Advertising to the Right Audience: Geotargeting for Regulated Industries

If you're selling heavily regulated products like cannabis or alcohol, your marketing strategy needs to be precise. You shouldn’t be trying to blast ads across the internet, hoping something sticks. You're trying to get in front of people who can legally buy what you’re selling, are physically nearby or in the delivery range, and are likely to make a purchase.

That’s where most ad strategies fall short. Broad targeting wastes the budget on the wrong viewers. Social platforms flag or restrict campaigns that don’t follow guidelines. Even the best creative won’t matter if it’s shown to someone across the country who couldn’t buy from you if they tried.

Geotargeting fixes this. It allows you to serve ads only to people in areas where your business can operate and where your ideal customers are already spending time.

Why does geotargeting matter?

Focus on relevant, legal markets

In regulated industries, you cannot advertise freely to everyone. Cannabis dispensaries, for example, can only market in states where cannabis is legal, and each state has its own set of guidelines. A hemp or kratom brand might need to avoid entire states or cities where their products are restricted. Geotargeting lets you zero in on the areas where you are allowed to operate, ensuring your ads don’t accidentally appear in banned locations. (When Twitter recently opened the door to cannabis advertising, it required brands to “only target jurisdictions where they are licensed to operate.”)

Higher efficiency and ROI

Geotargeting also makes sure you spend your ad dollars more efficiently. Rather than paying to show ads to everyone, including people who can’t visit your store or order your product, you focus the budget on your local customer base. This means a higher concentration of impressions to audiences who are likely to convert. The result is better performance – in fact, location-targeted campaigns have been found to significantly outperform broad campaigns. One report noted that mobile ads using location data outperformed others by 2X, and 90% of marketers report positive results from location-based marketing. Consumers respond to location relevance; most say they prefer ads tailored to their local area.

How does geotargeting work?

Geotargeting delivers ads to users based on their geographic location. It works by using the location data that’s tied to an individual’s internet-connected device. When someone uses a smartphone, computer, or tablet, that device shares clues about where it is – via GPS coordinates, Wi-Fi networks, or IP address. Ad platforms like Google, Facebook, and programmatic display networks leverage this data to allow location-based targeting. As an advertiser, you can define a geographic zone for your ads: for instance, a radius of 10 miles around your dispensary, specific ZIP codes, a particular city or state, or even multiple states (while excluding others).

Once your geotargeting parameters are set, your ads only show to users whose location falls within those boundaries. If we set an ad to target “New Jersey and New York, ages 21+”, then a 25-year-old user in New Jersey might see it, but a 19-year-old or someone in a different state will not. Modern ad technology is precise; locations can often be pinpointed on mobile devices. We can adjust the size of the target area, add exclusions (say, exclude a radius around a school if needed), and layer in other targeting filters. The end result is that your campaign only runs where it makes sense. If you operate a liquor store, you might target a 5-mile radius around your shop and the adjacent town, so that your ads only reach nearby adults who could realistically stop in or get delivery.

It’s worth noting that geotargeting isn’t limited to just “where people live,” it can target real-time location. Techniques like geofencing allow you to draw a virtual fence on a map (for example, a 1-mile circle around your store or a competitor’s store). When a user’s mobile device enters that area, they become eligible to see your ad. This way, you can reach customers at the exact moment they are near a specific place. A smoke shop could set up a geofence around a popular mall; when someone who fits their demographic walks through that mall, a targeted ad for the shop can be delivered to them. Geotargeting technology uses these location signals and trigger points to serve ads dynamically based on where users are, in real time.

What are some geotargeting strategies?

There are a variety of location-based targeting tactics that regulated businesses can employ to reach the right customers. Here are some effective geotargeting strategies:

Geofence your storefront

Define a close radius (say 1-2 miles) around your business location and target ads to people within this zone. This “geofencing” strategy is great for driving immediate foot traffic – you’re catching people who are already in the vicinity and might be able to stop by. A dispensary could geofence its neighborhood so that anyone nearby sees an ad for a daily special or happy hour deal. Geofencing campaigns have been shown to boost in-person visits; location-based ads can drive roughly 20% more store traffic on average. It’s a direct way to convert local foot traffic into customers.

