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Geocoding Basics: What are Geocodes?

By 12 January 2022February 11th, 2022No Comments
geocoding and geocodes

Geocoding Basics: What are Geocodes?

We live in a world that is so vast, and it seems practically endless. Over the years, technology has brought the world closer together despite it being physically far away from each other. Back in the day, not too long ago, keeping track of different physical locations was a challenging task that gave marketers nightmares. But, this has changed post the introduction of geocodes, which has made managing or tracking physical locations easier for businesses.

Geocodes are basically a set of latitude and longitude coordinates of a physical location, and for businesses, this geocode usually belongs to an address. Geocodes can help streamline several business operations and enhance their reach.

geocoding and geocodes

Geocoding is now a popular term that’s often thrown around inside businesses of all kinds, and many of you would have at least come across the term at some point. Geocoding is the process of converting a physical address or a location into a set of (latitude and longitude) coordinates so that they can be displayed on a map with utmost precision.

Geocoding has proven to be a vital part of businesses as they allow businesses to efficiently access different locations based on their demographics that are relevant for their unique business. Furthermore, geocoding also enables reverse geocode through which you can convert geographic coordinates to physical addresses.

In this article, we discuss the finer details of geocodes and the process of geocoding. We discuss the basics of geocoding and how accurate geocoding can be. Furthermore, we also discuss the different applications of geocodes, especially for businesses. The article will also explain how you can find a geocode and elaborate on the process of reverse geocoding. Additionally, we also take a look at geocoding with Google.

By the end of this article, you will have gained a sound understanding of geocodes and geocoding and how they can help you optimize your business operations. So, let us get started with the basics of geocoding.

What is a Geocode?

You are probably already aware of latitudes and longitudes in geography from school and, if not from school, elsewhere. They are common terms that often pop up here and there. They are a geographic coordinate system used to specify the exact location anywhere on earth. You could say that geocode is merely a simple term used instead of latitude/longitude. Similarly, you can also say that ‘geocaching’ is just a fancy name for “scavenger hunt.” To put it simply, geocode specifies the latitudinal and longitudinal coordinates of a particular location.

So now that we know the geocodes are merely the latitudinal and longitudinal coordinates of a location, it makes perfect sense that geocoding converts a descriptive location like a street address into geocodes or lat-long coordinates.

Geocoding has the potential to be crucial for businesses that often employ location-based marketing strategies. Being able to map out your target audience can enhance your marketing strategy’s effectiveness and help you figure out new and revolutionary ways to reach your target audience through innovative thinking.

Accuracy of Geocoding

The accuracy of geocoding is arbitrary. There is no one answer for how accurate geocoding is because there are several factors that you need to consider before you can accurately answer this question. The accuracy of your geocoding may vary depending on how you carry it out, the clause or data you use for it, and so much more.

In other words, the question “how accurate is geocoding?” is not the right way to formulate the question; instead, you should rephrase the question to ask how accurate geocoding can be. But to answer such a question accurately, you need to look at various aspects that make geocoding possible. Below we discuss, in detail, ZIP+4 code, interpolated, parcel centroid, & rooftop – the four major geocode accuracies.

ZIP+4 Level Geocode

The ZIP+4 codes are a great place to start when it comes to mapping addresses because they provide accurate data about the address’s physical location. The ZIP+4 code is used to represent a postal delivery route, and these routes typically consist of ten to twenty addresses. Although a ZIP+4 code may contain up to twenty addresses in them, it is still enough to give the ZIP+4 level geocodes to be relatively accurate.

In this type of geocoding, the approximate center of the delivery route of a ZIP+4 code is taken. This means that a ZIP+4 level geocode can be accurate on a block level for the addresses you are searching for, which is a relatively decent standard for geocoding but not the best. However, such geocoding works best for you if you are only looking to get an approximate location of an address. If you want a more accurate mapping of the address, ZIP+4 level geocoding is probably not your best option.

Interpolated Geocodes

Some of you may be familiar with interpolation as part of your mathematics curriculum, and for those of you who don’t remember, you need not worry. We are not going to discuss any math problems here. So if you have ever wondered when I will ever be using this in real life during your maths class, well, this is it. Interpolated geocode uses the principle of interpolation. Despite using the same mathematical principles that we are taught in school, the interpolation approach is not focused on accuracy but rather on the speed of the geocoding process. Furthermore, the process is surprisingly simple, even though the math may seem complex.

To better understand the interpolation geocode, let’s consider an example of a random street address. For keeping the example simple and to better comprehend the process, let’s say that the address is in a residential street that would effectively terminate the intersections at either end. Now, imagine that there are two geocodes close to the address that you want the geocode for. Suppose these two geocodes are on the two ends of the street or intersections. At this point, you have all the information you need for interpolation, and all that’s left is to do the math so that you can determine the middle of the series.

Now, you probably think it is way too hard to implement this in real life, but before you come to that conclusion, let’s put your mind at ease by saying that this method is automated. You need not worry about doing the math as a computer program can easily take care of it for you.

