Dealers use geofencing to pinpoint shoppers and pull them in with ads

For about three months last year, McKie Ford-Lincoln in Rapid City, S.D., drew a digital fence around a competitor's Jeep store after registration data showed the rival store was outselling McKie in certain vehicle segments.

So McKie turned to geofencing technology to pinpoint shoppers through their mobile device using GPS, Wi-Fi or cellular data or radio-frequency identification as they crossed a virtual threshold onto the Jeep store's property, said Karris McKie-Kaiser, the dealership's digital operations manager. Those shoppers received a digital display ad offering $500 off their next new-vehicle purchase at McKie Ford-Lincoln, and that offer followed them for a time as they surfed the Internet on their smartphones.

The relatively low-expense geofencing campaign helped the dealership sell a few vehicles and reach more in-market customers, McKie-Kaiser said. She didn't share cost numbers, saying dealership spending on geofencing varies by campaign, but the dealership makes "our money back, plus some." Over about two years, geofencing has helped the dealership sell 12 vehicles.

"You're really getting a quality customer versus someone who is accidentally clicking on your display ad," McKie-Kaiser told Automotive News.

An increasing number of dealerships are putting more advertising and marketing dollars into geofencing, serving up ads, offers and even simple welcome messages via smartphone to customers when they arrive on their premises. In other cases, dealerships are using the technology to pitch ads to shoppers who may be walking the competitor's lot across the street.

Some dealers who have used the technology say it offers a higher customer conversion rate than other forms of advertising and is good for saturating their markets. But others say dealers should be careful and make sure they understand how the vendor defines geofencing and where they set boundaries to target customers. And some argue that advertising to consumers already shopping rivals does them no good.

"Nowadays, shoppers are going to one, maybe two dealerships before they buy a car," said Jamee Cook, Internet marketing administrator for Cascade Auto Group in Cuyahoga Falls, Ohio. "So if we're waiting till they are on another dealer's lot, that's way too late, and it's a waste."

That's just one reason Cascade Auto, which has Subaru, Mazda and Audi dealerships, has chosen not to geofence competitors' lots. Michelle Primm, managing partner of Cascade Auto, also doesn't want to invite attacks from bigger competitors across the street.

"Because we're a small dealership on the fringe of a major metro, we thought that fencing another dealership would be poking the bear, especially if they had a way bigger ad budget than we did," Primm said.

Cascade, which has used geofencing for about a year, instead has found successful target locations at country clubs and at a movie theater on Black Friday. Vendor-provided metrics show Cascade whether a customer served a geofencing ad ends up on the retailer's lot during the next 30 to 60 days — something the dealership is seeing more frequently, Cook said.

"That shows us that we're fishing in the right pond," Cook said. "We are fencing the right location, and these people are the audience that we are trying to attract."

Multiple vendors in the auto industry and marketing world now pitch geofencing products. Players include AutoMotion, Propellant Media, Mobile Dealer and DealerApp Vantage. Their services vary, with some only able to geofence through an open dealership-branded app.

Justin Croxton, managing partner for Propellant Media, an Atlanta marketing company that specializes in geofencing, began working with dealerships a few years ago. Today, Propellant works with 40 U.S. and Canadian dealerships to serve up ads to customers with a mobile device with location services turned on and who may shop competitors' lots. Some dealerships also use address-based geofencing to target the homes of people whose leases are expiring in the next three months.

"Geofencing gets you the ability to get right in front of those people, right when they're about to buy," Croxton said.

Ads follow the customer for up to 30 days after they leave the geofence, Croxton said, and show up while they are browsing the Internet on their smartphone or using other apps on their mobile device such as Words With Friends, The Wall Street Journal or even Angry Birds.

Dealers can use geofencing to target a specific event such as an auto show, places such as used-car lots and service centers or stores such as AutoZone. They also can use it at their own dealerships to offer incentives to people currently shopping, according to Propellant.

Other app providers such as Mobile Dealer and DealerApp Vantage offer geo- fencing, but it only works for customers who have downloaded a dealership app, which can limit the number of potential customers.

Mobile Dealer, an Ottawa, Ontario, company formerly known as Mobile Einstein, includes geofencing as part of its app, making it available to the more than 200 dealerships it works with in the U.S. and Canada. The app doesn't need to be open to receive push notification messages from the dealership that activate when the customer crosses the geofence, CEO Tony della Busa said.

"It's intended to be a customer retention and sales conversion tool, not a conquest marketing tool where some geofence solutions reach out to unsuspecting people who never opted into communications with the dealership," della Busa said in an email. The latter "can have a negative impact."

Dealerships, however, will be alerted when customers with their app visit a competitor's lot. They are then encouraged to send the customer a note, perhaps offering a discount, della Busa said.

Angel Cruz, product specialist at DealerApp Vantage, a Piscataway Township, N.J., mobile app company, said a dealership's success with geofencing depends on the number of app downloads.

The company works with more than 300 dealers in the U.S., Canada, the Caribbean, England and the Middle East. Some dealerships have generated 20,000 downloads and see a few hundred leads a month, he said.

DealerApp Vantage also offers beacon technology to dealerships to reach people who may have the app turned off but have Bluetooth enabled, Cruz said.

Beacons, or small hardware devices that send Bluetooth signals, can be set up in various parts of the dealership, such as the service waiting room. Push messages — for example, offering a certain percentage off accessories installed on the vehicle while the customer waits — can be sent to mobile devices, Cruz said. About 10 percent of DealerApp Vantage's customers use them, Cruz said.

"Where geofencing fails to connect, the beacons can take its place in a rather successful manner," he said.

Easterns Automotive Group, a used-vehicle retailer with seven locations in Maryland and Virginia, has tried geofencing to market its brand at competitors' service centers, but Joel Bassam, director of marketing, hasn't found it that successful.

One hurdle with geofencing is determining locations where your customer base may frequent, Bassam said. For instance, it's difficult to know whether prospective customers "hang out at specific hair salons," Bassam said.

He's also waiting for a company to be able integrate more data and better pinpoint customers who are in market and showing concrete signals that they are ready to buy, such as searching third-party car-shopping websites.

"It has a lot of potential to be done well," Bassam said.