The Connected Car – Big Data means Big Possibilities Part 2

Ella Williamson investigates.

Last year Thilo Koslowski, automotive analyst for Gartner, described the car as the “ultimate mobile device”. When it comes to advertising, separating the two major mobile devices – the car and the smartphone—there’s one serious challenge: driver distraction.

As outlined by the European Commission, there are three basic types of distraction: visual – things that make drivers take their eyes off the road; cognitive – causing drivers to think about other things; and manual – things that cause drivers to take their hands off the wheel. Mobile phones and satnavs have been identified as some of the major sources of driver distraction and despite the connectivity and functionality of such devices becoming increasingly integrated into the car itself – obviating driver distraction remains of chief importance.

Radio content providers such as Aha and Pandora are already finding ways to not only stream radio to drivers but to target advertisements at them, too. Earlier this year, Pandora launched the streaming music service’s in-car advertising solution. It offers advertisers spots of various lengths up to 30 seconds running across 130 vehicle models with native Pandora integration and 270 aftermarket auto-devices that feature the service.

Taco Bell has advertised with Pandora – using the advertising solution to target drivers in their car at mealtimes. An ad-free service is available via a subscription to a Pandora One premium account.

Aha Radio has also recently announced a partnership with AdsWizz to deliver targeted audio advertising in the car. The deal which uses audio ads associated with an on-screen brand logo, address and a ‘click for coupon’ functionality is set to monetize its base of more than 50 car models by 14 OEMs including Ford, Honda and Toyota.

Jean Cherbonnier, CEO and co-founder of content provider and aggregator to the connected car NAVX, is researching a business model for implementing advertising in the car and anticipates that 2015 will be NAVX’s year of experimenting with it.

His preferred vision for advertising would manifest itself as, “Advertising that appears when a car’s driver is actually using a service, such as looking for a gas station.  It must be fast and contextual. Instead of having just a list of gas stations – you could have one at the top that is sponsored – paid to be shown at the top, incentivizing with, for example, save one Euro in the form of a voucher”. He predicts that advertising would mostly occur when the driver is stopped and looking for something rather than popping up when driving, something that is technically possible but would likely be quashed by a car maker.

When it comes to who pays for content, Cherbonnier sees a shift ahead prompting the need for advertising revenue. “Today the car driver is actually buying the content like fuel prices, parking information, traffic information – they are buying it through the subscription to the car maker or sometimes they just pay without noticing it when it is included in the price of the car or GPS system. I imagine in the future a third party needs to pay for the content because neither the car maker nor the end user will be willing to pay”.

The challenges facing advertising in the car are threefold for Cherbonnier – audience volume, driver distraction and revenue potential. “You need millions of eyeballs to make sense of an ad campaign so it will take some time before there are enough connected cars on the road to justify the campaign. I don’t think we can just display advertising banners on screen in the car like you would do on a phone as you cannot distract the car driver”.

When it comes to subsidizing content in a car, approaching big brands and offering to promote them within an app may not be enough according to the NAVX boss: “We would also need to introduce booking services, i.e. book a parking lot or EV charging station and the car maker or content provider could take a cut.”

Other routes for leveraging revenue could be via selling data to a third party, partnerships and simply using the data to improve profitability. “One way for sure is for the car makers to collect the data and make it available to third parties and sell information. That’s not to say that carmakers will do this – it may not be their core focus – but it would be an easy way.

“Maybe third parties could have partnerships with carmakers to extract value from the data and help them resell it. It is also interesting for the carmaker to improve profitability. If a car maker is able to really analyze what drivers are doing, where they are going, and so on they will probably be better at maintaining the cars, understanding what is wrong and avoiding those millions of recalls that occur every year”.

When it comes to OEMs and targeted communication – Volvo uses its own cloud solution to deliver personalized newsletters and an owner’s website with opt-in tools. Volvo’s next marketing moves are currently under wraps yet David Holecek, director connected products and services for Volvo Cars, tells TU, “We are exploring potential paths together with our various partners. The key is to enhance customers’ experience through more relevant information, and therefore any steps must be carefully evaluated. We would rather do it right than do it fast”.

When it comes to driver distraction Volvo sees this as no obstacle. “Advertising should never interfere with driving the car. However, we do see opportunities for smarter advertising functionality, which could make it easier for you to later retrieve possibly interesting information, rather than trying to note it somewhere while driving”.

For Telefónica, value leveraged from the connected car is non-advertising led. The MNO’s M2M end-to-end solutions director, Rosalia Simon Navarro says, “Drivers want, and will continue to want, a clear value exchange for giving away some of their driving data and we feel that advertising to drivers, in a similar way to smartphones and desktops, is not where this data is best utilized. For Telefónica the real opportunity in connected cars is the ecological, economical, safety and infotainment benefits that can be derived from a more connected vehicle”.

Generating revenue from personalized advertising is being left to third party partners for American Honda. Koch, the American Honda executive, explains, “We are not interested in this as a revenue area at all. At this point some of our third-party partners already have relationships with some of our customers – like Pandora and Aha. So they have their own business models and they are getting their own data from those relationships”.

When it comes to the question of selling consumer profiles and data to third parties, Koch stands firm that this is quite simply, not part of the Honda plan.

As for displaying these third-party applications, Koch says Honda is trying to display big data in small doses for the driver: “We’re obviously concerned about presenting too much non-essential information during driving. Now we are making third-party apps available to customers while they are driving so we’re aware that some of those services are serving up advertising as part of that experience so we’re trying to work with some of the aggregators and some of the apps to make sure that when that information is presented it is not driver distracting”. 

To find out how connected vehicle data will transform the automotive industry, check out Telematics Berlin Conference and Exhibition 2015 (11th – 12th May).