Per the definition in Techopedia, geo-fencing is: "a technology that defines a virtual boundary around a real-world geographical area. In doing so, a radius of interest is established that can trigger an action in a geo-enabled phone or other portable electronic device."
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NBC's affiliate in Utah, KSL News, produced this video on geo-fencing. It shows some of the new techniques marketers can use to advertise certain products with opt-in smartphone apps.