The Connected Car: A great space for online advertisers

While searching for information on possible services/apps future drivers would really enjoy getting while in their car, I came across this interesting market research report from Arbitron. The findings are based on a broad-based survey with a total of 1,858 peoples interviewed in the US.  The sample is large enough to reveal some general trends, despite the fact that it not clear whether the sample is representative of drivers distribution across US – some findings do suggest that the sample is heavily concentrated in sub-urban areas where driving is King!

Anyway, here’s one interesting finding: on average, American drivers spend almost 20 hours in their cars per week and travel more than 200 miles. Although this seems like a lot of time stuck in the car, I must confess that I can relate to it and it is not inconsistent with my driving behaviour.

Here’s another one: over two-thirds of drivers interviewed make their shopping decisions while in the car and more than one-third make the decision to stop at the store while on their way home (that’s definitely me!)

Combining these two data points inevitably leads to the conclusion that the car will be an increasingly competitive space for advertisers and services providers – it is worth noting that the automotive applications market is expected to hit $1B by 2017; underestimated, imo.

It is reasonable to expect that traditional offline advertising to drivers, through billboards and radio programs, will progressively migrate online and be directly delivered to the car for a more effective results. Considering the findings revealed above on drivers propensity to buy when driving home, digital ads delivered to the car have the potential to realize unprecedented ROI for advertisers. For instance, Internet ads “remarketing” can be extremely effective if appropriately delivered to the car by taking into account the driver’s context. Also, the car could be a very strong element of a multi-channel marketing campaign.

It is easy to see Google dominating this space by leveraging the wealth of information they gather on user’s Internet activities to deliver surgical remarketing ads as the user drives around. Google Maps is key to this picture: the driver will be using it for free anyway to get traffic info, navigation directions, weather, places reviews, and many more layers that can come from integration with Google’s other properties. While Google is particularly well positioned to conquer the hugely profitable car advertising space (a prime real-estate for advertisers), there is still plenty of room for others to succeed and grab a piece of the pie. More generally, the winners in the lucrative automotive digital services market would be the players that better expose our digital lives (Internet activities) in the car. A stronger integration with the car controls, sensors and DATA will also be important here.

Let’s put this into context with respect to recent car-related moves by the Apple and Google. By getting its iOS into the cars of some 12 carmakers, Apple has a head-start in the nascent connected car market. There is no doubt that delivering services to the touch-screen OBU (On-Board Unit) is the winning formula for future automotive services delivery. The most important thing here is that Apple seems to have established valuable relationships with carmakers, which is key to building another ecosystem (even if it is a walled garden) for the connected car. Apple is attractive to carmakers in two important ways: (i) it can bring an extremely loyal community of app developers – Apple paid $10B to its 6mln-strong developer community in the last year alone, 3X more than all other platforms combined; and (ii) it offers an unmatched ability to sell digital content through iTunes – audio content consumption on cars will remain a solid occupation for the driver, even if the connected car means the radio has to reinvent itself.

On the other hand, in terms of bribing (or luring!) carmakers, Google has a few tricks up its sleeve. As noted above, Google LBS services built around GMaps is the kind of value proposition that carmakers can’t walk away from, not to mention the self-driving car solution that really gets to the carmakers core business. Would be interesting to see how this proxy fight unfolds in the coming years …..

Carmesh has been working on developing scalable ads/announcement distribution solutions (using geo-multicasting), taking an infrastructure-to-vehicle approach. As we progressed in the project since its instigation in 2008, our thinking also progressed with the realization that the mobile Internet will cannibalize everything that involves personal computing – even the mighty PC has been brutalised by Mobile. Therefore, we are currently developing more mobile-centric use cases to deliver value-added vehicular services (and appropriate ad formats) to the car.

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3 thoughts on “The Connected Car: A great space for online advertisers

  1. Pingback: Why Apple needs iTunes Radio | whatsweb

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