This may be a zip code, a neighborhood, a town or even a state,” says Mike Funkhouser, CEO of Small Business Mentor.
Restaurants can use geofencing to help meet goals such as bringing in more customers, improving brand recognition and creating brand loyalty. In addition to offering promotions and discounts, you can use this type of advertising to inform potential diners about your place. For instance, if your pizza shop provides free wi-fi for diners, you can include this in the message that’s sent to individuals in the geofence.
“Geofencing can take only a few minutes to set up if you know where to look,” says Nate Shivar, a marketing consultant at ShivarWeb LLC who helps local businesses like pizzerias with online marketing. If you’re using Google Ads, you can navigate to your campaign overview. Once you see the column with campaign options, you can click “More” to expand the options listed. Then click on “Locations” and add your included areas and excluded areas. For Facebook, you can head to Facebook Ad Manager; once you’ve created your ads, go to Ad Set. Then head to the Audience section, where you can narrow or expand your audience based on a radius surrounding an address or a defined location area.
“Like anything in technology, geofencing isn’t foolproof,” says Pieter Vanlperen, a veteran software architect and security expert, and managing partner at PWV Consultants. “There will be a percentage of ads that get outside the fence.” You also may find that you end up marketing to your pizzeria’s already established client base. This can happen if you’re located in a small town, and everyone there already knows of your place.
Another pitfall can occur if your marketing efforts collide with your customer base’s preferences. For instance, some clientele may consider it an invasion of privacy to receive ads when they are in a certain location. If your target customers tend to not be tech-savvy, delivering notifications on a mobile device may not lead to as high of a conversion rate as you’d hoped for.
“Usually the cost of a geofencing marketing campaign varies from $5 to $15 CPM (cost per thousand impressions),” says Akshay Deogiri, SEO outreach specialist at Beaconstac, which provides proximity marketing solutions including geofencing. Your exact spend will depend on several factors, including the size of the geofence. “The larger the geofence, the lower the CPM is because the volume is higher,” Deogiri says.
One cost perk of geofencing is that you can avoid spending money to reach customers that are outside of your ideal range. For instance, say you tell Google, Facebook or another ad platform that you will pay $0.25 per click for customers in Atlanta who want to buy pizza. “Once their algorithms find a group of people who click your ads, they will focus on serving your ads to just that group of people,” Shivar says. “You might end up spending almost all your ad budget on cheap college students at the outside bounds of your delivery range.” With geofencing, you can establish a radius or target a specific neighborhood and only spend ad money on individuals who are within your delivery reach.
In addition, you can use geofencing to create more attractive and profitable ads. “People click on ads that are more relevant to them,” Shivar says. Google and Facebook reward relevant ads with lower costs per click. “Plus, they usually have better conversions,” Shivar adds. For example, perhaps a national restaurant chain pays $0.50 per click for an ad throughout the Chicago metro area that says, “Get Tuesday’s Pizza Special!” If you have just one location in downtown Chicago and try to run an ad campaign throughout the city that states “Check Out Our Tuesday Pizza Special!” You will have to pay more than $0.50 a click, and your ad still might lag behind the national chain’s promotion. However, if you run a campaign for just the two miles around a university that is near your restaurant and create a relevant ad such as “University of Chicago Students Get a Tuesday Pizza Special!” Google and Facebook will be more likely to show your ad first. You can expect to pay much less than $0.50 per click, even though the national chain is still bidding $0.50 per click for those same customers.
Marketing today is becoming increasingly personal. Using geofencing can help you find those ideal customers and bring them back for another meal. “Geofencing is a viable and high-converting option when pizzerias are relying on online ads and digital marketing to drive footfall, and when the ideal target customer is tech-savvy,” Deogiri says.
Rachel Hartman is a freelance writer who covers small business, finance and lifestyle topics.