Location-Based Marketing: How It Works, Types & Examples

Location-based marketing helps businesses reach people with more relevant advertising, offers and services based on geographic context. A retailer can promote a new store to nearby audiences; a restaurant app can recognize an eligible customer’s arrival; and a website can show products available in a visitor’s selected city.

These experiences share a principle, but they do not use the same technology. Some rely on broad geographic targeting, while others require a mobile application, device permissions or a saved digital pass.

This guide explains what location-based marketing is, how it works, the different methods businesses use, and how to choose and measure a practical strategy.

What is location-based marketing?

Location-based marketing is a strategy that uses geographic information to tailor advertising, messages, content or customer experiences. The location information may be broad, such as a country or city, or more specific, such as proximity to a store or event venue.

For example, a fitness studio could promote an introductory offer to people within its service area. An airline’s app could display terminal information relevant to a traveler’s airport. Both use location to increase relevance, although the signals and delivery systems differ.

Related terms describe different parts of the process:

• Geotargeting: Selecting audiences or content based on geographic criteria.
• Geofencing: Defining a virtual boundary that compatible technology can use to detect supported location events.
• Proximity marketing: Creating experiences based on closeness to a particular place or device.
• Geolocation marketing: A broad term for marketing informed by geographic data.
• Geoconquesting: Targeting an eligible audience associated with competitors’ locations.

Location can inform more than promotions. Store locators, regional inventory, pickup instructions and venue information can also improve a customer journey.

The important question is what the location adds to the experience. If the same message would be equally useful anywhere, geographic targeting may offer little value.

Image source: Freepik

Location-based marketing vs. location-based advertising

Location-based advertising is paid advertising that uses geographic information to determine where or to whom ads are shown. It is one type of location-based marketing, not a synonym for every location-aware customer experience.

A neighborhood restaurant might use a digital advertising platform to reach people in its city. A national retailer could promote different products in different regions. The available geographic settings, estimated audience locations and targeting accuracy depend on the advertising platform.

Location-based advertising commonly runs through search, social and mobile display platforms. Advertisers select geographic criteria supported by the platform, such as a country, city, postal code or radius, and pair the audience with relevant advertising. Before launching, check whether the setting targets people physically present in the area, people interested in it or a broader inferred audience because platforms define location eligibility differently.

Location-based marketing also includes non-advertising activities, such as an app showing the nearest store or a saved ticket becoming useful at a venue.

There is another important distinction: targeting an ad to a geographic audience is not the same as detecting when a particular device crosses a geofence. An advertiser generally does not need its own mobile app to run regional ads. An app-based arrival trigger needs suitable software, permissions and a delivery workflow.

For businesses aiming to attract new local customers, geographic advertising is often the most straightforward starting point. For businesses improving an existing app or loyalty experience, other location-aware technologies may be more appropriate.

How does location-based marketing work?

Most campaigns involve five decisions:

1. Choose the objective. Decide whether the goal is local awareness, verified redemptions, easier order collection or another measurable outcome.
2. Identify an appropriate location signal. This could be a selected store, regional ad targeting or location information available to a compatible device.
3. Define the audience or area. Choose locations customers can realistically visit or places where the experience becomes useful.
4. Select the delivery method. Geographic ads, website personalization, in-app messages, supported push notifications and wallet passes have different requirements.
5. Measure the resulting action. Track what the selected systems can actually observe, such as clicks, app interactions, scans or purchases.

What technologies determine location?

GPS helps compatible devices estimate their geographic position, especially outdoors. Wi-Fi and cellular information can contribute to device positioning. IP geolocation is commonly useful for regional estimates but is not reliable evidence of an exact street address.

Bluetooth Low Energy (BLE) beacons can provide short-range signals for compatible proximity experiences. The beacon broadcasts an identifier; supporting software decides what to do with it.

Not every campaign uses a customer’s live location. Three useful distinctions are:

• Static data: A saved city, billing region or preferred store.
• Foreground data: Location available while an authorized app is being used.
• Background data: Location accessible to an appropriately permitted app outside an active session, subject to operating-system limits.

A city-specific website promotion may require only static information. An app that reacts to arrival has more demanding technical and permission requirements.

