Automotive > Infotainment & Telematics Blog

The Future of Advertising in the Car: Where is it!

by Roger Lanctot | 2月 24, 2011

Advertising, like real estate, is all about location. But lately, advertising in a connected and increasingly mobile world is about location and context and when you put these two together you get relevance. Many companies are trying to capitalize on the emergence of relevance as an index of commercial activity but none more uniquely and effectively than the appropriately named Where. 

A year after launching its “relevancy engine,” Where has 250 mobile application publisher clients with a reach of 50M unique users producing 2B ad requests and 140G of contextual data per month. Depending on how you look at what Where has done, the company has either banished or redefined the idea of location in advertising. In the words of marketing chief Dan Gilmartin the popular DMA (designated market area) of old now stands for Doesn’t Matter Anymore. 

The relevance of advertising in the automotive industry has emerged as more consumers connect smartphones into their cars introducing the world of mobile advertising to the dashboard – a venue previously “owned” by the on-board radio. A growing number of service providers are offering OEMs ad-supported server-based wireless content delivery platforms. And the lead application on many of these platforms – such as Toyota’s Entune or GM’s new MyLink – is Internet radio.

Third Generation Mobile Advertising

Like so many aspects of the connected world, advertising has gone hyper local and contextual. Where first generation mobile advertising might have been broadly targeted to a region, and second generation wireless ads might have sent you a coupon for a Big Mac as you drove by a McDonald’s, third generation mobile advertising will take into account the time of day (lunch time?) as well as, maybe, the user’s past searches or clickthroughs which might indicate a preference for vegetarian.

Location is still important, but now context is the critical determining factor for mobile advertising campaigns and just about everything else in an always connected world. Nowhere is this fact made more clear on a daily basis than in the realm of terrestrial broadcast radio advertising – a nearly $20B business that has resisted the inroads of satellite radio, digital radio and, now, Internet radio. But terrestrial radio’s ability to hold off the competitive threat from Internet radio will be a test and that’s because of relevancy.

To better understand the role of location it is worthwhile looking at the market impact of satellite radio. Sirius XM has been able to build a subscription-based $2.8B revenue stream around premium and curated broadcast content. While some of the stations on Sirius XM allow for some limited advertising messages these ads are generally not location specific since all of the stations are broadcast across the entire U.S. and Canada.

The broadcast approach to advertising Sirius XM-style is “broad” in its most loosely defined sense – very first generation. Ads for male enhancement products (Prolixis) or the AshleyMadison dating service are typical. These ads have zero location relevance and, as a result, have the quality of audio spam.

Relevance Rules

Traditional terrestrial broadcast radio, on the other hand, may have its own sprinkling of national advertising spots, but they are leavened with spots for local service providers with familiar names. That familiarity somehow makes those ads easier to accept and less like audio spam.

The strength of those local advertising bonds has helped the terrestrial broadcast radio industry hold its own against other sources of content, including music playing devices. Today, only 3% of total listening hours are attributable to Internet radio, according to Arbitron (which does not measure satellite radio listening), with the balance devoted to terrestrial broadcast sources.

Internet radio in the car – whether as an embedded solution or delivered over a connected mobile phone – represents the arrival of third generation advertising opportunities in the dashboard. The power of Internet radio advertising lies in its infrequency – about half the hourly ad load of terrestrial broadcasts – and in its relevance. And to help seal the deal for a prospective advertiser, Internet radio offers the prospect of superior metrics for evaluating the efficacy of a mobile advertising campaign.

Predictive Advertising Model

Where’s relevancy engine enables the rifle-shot approach to advertising that advertisers seek. Like a weather or traffic forecaster, Where’s algorithms can predict consumer receptivity to advertising messages based on a variety of inputs including everything from time of day to weather to location or any of a range of behaviors reflected in online activity.

Among the inputs Where’s relevancy engine ingests are such things as page views, click to calls, click to map, click to directions as well as “likes,” “saves,” “favorites,” and ratings. Different types of indicators get different weights, but all contribute to delivering a message that is likely to be more welcomed by the consumer since it is more relevant.

It will take research to bear this out, but my personal theory is that the more appropriate or relevant an ad is the more closely a consumer will pay attention and respond. I am not interested in Prolixis or AshleyMadison, but I may need gas, a cough drop, or a Big Mac depending on my context.

Where also has a mobile phone application which has taken its relevancy concept further with the addition of what it calls Perfect Places, a social discovery service that recommends nearby sites that friends might want to visit based on matching relevant similarities in taste. The service also delivers exclusive deals from local merchants. The Where app has 4M users.

Conclusion:

The transformation coming to the automotive radio experience is driven by the $20B advertising opportunity that terrestrial broadcast radio represents. Internet radio stands a much greater chance of capturing a piece of that pie or, alternatively, making it larger. The Internet radio listening audience is unique and attractive to advertisers and the underlying technology allows for more accurate targeting and measurement of campaigns.

How providers translate Internet radio into revenue opportunities remains to be seen. Pioneer Electronics’ Platform for Aggregation of Internet Services (PAIS) has been the most overt regarding its proposed strategy of advertising revenue share. But most other platform providers, from Airbiquity to aha mobile, have the same idea in mind. There is a reason GM and BMW have been working so hard to bring Facebook into the car. It’s all about advertising inventory.

For further insight:

http://bit.ly/gcXXyX - Next Gen Car Radio: Battle Lines Drawn over Content & Location - Insight – Roger Lanctot – Automotive Multimedia & Communications Service

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