Vehicle Ads – The Next Gold Mine For Ridesharing Companies

(BMW Williams’ F1 car for 2004 season. Image from Google)

Formula 1 or F1 is one of the sports that I used to watch quite religiously since mid-90s. And as I mentioned in my previous article here, one of the reason is sponsorship. Yes, I love to see how F1 teams (or any motorsports teams in general)  putting the logos of their sponsors throughout their racing vehicles and drivers’ racing suits. Apart from a good indicator if there’s any specific regional or county’s regulating the ban of specific advertisements (like tobacco) in certain racing circuits, it’s could also be one of the signal of global economic growth for that year (plus the next few quarters), as sponsoring those teams especially the top-tiers is not actually a chump change.

(AP03, the F1 racing of Prost F1’s team during 2000 season. Yahoo! was one of their main sponsor as during that time it was a dotcom bubble)
(Mika Hakkinen driving for McLaren-Mercedes F1 team. West was McLaren’s title sponsor, but at circuits where tobacco advertisements were banned, West logo would be replaced by the driver’s name)

Or it could even be a hint whether we will see some specific team again next season . After all, there are always winners and losers (and lack of faith from sponsors towards the team).

(Honda F1’s RA108 with very minimal sponsors during 2008 season. Honda withdrew from F1 at the end of the season)

How much money we’re talking about here? Based on BBC estimation (years ago, in 2004), title sponsors could fetch up to $50 million per season for top tier team. It was rumoured that Philip Morris (parent company of Marlboro) spent close to $100 million per season to become a title sponsor for Ferrari F1 team during the Michael Schumacher-era during early 2000s.

Obviously it is a serious money just to put your brand’s logo on a vehicles that raced 16 or 20 others at 300 km/h. If you’re one of the sponsors, consider yourself lucky of your team’s cars survived in one piece at the end of the race. Nobody can see your brand on a crashed or DNF cars, plus it would be embarrassing especially if both drivers were crashed because they raced with each other and refuse to yield because both of them are very competitive and hot-headed (Exhibit A: Ralf Schumacher and Juan Pablo Montoya).

(Williams F1’s FW14, the car used by Williams F1 team during 1991 and 1992 seasons)

A good thing about sponsoring those teams? Even after 30 years, some people still remember your brand due to heavy exposure and popularity although you may not sponsoring anymore. Yes, many still remember West (former title sponsor for McLaren Mercedes) or Mild Seven (former sponsor for Renault F1), but I bet there are also other people who remembers other legendary logos like Benetton, Parmalat and Canon even the team that runs the cars may already folded and their drivers were already retired.

A sponsorship that brings exposures to the respective companies for a very long time.

(Qatar Airways runs the livery of Barcelona FC)

And vehicle advertising is not limited to F1 or any motorsports (or even sports in broadest sense). Some airliners run a few special liveries to promote some events (Emirates and World Expo 2020) , latest movies (Air New Zealand and The Lord of The Rings), social message (Azores Airlines and whale sanctuary) and even their sponsored soccer team (Qatar Airways and Barcelona FC)

Vehicle Advertising – Our Next Gig Economy Opportunity

 

Although yet to make it a big time or playing with the big guys like Uber or Grab, vehicle advertising has started to make foray into mainstream for the past few years, thanks to the popularity of gig economy like ridesharing and increasing number of willing freelancers. Companies like Carvertise and Wrapify has become an “Uber for advertisers” by coordinating drivers and advertisers who wants to promote a brand on a moving platform instead on some static billboards. And the drivers will drive their ads-filled vehicle and compensated based on miles driven and whether the car was driven in a highly-populated areas or sitting for quite considerable time in a traffic jam (presumably more eyeballs during that time). And as for Wrapify, it has a feature that lets advertisers send a push notifications to the drivers and offering extra incentives for drivers to park or drive their ads-filled vehicle at some specific areas or time.

(Example of ads on vehicle. Image from Wrapify)

And the best part? No worries if the drivers have a shaky hands or lousy in doing some artistic works especially on their much-beloved cars. Those vehicle advertising platform companies has in-house professionals to do it or in areas where they don’t have them, a local signage company that partnered with them might be available. So, there’s no need to worry that you may smear or dent your brand new Toyota Yaris.

Some of them even allow a leased vehicle to be part of the program, as they claim the wrap can be removed without harming the vehicle. And about potential revenue? According to Wrapify, a driver could earn approximately around $84 to $452 per month.

