Geotargeting vs. Geofencing: What You Need To Know

While the names may sound similar, geotargeting and geofencing are two distinct types of geolocation marketing. Each plays a unique role in achieving specific ad campaign objectives. However, they are frequently confused, even by experienced marketers.

It’s no surprise that sometimes geotargeting and geofencing are used interchangeably. However, having a thorough understanding of the differences between geotargeting and geofencing can allow marketers to better gauge when to use each tactic.

What is geotargeting?

Geotargeting is a type of advertising that serves messaging to consumers based on their geographic locations by leveraging location data. With geotargeting, brands can serve messaging that’s relevant to a specific audience based on their physical location.

Beyond identifying a user’s physical location, effective geotargeting in marketing also incorporates a person’s specific interests, online behaviors, and demographics. 

For example, a fitness brand might use this tactic to target residents within a specific city who have also demonstrated an interest in working out or personal wellness. This deeper layer of data helps show ads to people who are much more likely to be interested in the brand’s offerings, leading to higher engagement rates and a more efficient use of the advertising budget.

Learn more about geotargeting, and Viant’s geotargeting capabilities, in Part 1 of this series. 

What is geofencing?

Geofencing is a location-based service that allows marketers to create a virtual “fence” around a specific real-world geographical location. People who then enter the “fenced-off” area can be reached with ads via their devices – for example, ads on their smartphones or ads on their laptops.

This strategy can be used by marketers to reach specific audiences at specific locations, such as individuals within a stadium or attending conferences at a convention center.

Effective geofencing marketing often works best when potential customers are physically nearby and ready to take immediate action. Unlike other tactics, this approach targets anyone who enters the virtual boundary regardless of their specific interests or demographics. 

For instance, a retail store might target shoppers within a few blocks to drive spontaneous foot traffic, or a brand could target people currently inside a competitor’s location to offer a timely alternative. This immediate, location-first approach ensures messaging reaches everyone currently in the vicinity.

What is the difference between geotargeting and geofencing?

The best way to understand the difference between geotargeting and geofencing is to break down their names. Geotargeting allows for targeting individuals within a certain location that also factors in their interests, preferences and unique characteristics.

Geofencing, on the other hand, creates a virtual fence around an area in which ads reach anyone who enters. Ads are served to all of the individuals within that specific area, regardless of their specific qualities or behaviors.

The primary distinction between geotargeting and geofencing lies in the audience layer. In a nutshell, geotargeting equals “who” plus “where,” while geofencing focuses on “where” only. 

For instance, geotargeting might involve reaching high-frequency travelers throughout a specific city, whereas geofencing would serve ads to every person currently inside an airport terminal, prioritizing immediate proximity over specific user profiles.

How does geofencing work?

Imagine an invisible line. Once a device crosses that line, it is served an ad by the brand running a campaign with geofencing. Geofencing can be applied to areas big or small, anywhere from a concert venue that holds 5,000 people to an entire neighborhood or city limits.

Geofencing is used by both B2B and B2C marketers to reach audiences with localized messaging. For example, a bakery could choose to geofence a surrounding 10-block radius. Anyone who enters that radius could be served an ad about the bakery’s services, which then helps drive traffic to their business from people who are already in the area.

The process of geofencing targeting follows three simple steps: set a location, detect when someone enters the boundary, and show them an ad. These advertisements appear across mobile apps and websites while a user is active on their device. 

For example, a restaurant could target nearby office workers during the lunch hour to drive immediate foot traffic. Because of the focus on proximity, this works best for real-time or timely messaging that reaches consumers exactly when they are ready to act.

How accurate is geofencing?

How accurate geofencing is depends largely on the location data partners you’re working with in your DSP of choice. Partners’ accuracy hinges on a number of factors, including the type of technology they’re using (for example, GPS vs. IP address) as well as privacy settings at the user level.

The level of precision varies significantly by technology; while GPS data is very precise, IP-based targeting is much broader. This is essentially like knowing someone’s exact street address versus just their general neighborhood. 

Ultimately, the overall accuracy depends on user permissions and data quality, which determines how granular and effective a location-based campaign can truly be.

How does geotargeting work?