Types of location-based marketing

Geotargeting

Geotargeting focuses on customers in an area such as a city, state or supported local advertising zone.

For example, a salon might promote its opening within a realistic travel distance, while an ecommerce retailer could show regionally available items.

It suits geographic relevance rather than precise movement detection, and its accuracy depends on the underlying data and platform.

Geofencing

Geofencing defines a virtual perimeter around a real-world area. A compatible system can use an eligible device’s entry or exit to initiate an action.

A permitted restaurant app, for example, could display pickup instructions when a customer arrives.

Geofencing does not automatically reach every phone inside the boundary. Implementations require suitable software, permissions and delivery infrastructure, while detection depends on location accuracy and device behavior.

Proximity marketing and Bluetooth beacons

Proximity marketing covers experiences that become relevant near a place or object.

Bluetooth beacons can help compatible devices recognize proximity within a venue. A museum app might present information about a nearby exhibition.

Beacon hardware alone cannot identify everyone nearby or send them unsolicited messages. Compatible software and appropriate device settings are still necessary.

Geoconquesting

Geoconquesting uses geographic targeting around competitors’ locations to promote an alternative.

A restaurant could advertise to an eligible audience near competing eateries. The tactic requires a compelling offer and attention to platform policies, privacy and accuracy.

Location-based personalization

Location-based personalization adjusts an experience using geographic context rather than necessarily sending an alert.

Examples include displaying nearby branches, showing stock at a customer’s selected store, offering relevant delivery options or presenting local event information.

A self-selected location may be sufficient. Businesses should not collect continuous precise location data when a simpler signal serves the same purpose.

Mobile wallet location relevance

Compatible Apple Wallet and Google Wallet passes can contain information about where they may be useful. A saved loyalty card, offer or ticket can become easier for its holder to access near a relevant location.

This is primarily an existing-pass-holder experience, not a way to advertise to every person passing a business. The wallet controls relevant presentation, subject to the holder’s settings.

Which location-based marketing method should you choose?

Method	Best use	Typical requirement	Main limitation
Geotargeting	Local or regional advertising	Suitable audience data and advertising channel	Targeting does not verify a store visit
Geofencing	App-based arrival or departure actions	Compatible app or partner system and permissions	Location events are not guaranteed
Bluetooth proximity	Indoor or short-range experiences	Compatible software; often beacon hardware	Hardware, range and device support
Geoconquesting	Competitive geographic advertising	Eligible ad targeting or location system	Privacy, relevance and accuracy
Geographic personalization	Local inventory, service or content	Appropriate location context	Depends on data quality
Wallet relevance	Quick access to an existing pass	Customer has saved a compatible pass	Device-controlled; not general advertising

For acquisition, start by evaluating geographic advertising. For arrival experiences, investigate geofencing. For existing customer credentials, consider wallet relevance. A business can use multiple approaches, but each should have a distinct purpose.

Location-based marketing examples

Burger King’s Whopper Detour

Burger King’s Whopper Detour is a documented example of making location central to a promotional campaign.

The company associated a one-cent Whopper offer with approximately 14,000 McDonald’s locations. Customers could unlock the promotion by opening the Burger King app within the qualifying proximity of a participating competitor location.

According to Braze’s campaign account, the campaign generated 3.2 million app downloads and was associated with a 53.7% increase in monthly active users. These are vendor-reported results from a particular campaign, not typical outcomes businesses should expect from geofencing.

The useful lesson is that a location signal works best when it supports a compelling reason to act.

Practical examples for smaller businesses

These are illustrative scenarios, not documented brand campaigns:

• Retail: Advertise a weekend opening to customers within the store’s service area.
• Restaurants: Use a permitted ordering app to provide collection instructions when a customer arrives.
• Events: Show attendees relevant venue information through a compatible event app.

The right technology depends on the customer relationship and available infrastructure. Small businesses rarely need to reproduce a national campaign to benefit from geographic relevance.

Benefits and disadvantages of location-based marketing

Location-based marketing can improve relevance and local engagement, but it introduces practical tradeoffs.

