Articles, Smart Mobility, Vehicle Automation

Could In-Car Ads Lead to Cheaper Mobility?

Ride-hail services like Uber and Lyft are expected to be some of the biggest beneficiaries of autonomous vehicles. The cars could theoretically pick up passengers 24 hours a day. On the downside, these services will then be required to purchase or lease new vehicles from automakers, an expense they currently avoided by having drivers use their own automobiles.

With so much technology going into them, self-driving cars are likely to be very expensive. How will Uber and Lyft – or any taxi-type service – pay for them without increasing their fees?

Is In-car Advertising the Solution?

One solution is personalized in-car advertising. Using data gathered from customer’s phones, the car could deliver targeted ads that provide steady revenue for ride-hail services.

“I’m sure everything will be tried,” said Marc Weiser, managing director at RPM Ventures, which invests in seed and early stage companies, including automotive IT. “We’re not doing it yet, so why would we start? As long as the economics work…[but] if they don’t, that’s when you could start to see people paying for ads not to be there.”

Higher fees for no ads? That sounds like the model used by some streaming video services, including YouTube.

Jeffrey Tumlin, principal at Nelson\Nygaard, a transportation planning consultancy, thinks this model is inevitable.

“Of course that’s the market we’re heading to,” said Tumlin. “And given the business model for mobility, I would expect it’s going to be much more like the Hulu model, where the only thing you pay for is to turn the ads off. Think about advertising: when you are [in a car], you’re in a confined space. You’re surrounded by surfaces. The [car] knows who you are, where you are, where you’re going. It has your credit card information. It has anything that’s available about you online.”

Fearing the Ad Invasion

Grayson Brulte, co-founder and president of Brulte & Company, hopes that is not the case. He is not looking forward to a ride-hail service that bombards passengers with any form of advertising.

“[But] I am very fascinated and utterly interested in hyper-local experiences that can be monetized,” said Brulte, whose company develops and implements technology strategies for a global marketplace. “If you’re driving through a city and you have an augmented reality windshield, and it pops up an offer for Chipotle or something else – a paid or sponsored advertisement inside the augmented reality world – I think that’s interesting.”

Brulte said he is not bullish on the idea of a car that’s covered in ads or forces passengers to watch a screen. “It’s too invasive,” he said, comparing it to the loud and repetitive commercials that are displayed in some taxis. “It takes away from the whole experience. People try to turn it off all the time. They hate it. I don’t see that transferring to autonomous vehicles because there will be a backlash.”

Before that happens, Weiser theorized that ride-hail services might experiment with offering faster pickups for a monthly fee.

“Will I pay $500 a month to ensure that when I hit the ‘Lyft’ button to hail a ride, the car is there within five minutes every time?” Weiser questioned. “And if not, my fare is entirely free? We haven’t seen any of that. Right now the only differentiating payment models are [based on the] vehicle or the number of people inside the vehicle.”

About the author:

Louis Bedigian is an experienced journalist and contributor to various automotive trade publications. He is a dynamic writer, editor and communications specialist with expertise in the areas of journalism, promotional copy, PR, research and social networking.

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