Suppose the addresses you are looking for are all lying between points A and Z (known geocodes), and you need the geocodes for points B and C. Here, the computer program would put the points B and C at regular intervals between A and Z and set a pattern. As you can guess, the actual layout of homes/businesses won’t be as we have assumed in the process.

Buildings may be built just about anywhere, and the interpolation geocode can only give you an approximate idea of where the address belongs. To be more precise, the interpolation geocodes are only accurate to a street-segment level and on a rooftop level.

However, it is worth noting that many businesses do not really rely purely on geocodes, as verifying their address database is enough for most business operations. You can make use of an advanced address verification tool like PostGrid to validate the addresses you have and get a full ZIP+4 code of the addresses. Furthermore, most marketing efforts using geocodes often involve direct mail, which can be easily automated with the help of a system like PostGrid.

Parcel Centroid Geocodes

Next, we are going to discuss the parcel centroid geocodes. The parcel centroid geocode is obtained by accounting for the known boundaries of a property. In this type of geocoding, after accounting for the boundaries, you need to approximate the geocode in the center of the parcel. As you can see, the name “parcel centroid” is pretty apt for this one. Unlike ZIP+ code geocoding or interpolation geocoding, which are relatively cheap and easy, parcel centroid geocoding is more expensive. The primary reason for the difference in price is due to the additional data required for parcel centroid geocoding.

However, despite the additional expense and the data parcel, centroid geocodes still lack precision considerably. A significant reason for the inaccuracy of parcel centroid geocoding is that most homes or buildings are not built in the geographic center of their property. This is an even more pushing factor for parcels that are especially large or irregular. To get a better understanding, you can try using Google Places Geocoding API, where you will be able to see the centroids are rarely at the center of the property.

Additionally, a rule of thumb you can follow in geocoding is that the larger the package, the less useful a parcel centroid geocode will be.

Rooftop Geocodes

The last but most accurate geocode type we are going to discuss is the rooftop geocodes. Having the ability to know the precise location of the primary structure is like a dream come true for many business organizations. Having access to such accurate information can make a huge difference when it comes to insurance quotes, city planning, and many more such cases. Even if the difference is by just a dozen feet could prove to be crucial for such sensitive businesses. Rooftop geocoding was developed particularly for keeping such high standards of accuracy. Rooftop geocodes started out as parcel centroid geocodes but it was later optimized by incorporating additional data points.

The rooftop geocode was created after refining the process and incorporating additional data points, and then coupling it with superior calculations that allowed it to match geocode with the primary structure’s actual rooftop as you can very well guess, superior quality in geocoding means additional data, which further means more expenses. Furthermore, such high-value data is hard to obtain, making the rooftop geocoding not only the most accurate of the bunch but also the most expensive.

Since such money is involved in it, you must be careful when selecting a geocode service provider. Don’t just jump at the first service provider that claims to be “rooftop accurate”. Take due diligence before picking a service provider for your business. There have been many instances where service providers claim to be rooftop accurate but, in reality, only employ parcel centroid.

Therefore make it a point to double-check and triple-check your service provider. The best approach is to try using the service provider to test their accuracy so that you know for a fact that they can deliver what they promise.

Understanding The Level of Geocoding Accuracy You Need

As we have explained above, the ZIP+4 level geocodes and interpolation geocodes are relatively low, but so are their precision compared to more advanced geocodes such as rooftop geocodes. But the low cost does make it accessible for businesses with a constrained budget. This makes it ideal for those of you who are looking for a cost-effective geocoding solution and can afford to compromise on precision to some extent.

As we move on to rooftop-level geocodes, the prices shoot up as compared to ZIP+4 level or interpolation geocodes, but at the same time, so does its precision. Rooftop-level geocode is typically employed for high-precision requirements such as insurance quotes and city planning. When it comes to applications that require hyper accuracy, rooftop-level geocodes are a perfect fit and cost-effective.

Finally, the parcel centroid geocode is unlike the other geocoding methods, which typically provide a precision level that is proportional to their price. When it comes to parcel centroid geocodes, you end up paying a higher price for a lower precision. Clearly, the parcel centroid geocode is not for everyone, and there are only very few cases where you use parcel centroid geocodes in a cost-effective way.

Geocoding Applications

If you look at it in a broad manner, geocoding is used to determine the precise location of something or somewhere on the earth’s surface. The practical application of geocoding is more than what you can possibly imagine and to list them all here is nothing short of impossible. But, we can make an earnest effort to make you understand how geocodes can be used by different industry verticals to optimize their different business operations. Below we discuss some of the more common instances where geocodes are employed for business operations.

Sending Coupons

Suppose you run a fast-food franchise that has its presence all over the country, and you want to run a direct mail marketing campaign employing discount coupons in a metropolitan area. Now let’s assume that the restaurant has six franchise locations spread out over the metropolitan area we are considering. The restaurant would then need to print the address of the nearest restaurant’s location on each mailpiece or coupon based on the locality they are sent.