Advantage	Why it matters	Disadvantage or limitation
More relevant advertising	Businesses can focus on areas where their products or locations are accessible	Geographic targeting can be inaccurate or exclude potential customers
Better local budget allocation	Spending can concentrate on markets most likely to respond	Narrow audiences may be expensive or too small
Timely customer interactions	Arrival information or nearby services can be useful at the moment needed	Repeated alerts can create notification fatigue
More convenient experiences	Store information, local inventory and directions reduce friction	Advanced experiences may require apps, integrations or hardware
Potentially better offline attribution	Connected systems can associate some campaigns with redemptions or purchases	Impressions and modeled visits do not automatically prove incremental sales
More useful personalization	Local context can complement customer preferences	Precise location data raises privacy and permission concerns

The effectiveness of location-based marketing depends on whether the experience helps customers and whether the business can measure an appropriate outcome.

It is not inherently more profitable than broader advertising. A poorly chosen location or irrelevant offer can waste money even when the targeting technology works as intended.

How to create a location-based marketing strategy

1. Start with a specific business objective

Choose an outcome that matters: new local customers, verified coupon redemptions, repeat purchases, completed pickups or useful event interactions.

Avoid defining success as simply sending more notifications.

2. Identify the right audience

Decide whether you are trying to reach prospects or engage customers who already have a relationship with the business.

For example, a new store may need broad local awareness. An existing loyalty program may instead aim to make rewards more convenient for members.

These objectives call for different delivery channels.

3. Match the geographic area to the customer journey

Choose locations because they are relevant, not merely because they can be targeted.

A city-wide promotion may suit a store opening. An arrival-based service needs more specific location information. A selected preferred store may be sufficient for local inventory.

Consider whether people can reasonably act on the message from the targeted area.

4. Select the technology and message together

The message must fit the delivery system.

A geotargeted advertisement could say: “Our new downtown store opens Saturday. Explore the opening offers.”

A compatible app could display: “Your order is ready. Follow the signs to the pickup counter.”

A location-relevant wallet pass might contain: “Your loyalty card is ready to use here.”

The third example is pass-relevance text, not a traditional push message sent by the issuer when someone crosses a geofence.

Before launching, confirm the necessary infrastructure, permissions, and what the platform can actually deliver.

5. Respect customer choices

Explain why location is useful, request appropriate permissions and avoid unnecessary data collection.

For app-based messaging, consider notification preferences and frequency controls. An audience’s geographic location does not establish permission to send direct SMS messages.

Use relevant content rather than repeatedly reminding customers that they are being tracked.

6. Test, measure and refine

Begin with a limited audience or group of locations.

Check the experience on supported devices. Review targeting accuracy, customer engagement and verified actions.

If possible, compare results with a similar group that did not receive the campaign.

Expand when the experience is reliable and the business value is sufficiently clear.

Example: A retailer promoting a new store

• Objective: Drive purchases during opening week.
• Audience: People within a realistic service area.
• Channel: Geographic search or social advertising.
• Offer: An opening-week promotion with a unique redemption code.
• Measurement: Code redemptions and associated transactions.
• Evaluation: Compare the results with an appropriate baseline, accounting for other promotions and seasonal demand.

This setup separates audience targeting from business measurement. Ad impressions show that the campaign reached an eligible audience; verified redemptions show that some recipients completed the intended action.

How effective is location-based marketing?

Location targeting can improve relevance, but no universal conversion uplift applies. Measure effectiveness against the campaign’s original objective.

Objective	Useful metric	What to avoid assuming
Local awareness	Relevant impressions, reach and clicks	Everyone reached can visit the store
Offer redemption	Verified redemptions and associated purchases	Every redemption was caused by the campaign
App engagement	Supported location events, opens and completed actions	Every trigger resulted in a useful interaction
Repeat visits	Verified repeat transactions over a defined period	A post-campaign purchase proves causation
Wallet pass usage	Pass saves, supported scans and redemptions	Wallet location suggestions were shown or opened

For example, if a store issues 500 eligible coupons and records 40 verified redemptions, its redemption rate is 8%.

That calculation describes what happened. It does not establish how many customers would have purchased without the offer.