Geotargeting analyzes location data to serve localized ads relevant to location or interest. It factors in where potential audiences are at the present time, what might interest them and what areas they’re searching on the internet, using a brand’s chosen audience segmentation strategies. This can be highly useful in delivering relevant ads with potential to engage both new and existing customers.

One example of geotargeting would be a boat rental business targeting consumers in an area around a beach. By doing so, they’re reaching people who are more likely to use their services and rent a boat based on where they’re located.

How accurate is geotargeting?

As with geofencing, the accuracy of geotargeting largely depends on the location data partners you’re working with, as well as consumers’ privacy settings. The “gold standard” in geotargeting, so to speak, is full GPS precision. However, accuracy can be impacted at numerous levels, including at the user or app level, as location sharing is often an opt-in process.

How Geotargeting and Geofencing Work Together

Rather than choosing between these two tactics, high-performing campaigns often treat them as a combined full-funnel strategy. In this approach, geotargeting is used to “cast a wide net.” 

For example, advertising to a specific demographic across an entire city to build general brand familiarity. Geofencing then serves as the final push, acting at the moment a consumer enters a specific store location to provide a timely incentive.

When considering the synergy of geofencing vs geotargeting, marketers can visualize the customer journey in two distinct steps:

• Step 1: Build Awareness (Geotargeting): Reach a broad but relevant audience within a specific region to ensure your brand is top-of-mind.
• Step 2: Drive Action Nearby (Geofencing): Trigger high-intent messaging or exclusive offers when those same potential customers are in the immediate vicinity and ready to make a purchase.

When would you want to use geotargeting vs. geofencing?

While geotargeting and geofencing can both help marketers achieve their campaign objectives, it’s important to understand exactly when you’d want to use one tactic versus the other.

When to Use Geotargeting

Geotargeting is best for marketers who want to reach narrower audiences, like the boat rental business example above. It’s a smart option for brands in more specific product or service categories that cater to niche groups of people with a local angle.

Common use cases include e-commerce brands targeting multiple cities simultaneously or businesses looking to expand into entirely new markets. As a general rule, use geotargeting when specific audience traits and demographics matter more than immediate physical proximity. 

For example, a brand may prioritize targeting parents throughout a major city rather than simply reaching anyone walking near a specific storefront. This approach allows marketers to scale their campaigns more efficiently by focusing on the highest-value individuals regardless of their exact real-time street address.

When to Use Geofencing

Geofencing, meanwhile, is better suited for marketers aiming to reach larger demographics within a certain area. An example of a brand that could benefit from geofencing is a bookstore looking to engage students and encourage them to come into their shop. By leveraging geofencing, the bookstore could target an entire university, which would fit into their ideal customer demographic.

Geofencing is particularly effective when the primary goal is to increase foot traffic to a physical location or reach individuals in high-intent environments such as retail stores, sporting events, or entertainment venues. 

As a strategic decision rule, you should choose geofencing when immediate location and timing are more critical to your campaign’s success than specific audience traits or demographics. By prioritizing proximity over profile, this tactic helps capture demand at the exact moment people are most likely to take action.

When considering whether geotargeting or geofencing is right for your brand, think about your audience, products and/or services. Depending on who you want to reach and why, location-based marketing can be used to boost your brand and build revenue.

Activate Smarter Location-Based Advertising with Viant

Success in today’s landscape requires more than just picking a tactic. It requires a scalable, unified platform that allows you to execute both geotargeting and geofencing seamlessly. The Viant DSP provides a single destination for planning, activating, and measuring sophisticated location-based campaigns across the entire marketing funnel.

Viant’s industry-leading identity solutions help marketers move beyond the limitations of legacy tools.

• Cookieless targeting & identity resolution: Reach your ideal audience using first-party data and deterministic identifiers, ensuring more accurate insights without relying on third-party cookies.
• Household-level consistency: Viant’s Household ID™ enables cross-device targeting, ensuring your message reaches the right home across CTV, mobile, and desktop.
• Privacy-first: Execute high-impact campaigns with confidence, knowing our deterministic approach is fully GDPR and CCPA compliant.
• Real-world outcomes: Bridge the gap between digital impressions and physical actions, connecting your omnichannel campaigns directly to real-world results like increased foot traffic and conversions.