Geolocation is as old as the internet. Computers needed to know IP addresses to send and receive information. The physical location of those IP addresses would often be known. As the use of mobile has grown, so has the sophistication of geo-tracking. Geofencing is the marketing extension of geolocation. Geofencing allows marketers to set up digital “boxes” around a physical area using GPS data. When a user walks into this box they will then receive an ad (Chamberlain, 2016). Companies can use this process to target customers based on real-time location. It is trying to shorten the buyer’s journey. As a result, geofencing is a transactional sales process, not a brand development strategy. There are two other subsets of geofencing that I also find interesting:
- Geo-Conquesting involves setting up a geofence around a competitor’s location, then pushing ads for your company when someone is near your competitor (Geofencing.com).
- “Addressable geofencing” is a microform of geofencing that targets an individual’s household or business (Geofencing.com).
I feel addressable geofencing is getting close to the point of annoyance, but it does turn geofencing from a transitional focused process into a brand development one. However, technology giveth and it taketh away, enter Virtual Private Networks (VPNs).
Hiding in the neighbor’s yard
A VPN is a tool used to mask the location of a device in the real world. It sends the users information through a series of IP addresses to make it look like the user is somewhere else in the world. This can greatly limit the effectiveness of a geofence. If a user’s phone has a VPN showing them in California, then they will not see any ads from a geofence as they physically walk around in Philadelphia. The use of VPNs will have a larger impact on devices used at home compared to devices used in public. While a VPN will mask the customer’s location from marketers, it will also mask their location from all other apps. Most users will keep VPNs off their phones so they can continue to use the GPS information needed for directions, dating apps, ride-sharing apps, and other location-dependent services. Marketers can still gain insights when customers use VPNs.
Marketing in a VPN world
Marketers can use VPN data to help build customer profiles. VPN providers use a set number of IP addresses. Marketers can then identify the customer as a VPN user. This behavior comes with some interesting psychographics: they value security, they are somewhat tech-savvy, they are most likely higher educated. It may not sound like much, but marketers will have to infer a lot more about customers’ motivations based on their behaviors as privacy increasingly becomes a driving factor for customers’ buying decisions.
Chamberlain, Lauryn. (May 7, 2016). GeoMarketing 101: What Is Geofencing? Geomarketing.com. https://geomarketing.com/geomarketing-101-what-is-geofencing
Geofencing.com. Geofencing and Geo-Conquesting. https://www.geofencing.com/geofencing-and-geo-conquesting/
Geofencing.com. Geofencing and Geo-Conquesting. https://www.geofencing.com/addressable-geofencing/