This Space for Rent: Vehicles as the New Frontier of Mobile Advertising?

 In 2017, like in many other years, the Automotive category ranked #1 in ad spending with a total outlay of $13 billion. But could the tables turn? Is it possible that over the next decade automotive companies will actually be collecting revenue from other advertisers? 

Converging trends that include connected cars, fully autonomous vehicles, augmented and virtual reality, could transform cars into the next mobile media. In fact, in the past few months, there have been a couple of developments that could signal the leading edge of this trend:

• California is currently testing a limited number of digital license plates. In addition to displaying license numbers and expiration dates, these plates are capable of displaying time sensitive, location based messages.

• General Motors recently introduced a marketplace app that, among other capabilities, allows you to order Starbucks while you are driving.

But this is only the beginning. There are a wide variety of possibilities ranging from incremental to transformative for cars to dominate mobile media. And each of these expanded possibilities opens up new potential revenue streams for car companies, and new brand value propositions for their customers.  Consider these:

Location Based Notifications

• Is there any reason why Chipotle wouldn't pay to intercept a vehicle that knows its driver is on a habitual noon run to Taco Bell with a special offer in a nearby location?

• Why not pay to guide commuters who are stuck in a gnarly traffic jam to the nearest McCafe drive through for a discounted refill of their coffee mug?

In these scenarios, automotive brands could offer customers who agree to accept sponsored notifications reduced rates on connected vehicle or other optional services. 

Smart, Mobile Billboards

• Moving to the outside of the vehicle, why couldn't door panels be embedded with flexible screens to mutate vehicles into rolling electronic billboards. Sponsored geo-targeted messages would adapt to the vehicle's current location and time to alert those in the area to offers from nearby businesses.

• Since autonomous, connected cars will communicate with one another, a vehicle will have the ability to know who is riding in adjacent vehicles. Advertisers could easily send a customized, highly targeted message on the body panels to the passengers in next vehicle while riding down the freeway. That message would be tailored to match passengers' past behavior and destinations, with the current time and place.

These scenarios would likely work best for manufacturer owned and operated car sharing services. Individual customers who value a discount over pride of ownership might also be enticed by large purchase incentives for cars that are used as media vehicles.

Reinventing Mobile Advertising

• While those examples more or less mimic existing smartphone or out of home advertising capabilities, there is also potential to completely reinvent the very idea of mobile advertising. Autonomous vehicle interior configurations will likely evolve to integrate multiple screens into lounge-like interiors. Even windows will have the potential to transform into screens. The potential to create mobile, 360 degree content could liberate advertisers from the tyranny of the small mobile screen. Add augmented and or virtual reality, and advertisers will be capable of delivering completely immersive experiences to the right audience at the right time and the right place like never before.

While this scenario could prove to be the most complex, it could also be the most lucrative...both in its ability to generate incremental revenue, as well as create a value added customer experience. Car brands could offer exclusive, sponsored content that is only available in their vehicles.

While there is much to figure out, including data privacy and the role and relationship between automotive companies, service and content providers, automotive brands who are willing to take a risk are likely to be handsomely rewarded.

Learnings from the 20th Century: Launch Messaging Strategies for 21st Century Car Brand

In the next few years, the automotive industry will see the launch of several new car brands.  The last time the US auto industry saw as many new brands coming to market was probably the late 1980's and early 1990's. During that time, Suzuki, Acura, Lexus, Saturn, Infiniti, Hyundai, Yugo, and Sterling, to name a few, were launched. Can new brands learn anything from the launch of those 20th Century brands?

It's easy to dismiss those launches as irrelevant today. After all, the 20th century brands'  reason for being was to capitalize on broad demographic and economic shifts. Today, the new automotive brand launches are inspired by dramatic changes in technology that will fundamentally alter the way cars are used. Technology has also completely reshaped the media landscape, making the 20th century 60 second network TV launch spot obsolete.

But yet, there still may be strategic lessons to be learned. In looking at the list of brands above, 4 did not survive. Of the surviving 4, the two who were arguably were most successful were Lexus and Hyundai. Lexus, because it managed to earn a spot in the top tier of luxury brands. Hyundai, because it has been able to challenge the volume market leaders, and make a significant dent in their market share.

How did they do it? From a product/pricing perspective, both were excellent value plays at either end of the market. Lexus had a superior product, yet undercut the European leaders by ~$10,000, and Hyundai offered an adequate product that cost almost half the price of other new cars. 

But what perhaps jumpstared their success, was their communication strategy. Both came out strongly with insight driven messages that created by value by depositioning their competitors. Lexus' 'The relentless pursuit of perfection' played on the dirty little secret that owners of top tier luxury cars of the day knew too well...their cars were not so bullet proof. Hyundai's 'Cars that make sense' made smug Japanese buyers reconsider what they had thought to be the smartest choice in the marketplace. What likely sealed the deal for these brands was how they demonstrated these messages by bringing them to life in provocative ways.

Lexus' iconic 'Ball Bearing' and 'Champagne Glass' ads demonstrated perfection by going against every automotive advertising convention. The cars weren't shown on the road. No one was even driving them. Yet, you knew they were closer to perfection than the luxury car in your driveway.

Hyundai relentlessly pounded the value message by finding compelling ways to quantify the better sense of choosing a Hyundai.

Of course, from a media perspective, these brands found the most impactful platform of the day, network TV to spread their message. Their media buys targeted their customers as best they could through demographics and rudimentary psychographics. But while media was important, messaging is what set them apart. 

