Digital Insights

What Works Best to Attract New Customers: Geofencing or Remarketing?


Published: February 11, 2014

Geofencing and remarketing have both been used to generate traffic and attract new visitors. Both are effective, but one emerges as a leader in certain situations. Here is what you need to know about using these modalities to attract new customers.

What is Remarketing?

Remarketing gives companies a second chance to convert visitors who may have been interested in their product, but got deterred for one reason or another. As a part of the remarketing efforts, companies have a chance to bring back their indecisive customers by developing tailored ads that will appeal to these customers.

When you deliver relevant ads with discounts or incentives to entice customers, they are more likely to buy. Some companies have witnessed an increase of 60 percent in revenue and a 57 percent increase in leads that lead to conversions. In general, remarketing campaigns have generated “five times the conversions of regular remarketing campaigns.”

Some other campaigns have revealed that they had conversion rates that were 203 percent higher than display ads with dynamic remarketing campaigns. These types of campaigns were 119 percent higher than traditional remarketing campaigns. Real-time bidding can help you reach customers on thousands of sites. Remarketing has a high return on investment (ROI).

What is Geofencing?

Geofencing requires setting up a fence around a location. When the fence is set up, the system will alert the companies when certain customers cross the perimeter. Companies can, then, provide a list of the specials in the stores to generate more interest. Geofencing has caused an increase in mobile sales from people who simply prefer to buy online rather than in the store.

The concept is largely unknown, but it’s expected to gain more popularity. This concept is not met by some customers favorably. Some customers still feel that it’s invasive, and some resent someone trying to sell to them, but many people value the service.

Which is the Best?

Since only two percent of shoppers purchase an item on the first time that they visit a store, retargeting is necessary to convince the other 98 percent to come back and purchase. Mobile online purchases are quickly growing and may exceed in-store purchase during certain times of the year. People enjoy getting deals online, and they will purchase online if they have an incentive.

In general, more people are responding to retargeting than geofencing. Geofencing, somehow, feels like a loss of privacy. So, it has not been as successful as retargeting for generating more sales conversions. People somehow have a problem with the store identifying that they have entered the area using GPS and then, advertising to them. They feel that it’s more of a high-pressure sale. This is the primary reason why geofencing has not been as successful as remarketing efforts.

As more people become aware of the options, both geofencing and remarketing will be considered effective. Awareness must be created in the geofencing world to make this practice more useful to people. In the meantime, companies should try both to determine which is best for your company.