What is Geofencing? Here’s Everything You Need to Know – From Mercedes Benz to Mapsted

January 01, 2024

Technology Trends


If you’ve ever wondered what “geofencing” means, it is best explained through a real-world example. Imagine you are driving away from a Mercedes Benz dealership in your brand-new car (lucky you!). It’s a luxury car, and you intend to enjoy every moment of owning one – until it’s time to park and get some groceries. Leaving your new set of wheels means worrying about would-be thieves. Fortunately, Mercedes Benz has a valuable functionality built into its vehicles: the Trackstar geofence service. This service allows the driver to define a specific geographic area around their vehicle, and if the vehicle leaves the selected area they will be sent an alert – leaving them free to shop with peace of mind.

This service is just one example of how companies are using geofencing to provide added value to their customers. By practically applying Global Positioning Systems (GPS) data, geofencing has powerful potential in a number of industries, security included. However it can also lead to privacy concerns if handled incorrectly. Below is an introduction to geofencing – its potentials and possible problems.

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How Does Geofencing Work?

Geofencing uses location data to set up an invisible barrier in the real world. Often the technology uses GPS, however, it can also use other data signals including cellular, Wi-Fi, and Radio Frequency Identification (RFID).

You can’t see or feel anything when passing through a geofence, but if carrying a connected device, the system knows when you enter or exit the electronic boundary. Think of it as similar to the invisible electric fences popular with canine owners, but thankfully without the shock.

The geo ‘fence’ operates on one device and picks a series of location points nearby to create an artificial boundary. It then connects with available networks, such as cellular or wireless internet, to exchange signals with other devices. If a device is broadcasting its location near the boundary, the geofence can identify whether it is inside or outside the coordinates, and signal for a programmed action.

While GPS can establish our location on the globe, geofencing focuses on where we are in proximity to virtual landmarks. Combined with other applications to support specific alerts or commands, digital devices have an entirely new way to interact with the physical world. Are you near a specific store or service center? Driving by the library with an overdue book in your car? Have your kids stepped outside the local neighborhood? Geofencing allows users to define geographic boundaries without physical objects or symbols.

Benefits of Geofencing

Geofencing technology is growing quickly as valuable addition to existing applications. World-leading location technology company Mapsted, for example, offers customers the ability to create location-based push notification ads based on geofencing technology. The idea certainly has appeal: imagine a shopper getting an alert about a flash sale at The Gap when they are just one street away. Suddenly the shopper isn’t just aware of a good deal – they’re aware of a good deal within walking distance from their current location.

Often, this type of marketing gets customers in the door and ready to buy. By focusing on physical locations, geofencing is a perfect fit for bricks-and-mortar shops. But geo-marketing isn’t the only practical use for geofencing. Read on to learn more!

10 Valuable Uses For Geofencing

Other ways geofencing can be used include:

  1. Personal reminders to accomplish certain tasks when in a certain area.
  2. Smart devices such as thermostats can adjust the temperature automatically when the owner enters the home home.
  3. Security alerts triggered when items move, such as the Mercedes Benz example referenced earlier in this blog.
  4. Promoting restaurant deals, or driving incoming business.
  5. Advertising nearby movie premieres, theatres, concerts, or events.
  6. Ensuring pets, such as cats or dogs, are still in their respective neighborhoods.
  7. Tracking shipments, keeping track of logistics, and delivery timekeeping.
  8. Keeping drones away from restricted airspace.
  9. Safety messages for tourists when they wander too close to dangerous landmarks.
  10. Alerts for parents of toddlers if they get out of the house, or if younger children leave the neighborhood.

Is Geofencing Right for Your Business?

The main challenge for many businesses wanting to leverage the benefits of geofencing is a question of access – you must have an app that consumers download and they must enable notifications. Once that consumer base is achieved, the value of this technology for business is quite exciting. Here are three ways geofencing is proving its worth:

1. Lead Nurturing

After you’ve enticed your customers into downloading your app, the next step is to create offers and deals that will speak to them. To do this, you must really understand who your customers are. Which age range are they in? What type of promotion speaks to them? The more you know about your customer, and the more relevant you make your offer, the more successful your geofencing efforts will be. Above selling your product, your efforts should lie in adding value to your customers’ lives and creating connections with them.

Geofencing, in its nature, is a form of marketing that demands immediate results. Just a quick glance at a push notification is all it takes for a customer to decide if they want to dine or shop with you or not. To encourage immediate footfall, it’s recommended that you target customers within a three-mile radius. You can make your offering even more effective by adding options such as “order now and pick up on arrival” to grab the attention of the “want it now” generation.

With real-time capability, geofencing today has more potential than it has ever had in the last decade.

2. Contextual Targeting

Customization makes contextual information easy to leverage. For example, the weather and special holidays have an effect on marketing. Through geofencing, restaurants can remind their customers about their gorgeous patio seating on a sunny day, not to mention the brie and walnut salad that goes perfectly with a cold chardonnay.