By employing geocoding the addresses in a particular area, you can easily figure out which of those addresses are nearest to which of your franchise locations. This way, you can print the relevant restaurant’s address on each discount code. In this case, you need not have a hyper-accurate system like rooftop-level geocoding, as the precision level of much more affordable ZIP+4-level geocodes is more than enough to get the job done.

Insurance Risk Assessment

Risk assessment is an important part for insurance providers and others who work closely with the insurance industry. Suppose a house is located near a lake. Before the said property can be insured, it’d be required to complete a risk assessment. Let’s imagine that the house is located on a farm that stretches for hundreds of acres or two hundred to be precise. Let us also assume that the position of the house is just more than a dozen feet away from the lake.

In this situation, if you were to use any geocoding method other than rooftop-level geocoding, let it be ZIP+4-level, interpolated, or parcel centroid, then you are bound to get a low-risk assessment. However, on the other hand, rooftop geocodes would show you that the home is really 13 ft away from the lake. Getting access to such precise data will enable insurance providers to carry out much more accurate risk assessments, allowing them to make more accurate quotes.

Telecommunications

Another field that greatly benefits from the application of geocoding is telecommunications. One thing that is quintessential for the survival of telecommunication companies is providing adequate signal strength, and they make it a point to find out whether this requirement is met. For telecommunication companies, securing good signal strength for their customers is the ultimate goal. Meeting this requirement means they can meet all their other goals as well. So how does geocode come into all this?

Well, telecommunication companies can direct their signal to structures where there is high traffic or demand for quality signals. This allows telecommunication companies to channel their signal to places where they are needed instead of aimlessly directing them towards empty parking lots or open grounds. Such places are where people hardly go to stream videos or just scroll through their phones. Using geocodes, you can identify both types of areas. As you may have figured already, such an application would require precision, and hence you will need to use rooftop-level geocoding in this situation.

Reverse Geocoding

Geocoding is the process of finding the geocodes or latitudinal and longitudinal coordinates of a specific location. As we have mentioned earlier, geocoding provides you with a comprehensive idea of where your target audience resides, and you can use this data for optimizing your business operations.

Reverse geocoding, as the name suggests, does the opposite of what geocoding does. Instead of taking the address as input and giving geocodes as the output, reverse geocoding takes the geocodes as input and provides you with the addresses as the output.

The process of reverse geocoding is underutilized for the most part and holds great potential for businesses. Currently, reverse-geocode is typically employed for identifying addresses from a point given on the map. However, such application or reverse geocoding is often isolated, and it is yet to go mainstream. You can fully expect new and innovative applications using reverse geocoding in the near future. That being said, businesses shouldn’t wait around for someone to come up with a revolutionary new idea. They must strive to create one themselves that fits their unique needs.

Geocoding With Google

Did you know that Google actually allows you to geocode locations? It is hard to think that anyone of us would have missed Google Maps showing you the latitudinal and longitudinal coordinates. But even if we did notice, it is highly unlikely that we make the connection with geocoding because that’s the last thing we are thinking about when trying to get somewhere.

Although services from Google and Bing usually manage to geocode places to parcel centroid or even rooftop-level accuracy, there is a catch, and it’s a big one. Sometimes services, including Google and Bing, geocode locations that don’t even exist, which might be fine for regular users. It is unacceptable for carrying out business operations.

Google and Bing provide geocodes through their maps, and they do it so that you can navigate yourself to the given location. This is very helpful when you want to drive to a place where you are not sure where it’s located. However, they do not go so far as to validate the address or geocode they provide you with.

Think about all the times when Google maps have taken you to the middle of nowhere and said, “you’ve arrived at your destination!” and it should give you an idea about how reliable their data can be. Instead of straight-up telling you that they don’t have the information, they end up giving you the wrong data, and that’s far from ideal for business operations.

So, what happens when you decide to go ahead and use mapping services from Google or Bing anyway?

You will be provided with the requested geocodes, but there will be no telling about their accuracy or reliability. Furthermore, you may get geocode for locations or addresses that are no longer active, according to the postal service provider. The same goes for addresses that aren’t real or simply not registered with postal service providers like USPS.

A more convenient and efficient way in such a situation is to employ an advanced, automated direct mail solution like PostGrid. Using a tool like PostGrid will not only ensure that the address is real but also deliverable by USPS.

Conclusion

In this article, we have discussed what is geocode and geocoding along with their various influencing factors. We have talked about geo addresses and discussed major geocode examples such as ZIP+4 level geocodes, interpolation geocodes, parcel centroid geocodes, and rooftop-level geocodes. We saw how you could use these different geocode examples based on the geocoding accuracy your business requires. Geocoding has numerous applications in today’s world, and many industry verticals use it for different purposes.

However, many businesses that employ geocode in one way or another hope to optimize their marketing efforts and, more particularly, their direct mail efforts. However, there is an alternative way to accomplish the desired result with a 99% deliverability rate. You can use advanced direct mail solutions like PostGrid. Not only can it ensure the deliverability of your postal mail but verify your address database using USPS’s official address database. The best thing is that the whole direct mail process, including printing and mailing, can be automated using PostGrid.

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