According to Wikipedia, a Geo-fence is a virtual perimeter for a real-world geographic area.
From a marketing standpoint, geo-fencing generally refers to setting up a digital perimeter around a store or shopping area. The crossing of the digital geo-fence by a consumer with a smart, mobile device triggers a marketing offer such as a coupon.
This is often called "proximity marketing" and is considered by many to be the holy grail of location-based services.
So far geo-fencing and proximity marketing have not lived up to the hype. As Forrester recently pointed out, only about 5% of U.S. online adults regularly use location-aware applications.
But after many false starts, we believe geo-fencing and proximity marketing are going to start to become real over the next few years. The reasons are:
- Smartphone usage has become mainstream
- Geo-fencing technology has matured and dropped in price
- Location-based ad targeting is getting more sophisticated and accurate
- Consumers are more accepting of geo-targeted advertising
Adweek covers the growth of geo-fencing and targeting in a recent article. The opening quote pretty much summarizes where we think things are:
That future in which a bus-shelter ad equipped with geo-fencing technology scans your smartphone as you stroll by—inviting you to, say, a free latte or a cut-rate back rub—may not be so far off after all.