In-vehicle advertising is a dead end. Cars to get payment power instead
- Connected vehicle subscriptions are hardly covering connected car technology costs
- Advertising is a tired and overworked old warhorse
- Installing commerce platforms ‘in car’ is probably the answer
The connected vehicle opportunity is not going well. According to ABI Research, connected vehicle subscriptions are hardly generating enough to cover the costs incurred by car-makers to install the necessary embedded comms technology in first place and so there’s a continual reappraisal of monetization options, one of which might be a way forward.
It was all supposed to be so different. Ten years ago the connected vehicle was expected to be a key driver (sorry) for the mobile industry. A low-latency broadband connection was seen as critical for the journey towards the autonomous vehicle, at least by those responsible for industry hype. In the event it’s not and probably won’t be.
Instead finding vehicle connectivity use cases and ways to monetise them has become a real problem. There are millions of cars with embedded connectivity on the road, but many owners are reluctant to actually buy subscriptions to make use of them.
The obvious fix - in-vehicle advertising - might be one option, but ABI points out that buyers of expensive vehicles (and in comparison to everything else, cars are always expensive) are unlikely to look fondly on ads appearing on their screens in an attempt to gouge even more money out of them. That sort of user experience is likely to “harm car-makers’ brand reputations” as the marketing jargon has it.
Plus, growing pushback against intrusive and generally annoying device-based advertising seems unlikely to be the way forward, except perhaps, says ABI, where the vehicle itself is one step back from driver ownership, where it’s being used via some sort of a subscription model such as a lease.
Where an ad model could work, though, might involve ads displayed at the vehicle's touchscreen, with ad revenue from those going to the car maker, while driver/owners get a free ad-based connectivity subscription. This approach is thought to work better with entry and medium-level vehicle owners.
But no matter how you cut it, with ad revenues generally on their way down in the connected world as a whole, the ad option is pretty thin gruel for all involved.
A better way forward, suggests the researchers, might be to look closely at commerce platforms offering in-vehicle payment via “non-intrusive” smart personalization. Smart personalization means making an appropriate offer to the user - depending on context, location etc, - without being too obvious about it and then devising an interactive experience to make the transaction simple, secure and above all fast - removing all the potential annoyance involved in someone or something trying to lighten your wallet and being clumsy and long-winded about it.
To get that seamless, context aware buying experience working, ABI says carmakers are currently working with marketplace vendors to integrate the payment features with vehicle sensor analytics (e.g., vehicle location, fuel level, or driver identity).
If this approach works out, ABI reckons that carmakers’ revenues via in-vehicle payments made via the vehicle’s Human Machine Interface (HMI) rather than by using a smartphone or similar, will reach US$3.94 billion in 2026. It says significant deployments should be expected between 2023 and 2024.
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