The concept of geofencing is not new, but its popularity has started to grow at a rapid pace only recently. “The major factors driving the growth of the geofencing market include technological advancements in the use of spatial data and increasing applications in numerous industry verticals,” states a report from MarketsandMarkets, which also forecasts the global geofencing market size to grow from $542.7 million in 2017 to $ 1,825.3 million by 2022.

The beauty of geofencing is that most consumers are already ready for it because 92 percent of US smartphones are compatible with geofencing technology.

Practical Uses of Geofencing

The traditional uses of geofencing were defined by the costly nature of the early systems, and their reliance on specialized hardware devices. In the livestock industry, a few cattle in a herd are often equipped with GPS trackers to alert rangers when the herd moves outside a marked perimeter. In the transportation industry, similar GPS trackers are used to monitor the arrivals and departures of vehicles, just to give two examples.

More recently, geofencing has become synonymous with proximity marketing, the location-based distribution of advertising content associated with a particular place. Businesses now readily use geofencing to deliver in-store promotions, engage crowds of people at organized events, and attract new customers based on their purchase history, among many other things.

Considering that the IoT (Internet of Things) market is expected to mushroom to over 75 billion devices by 2025, up from 23 billion in 2018, it’s clear that marketers have just started to tap into the tremendous potential of this location-based technology.

Active Versus Passive Geofencing

All geofences can be divided into two categories: active and passive. As the name suggests, active geofences actively ask users to enable location services at certain locations. Passive geofences, on the other hand, collect data in the background without asking for explicit user approval.

Active geofences are more popular than passive geofences at the moment as they are used to trigger various mobile notifications. Passive geofences are an up and coming type of geofencing, allowing businesses to easily collect massive amounts of data about their customers or employees. For example, passive geofences can measure foot traffic, build consumer profiles, or monitor employee productivity.

Potential Privacy Issues with Geofencing

In Massachusetts, Attorney General Martha Healey blocked an advertising campaign from Copley Advertising that relied on geofencing around women’s health clinics because it conflicted with Massachusetts’ consumer protection law.

“Copley’s practices would violate consumer protection laws in Massachusetts by tracking a consumer’s physical location near or within medical facilities, disclosing that location to third-party advertisers, and targeting the consumer with potentially unwanted advertising based on inferences about his or her private, sensitive, and intimate medical or physical condition, all without the consumer’s knowing consent,” stated the settlement between AG Healey and Copley.

As we’ve seen with Facebook and Cambridge Analytica, massive quantities of user data can be used for nefarious purposes, and geofencing allows anyone who invests in the technology to collect behavioral data at a very large scale. Using this data to accomplish political goals would be just as easy as using it to sell more goods.

Conclusion

Geofencing has been around for quite some time, but it entered the mainstream only relatively recently with the advent of smartphones and wearable devices. From its early uses in agriculture and enterprise, geofencing is emerging as a very effective marketing strategy capable of engaging consumers when they’re most likely to respond to various incentives and become paying customers. Like virtually any modern technology, geofencing isn’t without its issues, but they can’t match its tremendous potential across numerous industry verticals.

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