To estimate incremental impact, compare campaign results with a suitable baseline or control group. Account for other promotions, seasonal changes and differences between audiences.

For return on investment, use reliable costs and incremental financial outcomes where available. Do not treat clicks, modeled foot traffic and verified sales as interchangeable measurements.

Privacy and location data: What businesses should consider

Location information can be sensitive, particularly when it reveals personal routines or visits to certain places.

Businesses should use the least intrusive data that achieves their goal, explain how it will be used and apply relevant permissions, security and retention controls.

The legal requirements depend on the jurisdiction, data involved and communication method. A regional advertising campaign differs substantially from an app collecting continuous precise location information.

In the United States, the Federal Trade Commission’s January 2025 action involving Gravy Analytics and Venntel addressed allegations involving sensitive location-data collection and sales.

Avoid targeting based on sensitive locations without appropriate legal grounds and safeguards. Technology providers can help implement controls, but businesses remain responsible for evaluating their particular data practices.

Can digital wallet passes support location-based marketing?

Yes. Digital wallets provide a way to make saved customer credentials more useful at relevant locations.

Compatible loyalty cards, coupons, memberships and tickets can contain location-relevance information.

PassKit’s location-relevance editor lets teams configure supported pass locations and the text associated with them.

Apple Wallet may suggest a saved pass on the iPhone lock screen when the device considers it relevant nearby. Google Wallet has a separate Nearby Passes feature that can present system-controlled notifications for eligible holders with the required settings enabled.

These behaviors differ from conventional app-based geofencing. Customers must already have saved the pass, and the wallet determines relevant presentation.

Our guide to wallet notification behavior explains the different mechanisms and settings.

PassKit’s location-relevance functionality helps businesses configure supported locations and manage compatible wallet passes. PassKit does not independently receive a record whenever someone enters a configured area or confirmation that a location suggestion appeared.

Transaction and redemption measurement still requires appropriate scanning or connected business workflows.

Wallet relevance therefore supports convenience for existing customers; it does not replace geographic advertising or app-based location tracking.

Frequently asked questions about location-based marketing

What is an example of location-based advertising?

A retailer paying to display an advertisement to people in a selected city is an example. The platform uses available geographic targeting information to reach a relevant audience. It does not necessarily know the precise location of each person.

What is the difference between geotargeting and geofencing?

Geotargeting selects audiences based on geographic criteria. Geofencing uses a virtual boundary that compatible technology can use to detect supported arrival or departure events. The second method generally involves more demanding technical and permission requirements.

Does location-based marketing require a mobile app?

No. Geographic advertising and regionally personalized websites can operate without a branded app. App-based geofencing needs suitable app or partner infrastructure. Digital wallet relevance requires an eligible pass already saved by the customer, but not a separate branded app.

How accurate is location-based targeting?

Accuracy varies with the signal and environment. IP geolocation is generally suited to broad regions; compatible device-location systems may support more specific experiences. No method should be assumed to identify every customer’s exact position consistently.

Is geotargeting legal?

Geotargeting can be lawful, but businesses must follow applicable privacy, advertising and communication rules. Requirements depend on the data used, platform, jurisdiction and campaign purpose. More sensitive location information requires greater care.

Can geofencing send messages to anyone nearby?

No. A virtual boundary alone cannot contact arbitrary phones. Delivering messages requires a compatible system, an eligible audience and the necessary permissions or lawful communication relationship.

Which location-based marketing strategy is best for a small business?

Start with the business objective. Geographic advertising may be appropriate for attracting local prospects. A preferred-store experience can improve customer convenience with relatively simple data. More advanced geofencing should be justified by a specific use case and available infrastructure.

Final thoughts on location-based marketing

Location-based marketing is valuable when geographic context makes advertising or customer experiences more useful.

Choose the technology according to the customer action you want to support, not simply the precision of the location data available. Geographic advertising may be enough for local awareness. An appropriate location-aware application may be necessary for arrival-based services, while wallet relevance can make an existing pass easier to access in the right place.

The strongest approach matches the method to a genuine customer need and measures an outcome the business can verify. Relevance, consent and reliable execution matter more than collecting the most precise location possible.