The brands that didn't make it, were much less clear in articulating and demonstrating their positioning. While Saturn promised 'A different kind of car, a different kind of company', they were unable to convincingly demonstrate how they were different. Sterling touted its British heritage, without offering any tangible benefit of that heritage. Suzuki introduced the Samari as 'the most extraordinary event in your lifetime'...really? And Yugo--well, it was a Yugo. All of these brands also borrowed conventional cues from typical car commercials--acceleration/performance, romancing sheetmetal, winding roads, etc. 

Of course, message alone cannot build a brand. There were problems beyond advertising for all the brands that met their demise. Despite a great start, Hyundai also went through some rough patches over the years. But none of that diminishes the huge and swift impact of the Lexus and Hyundai launch messaging.

So how can today's start ups use these examples to develop an effective messaging strategy?

• Establish a clear, insight driven launch message that depositions the existing competition.
• Amplify that positioning by creating provocative, news/shareworthy content that makes the audience pause to rethink the entire category

How can new car brands implement these principles? Most new car brands are likely to differentiate themselves on some combination of autonomous driving, seamless connectivity, and cleaner powertrains, here are a few thought starters:

• Autonomous plus connected means you can use your time in your vehicle to be more productive. For brands who want to create value through superior 'productivity', how about a 24 hour challenge at the same time of the 24 hour LeMans race. Enlist writers, artists or musicians to create something from inside the car, while the car drives them. . Create film that juxtaposes the productivity of the creative process against the monotony of track laps. 
• As electric battery technology gets better, electric cars are likely to have better range than traditional internal combustion (I/C) cars. For brands staking their claim on the benefits of superior battery technology, what about an endurance challenge in a desolated, remote location between their car and a trusted I/C brand? It could instantly transfer the onus of range anxiety from electric to I/C.
• Autonomous also means safer. For brands deciding to leverage the value of 'safer', how about conducting and filming live 'human vs machine' reflex challenges? 

Of course, these brands should leverage new technologies to precisely target the right people at the right time to maximize impact and earned media. But without a solid messaging strategy that changes the game in their favor, they're more likely to be Sterling than Lexus. Because winding roads, motorsports, gorgeous sheet metal and Super Bowl ads just won't cut it.

It's Not a Smartphone: Why Automotive Brands Should Think Different About Subscriptions

Over the past few months, several automotive manufacturers have introduced 'subscription' models as an alternative to ownership. These subscriptions have been touted as being 'just like how you might buy a smartphone'. The smartphone analogy generally refers to the relatively short term commitments to the vehicles and the flexibility to upgrade at will.

But are smartphones and cars really analogous? While the automotive and smartphone plans may resemble each other on the surface, there are a few key differences that create an opportunity for auto makers to really change the game by charting their own course in tailoring subscriptions that best match user needs.

The first difference between the categories is the core value proposition. Volvo, Cadillac, Mercedes, and BMW have all launched subscription models, but there are differences across brands in cost and flexibility. BMW's plan is the costliest and most flexible with monthly rates ranging from $2,000 - $3700 per month. Volvo's plan is the least flexible and most affordable, with rates starting at $600/month. But even at $600/month, these models appear more expensive than a traditional retail contract or lease payment, likely making them appealing to only a small segment of the market. On the other hand, smartphone subscription plans tend to make the phone affordable, and therefore accessible to more users.

The second difference is in the way the hardware is used. The fact is that in the US, the average car sits idle for ~95% of the time, with the average driver making 2.3 trips per day. In contrast, the average smartphone sits idle for 80% of the time, but it is used an average of 85 times during the day in small bursts from morning 'til night. Yet all the existing automotive subscriptions are based on the car being in your possession, devoted to your usage 100% of the time...just like your smartphone is.

And that difference in user behavior creates opportunities for innovative, needs based automotive subscription models--models that would obviate the need to trade off flexibility for choice. Instead, they could be tailored to fit specific individual's lifestyles, while at the same time maximizing utilization rates and fleet efficiencies.

For instance, the same vehicle could be used by subscribers to the 'Carpool Plan' during commuting hours, and the 'Soccer Mom Plan' during the day. Other specific usage plans like a 'Night Owl' subscription or a 'Weekender Getaway Plan' could round out fleet utilization, and lower subscription costs. This would also provide the added value of defraying the cost and hassle of parking, as a concierge could arrange for pick up and delivery. Moving from a 95% utilization rate to even a 70% utilization rate would mean the the car now takes 13.8 trips per day, by 6 different subscribers. This would significantly lower cost, and make subscriptions available to a much larger market. Over time, tsubscriptions could outnumber sales or leases.

So why would car companies want to swap sales for subscriptions? According to Deloitte, by 2030, more than half of new vehicles will be used in car sharing. This could take many forms, including ride sharing services like Uber, or unbranded car sharing like Zip Car, or even rental car services. That percentage rises to over 80% by 2040 as autonomous vehicles become more commonplace, facilitating delivery and pick up. The fact is that all these categories are converging and car companies need to think differently.

Subscription plans that add value could help to drive brand loyalty and stave off new competition. Customized subscriptions that take into account user's needs are suited to offer added value through amenities. What if the car was delivered with after school snacks in the 'Soccer Mom Plan' or piping hot coffee in the 'Carpool Plan'? 

There is also an opportunity to tap into incremental revenue streams by bundling incremental relevant services like WiFi for commuters or streaming children's programming into the kid's shuttle. 

And while car sharing may seem scary to car brands worried about shrinking volume, this is not likely to be the case. That is because the projected number of miles driven will continue to increase. Even at a 30% utilization rate, shared cars would be driven over 80,000 miles per year, a 6 fold increase over the 13,476 US average today. Thus, the fleet would need to be refreshed on a more frequent basis to compensate for greater usage, leading many experts to predict that volume will not go down.

As it seems that change is inevitable,  perhaps it's time for automotive brands to start thinking seriously about different subscription models as a powerful tool to  lead this change!