OK maybe not much for individual, non-ridesharing-drivers to quit their job and do this on a full-time basis, but it’s probably enough to cover some monthly operating expenses and fuel expenses.

 

Why Ridesharing Companies Could Copy The Same Playbook

 

Ridesharing companies like Uber and Grab, like any other for-profit companies, are always on the lookout for a new channels of revenue to support their operations, satisfy the financial demand of their (private) investors and readying themselves for an eventual IPO.  It’s not a secret that quite a number of those unicorns are actually running at losses for few years, and at best reduce their losses on year-to-year basis and/or positive cash flow from operations (CFO).

Therefore, the pressure to keep their investors happy, they started to venture out from ridesharing-only business and starts to run other services related to their transportation domain as well. Uber already forayed into delivering food and groceries, Grab ventured into groceries and fintech, and Go-Jek, started as motorcycle-based ridesharing, also ventured into fintech and other kind of vehicle-sharing. Due to relatively easy entrance into the business (therefore increasing number of competitors), none of them could prosper by solely focus on transporting only human being and surge pricing during peak-hour.

And that is why one day they may look into vehicle advertising and liveries as another channel of revenue. And they already have the ingredients to make it work, namely drivers, customers and most importantly, boatloads amount of data about the those and the cities they are operating.

How?

First, don’t look at companies like Uber, Grab and Didi Chuxing as transportation companies. They’re a data companies which just happens to collect those data by coordinating a transportation and logistical services between a willing drivers and willing customers. They were no longer employ a bunch of programmers to develop the apps, but hiring more and more data scientists to make a sense about the data each time aridesharing service is performed.

And it’s no longer just a basic data about identity of the drivers, passengers and locations of origin and destination but also time taken to the complete the service, how long the car could be stuck in traffic in some particular areas, what time the traffic would build up during weekdays and possibly even a driving style of the driver, derived from average, minimum and maximum time to transport the passengers.

Obviously that’s a lot of data for a single trip. In 2017, Uber completed about 5 billion trip since its founding and Grab also joined a billion trip club in October the same year. And the giant Didi Chuxing? More than 7 billion.

You will need a huge calculator to roughly estimate total data collected by those companies in a single year.

 

Ads Outside (And Inside)

(A screen that displays an ads inside rideshare service. Image from viuer)

And how would they match their data and the transportation service they currently perform in order to monetise vehicle ads? Look at Google Adsense or any contextual ads network and see how they match advertisers and audience.

With all the data collected by ridesharing companies like Didi Chuxing and Uber, they already have enough information about which brands or advertisers that could attract the attention of both passengers and people outside the vehicle in specific area. After all, they already know which are the most popular destinations during any given specific time, day or week and how many people could be around that area, thus tailoring specific vehicle with specific ads to be used to serve that area.

And it won’t stop with liveries or decals on the car. If Uber or Grab implement it and see the the results as encouraging, their next target could be inside the vehicle itself. Yes, according to this report, Uber wasn’t happy about another startup offered ads inside a car affiliated with Uber’s ridesharing network, but it was like 3 years ago when Travis Kalanick was still in-charge. With the prospect of Uber going towards IPO, never discount any change of heart with the new management to generate more income to please their existing and future investors.

And once ridesharing companies using autonomous vehicle instead of human-operated, it will be up to them how to monetise even further. For instance, a human-operated drivers could be not inclined to add extra 500 meters detour just to expose his or her vehicle (with liveries) due to certain reasons, but autonomous vehicle would just obey the instruction and proceeds with moving into such area, extra minutes be damned. And passengers can’t say no or go berserk either. After all, there are no human driver for them to throw their tantrum to.

Yes, the unintended consequences could be more and more traffic jam in popular places like London, New York and Los Angeles (as if the traffic is not already in dire condition) because the ads algorithm could identify the populous areas with high accuracy (with all the sensors to detect other vehicles, obstacles and human). And the algorithm that serve the ads could override the need of the passengers who need to go to their destination as quickly as possible. And how many of us would be comfortable taking a ride with ads-filled screen when the time inside those vehicle could be the only time we have to regain our privacy and solitude? Unless it has a feature to shut the screen or put it to mute. But I’m not really convinced those screen would have those features.

The next couple of years could be interesting to see how things could unravel with those transporting companies. Will they venture out more towards other segments like fintech (Grab) or would they go towards more laser-focused in their existing transportation industry (Uber)? Never discount any possibilities for them on exploring new opportunities and minting more money for investors. And vehicle ads could be their next move.

Just hope the liveries won’t end up with something like this.

 

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