Geo-conquest your competitors

Geotargeting isn’t just about your location – it can also target the locations of your competition. “Geo-conquesting” means placing geofences around your competitor’s stores or service areas to reach their customers with your ads. This strategy lets you intercept consumers who are already interested in your product type. By presenting an alternative (perhaps with a special offer), you have a chance to win them over right at the point of decision.

Target by state or city for compliance

If your business operates only in certain states or cities (common for alcohol delivery, hemp/CBD sales, and cannabis dispensaries), use geotargeting at the state/city level to focus your reach. This ensures you aren’t advertising in places you can’t serve. A hemp e-commerce brand, for instance, might target only the 10 states where they ship their products, and exclude the rest of the country from seeing the ads. A cannabis company might create separate campaigns for each legal state they’re in, each one carefully confined to that state’s borders. This way every ad impression is legal and relevant. You can also exclude locations as needed – for example, if a certain city has local bans on kratom, you can carve it out from your targeting. This compliance-focused strategy prevents wasted spend on unreachable audiences and safeguards your business from regulatory penalties.

Localized messaging and offers

Geotargeting also enables you to tailor the content of your ads to the local audience. Consider customizing your ad copy or creative to include local landmarks, city names, or region-specific language. People tend to pay attention when they see something familiar. Likewise, you can tie promotions to local events or seasons. A liquor store could advertise a “Game Day Special in [Your City]” during a hometown team’s big game, or a dispensary could promote a special for a local festival weekend. This makes your marketing more personal and relevant.

Retarget local visitors

Another strategy is combining geotargeting with retargeting (showing ads to people who have previously interacted with your business). Let’s say someone within 30 miles of your store visited your website or clicked on one of your ads but didn’t make a purchase. We can retarget those warm prospects with follow-up ads using geotargeting to make sure they are local. There’s no point in repeatedly advertising to a website visitor who was just vacationing in your area last week. Instead, focus on those who are likely to be nearby regularly. You’ll remind past visitors and lapsed customers to come back. It’s far more cost-effective to win back a previous customer than to acquire a new one, and geotargeted retargeting makes sure your reminders hit the right people.

Where do people see geotargeted ads?

Geotargeted ads can appear almost anywhere digital ads are served; the key is that they’re only shown to users in the specified location. One common channel is search advertising. When someone in your target area searches for keywords related to your business (“dispensary near me” or “buy CBD online in Texas”), your geotargeted search ad can appear at the top of the results. These are highly effective because they reach consumers at the moment of intent, and you’re ensuring the ad is only shown if the user is in a location you can serve. People also encounter geotargeted ads on social media platforms like Facebook, Instagram, and X (Twitter). For example, a Facebook ad for a local smoke shop might only be shown to 25- to 50-year-olds within a 10-mile radius of the shop. As users scroll their feed, they’ll see ads that seem to “know” their city or neighborhood.

Another major arena for geotargeted ads is the world of mobile apps and websites. Many popular apps – weather apps, news sites, maps, games – rely on advertising, and they often serve ads tailored to the user’s location. If you’ve ever seen an ad on a website saying something like “Big Sale at [Town Name] Dispensary – Today Only,” that’s a geotargeted display ad at work. These ads might be banners, pop-ups, or video ads, but what they have in common is that they use your location to make the content relevant. Even streaming services can serve geotargeted ads.

Let DispoJoy handle your geotargeting

Effective geotargeting requires market knowledge, careful setup, and ongoing management. Regulations can change, customer patterns shift, and finding that sweet spot of targeting (not too broad, not too narrow) takes expertise. Our team at DispoJoy is experienced in navigating the advertising restrictions and opportunities for dispensaries, hemp and kratom brands, smoke shops, and alcohol retailers. We take the guesswork out of geotargeting by doing it for you in a compliant, data-driven way.

When you partner with Dispojoy, we handle the heavy lifting of planning and executing your ad campaigns across display, email, texting, and even custom apps. We will identify the optimal targeting radius or regions for your business, whether it’s geofencing a one-mile radius around your store for maximum foot traffic, or targeting an entire state with different ads segmented by city. We can also employ advanced tactics like competitor geofencing and retargeting to maximize your results. Most importantly, we ensure every campaign stays compliant with the patchwork of advertising rules in your industry. You won’t have to worry about ads accidentally reaching a prohibited state or underage audience – we put those safeguards in place.

Ready to reach the right audience and build repeat sales? Schedule a call with our team to get started.