What is geofencing and can I use it to market my local business?

The reason is intent rather than capability. Somebody standing near your shop is not necessarily looking for what you sell, and location alone is a weak signal of interest. Advertising to everybody within a radius means paying for a great many people who are simply nearby. Compare that with somebody typing what you sell plus a location into a search bar, who has told you exactly what they want, and the difference in cost per acquired customer is usually not close.

There are situations where it genuinely fits. Events with a defined footprint and a relevant crowd. Businesses whose customers are physically adjacent, such as somewhere serving a specific venue. And targeting the location of a competitor, which works in some categories and is worth knowing carries reputational risk if it becomes visible.

The practical constraints are worth knowing before you evaluate a proposal. Accuracy varies considerably by device and setting, so a small radius is less precise than it sounds. Minimum spends on many platforms exceed what a first year business should commit to an experiment. And privacy regulation around location data has been tightening, which affects what is available and how it can be used.

If somebody is selling you geofencing as a growth strategy for a local service business, ask what they expect it to cost per enquiry and how that compares with search advertising against high intent terms. That comparison usually ends the conversation.

If you do test it, define what would count as success before you start and give it a fixed budget and end date. Location targeting produces impressions readily and enquiries reluctantly, which makes it easy to keep running on the strength of activity that is not producing customers. Measuring cost per enquiry rather than cost per impression, and comparing it directly against your search advertising over the same period, is the comparison that will settle whether to continue.

Check the privacy position before running anything, since location data is treated more sensitively than most advertising data and the rules are tightening in several jurisdictions. Platforms restrict targeting around certain categories of location entirely, and the disclosure requirements differ from ordinary advertising. This is worth establishing before a campaign rather than during one.