Location-based technology is opening up a world of possibilities for marketers — but it’s also complicated, as new capabilities and use cases seem to emerge every day.

With the goal of breaking down some of the most important “geo” concepts to provide a better understanding of the basics — and a jumping off point for exploring how far the power of location may take us — we introduce the next installment of our GeoMarketing .

What Is Geofencing?

Geofencing is the practice of using global positioning (GPS) or radio frequency identification (RFID) to define a geographic boundary. Then, once this “virtual barrier” is established, the administrator can set up triggers that send a text message, email alert, or app notification when a mobile device enters (or exits) the specified area.

So, businesses can section off a geographic area and communicate with devices within that space — understood. But why do they want to?

Practical Applications Of Geofencing

Geofencing is a way to engage consumers based on hyper-local location, and that can do a lot in terms of triggering immediate sales as well as understanding shopper mindset.

For example, a store could erect a simple geo-fence in an area surrounding its physical location. When users pass through, receiving a location-triggered alert or deal makes them considerably more likely to stop in and shop.

Alternatively, an auto dealer, for example, could set up a geo-fence aimed at targeting individuals who are leaving a rival dealership after browsing for a vehicle. Hitting them with an offer for zero percent financing on a comparable car model at that moment is more likely to make them come comparison shop — or at least consider an alternative option.

Finally, even if a geo-fenced offer or notification doesn’t provoke an immediate visit or sale, it allows a business to know exactly what location a consumer passed through — and where they were when they received the message — which may aid in refining targeting efforts in the future based on what communications were most successful.

What Are Brands (And Vendors) Doing With Geofencing In The Real World?

While a common application of geofencing is mentioned above — alerting customers near a store to an opening, offer, or a sale — today’s uses for the technology are considerably broader.

For example, concert and events producer Live Nation has geo-fenced amphitheaters at music events with a product called ShowBook. ShowBook geo-fenced the different tour stops of a musical artist, aggregating and curating all of the fan social media content generated in those locations. This captures a better understanding of what fans enjoy and share at events — as well as potentially providing brands with a better way to join in on real-time social chatter.