3. Real-Time Analytics

To refine your target audience even further, you can also use information about places they’ve previously visited to customize your messages. For example, if there’s a concert happening in your city, you can send out a message to the attendees about a special deal for concertgoers. Since geofencing technology allows you to build hyper-targeted ads, you can create more customer satisfaction and, in turn, enjoy higher levels of customer loyalty. Also, by having constant access to your customers’ locations, you can gain a greater understanding of their buying behaviour. Where do they shop? What brands do they associate themselves with? At which time do they prefer to eat? This information won’t just help you to build successful geofenced ads, but will also help you with the marketing and branding of your business as a whole.

Geofencing For Better Cyber Security

One of the growing geofencing services is the ability to add a new level of information security. Much like a physical fence can offer a level of security around physical perimeters, geofencing can heighten control over access to digital assets. A geofence offers another level of user authentication by verifying where they are. It can restrict user access by verifying the user is connecting at a pre-approved physical location.

Ideally, geofencing is an element of multi-factor authentication. The technology isn’t a security silver bullet, but it can keep your organization one step ahead. For example, a geofence won’t stop a hacker on-site or an employee from accessing privileged information. However, what if someone has privileged access from a remote location? What if a hacker gains access to an account through phishing? Using a geofence can slow down and stop their progress by sending an alert or blocking access from outside acceptable perimeters. This is particularly effective if limitations are set to detailed areas, rather than all access from specified cities or countries.

Geofencing can also limit social sharing on popular networks. Users of the photo-sharing network Flickr, for example, can set up a geofence to limit photo sharing to friends in a certain region. Such features may comfort those who want to engage with the local community but are wary of sharing their images with the world.

Geofencing Technology Privacy Concerns

By now, geofencing probably looks pretty attractive. The technology can offer better security, customer engagement and keep an eye on situations when you can’t. But before jumping on board with geofencing for your product or company, however, be aware the technology is not without flaws. In particular, your user’s privacy may be at risk.

By tracking where we are respective to physical objects or landmarks, geofencing can collect more personal data about the user than originally intended. It’s not only that the technology knows where we are: it “sees” what places we interact with. A geofence set up near a hospital that records regular visits may indicate health issues or loved ones in intensive care. Geofencing surrounding places of worship can indicate religious preferences, while close proximity to an LGBTQ+ nightclub can suggest sexual orientation.

Worse, in addition to tracking, the geofence can be triggered to cause mental harm when the lines are crossed.

A prime example includes the Massachusetts Attorney General’s dispute with Copley Advertising. Setting up geofencing around women’s reproductive health clinics, Copley sent women targeted ads and messages, including “You Have Choices” and links to anti-abortion alternatives. Copley sent information to third-party advertisers, risking targeting with “potentially unwanted advertising based on inferences about [they’re] private, sensitive, and intimate medical or physical condition.”

If considering a geofencing service, check on applicable privacy legislation first. Are there limitations on the data collection or use? Do you require consent from individuals or particular safeguards? Can uninterested customers opt out of the service? In some areas, such as Europe, geofencing may only be permitted when users opt-in and agree to use the service prior to deployment.

Other Geofencing Obstacles 

In addition to privacy concerns, other problems crop up with excessive geofencing use. TSheets, a division of QuickBooks, rightfully brings to mind the example of a Starbucks in New York using geofencing to send targeted ads every time a user walks by Starbucks. Sounds fine, until you realize such a setup would send out excessive notifications for every walk-by, ultimately irritating the user.

How To Choose the Right Geofence Service

Are there any applications for geofence not yet in use? Unquestionably. As more devices connect to the Internet of Things (IoT), there’s more potential for items to be identified by location.

The infrastructure that supports geofencing is easily available and indeed common in the age of smart devices. That makes it possible for anyone to leverage geofencing for any number of purposes.

So what geofencing location-based services should you take advantage of? Some things you should consider are geofencing cost and how much your business wants to allocate to geofence marketing and secondly, a reliable company with experience in geofencing technology. Mapsted offers patent-protected enterprise-grade geofence technology that includes everything your business needs to get started using this technology mindfully. If you’re interested in seeing a geofence demonstration, Mapsted will guide you through the entire process showing you the value of adding this service to your marketing repertoire.

If you would like to know more about geofencing and the powerful benefits it can bring to your business, check out this blog on tactics for increasing sales using technology in 2024, and our short video explaining the benefits of geofencing.

Frequently Asked Questions

Q1. What is geofencing?

Ans. Geofencing is the use of sensors and tags to control activities within a virtual boundary traced on a map. 

Q2. What advantages can location marketing offer?

Ans. You can target consumers based on their proximity to stores, events, and other qualifiers using location-based marketing. They have an impact on customers’ decisions when they are still undecided

Q3. How to get started with location-based marketing?

Ans. You can benefit from location-based marketing by utilizing Mapsted’s indoor mapping technology, which works without GPS or hardware. Mapsted estimates users’ locations and launches proximity marketing using data from their smartphones.

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