Will Uber and Lyft's car-top ad pivot open a data gold mine?
Uber and Lyft have both thrust into car-top advertising in the past week in the hopes of generating some much needed ancillary revenue. While both ride-hailing firms continue to burn through capital, they may be on the verge of unlocking a data "gold mine" according to industry observers.
Can car-top advertising save Uber and Lyft
Lyft, which reported a net loss of $463.5m in the third quarter of 2019, believes it can chart a path to profit by the fourth quarter of 2021. As part of this plan, it acquired rooftop advertising firm Halo Cars for an undisclosed amount last week. Founded in 2018 and operating in New York and Chicago, the start-up installs smart LED screens atop taxis to serve geo-targeted full-motion video ads.
According to its website, it has almost blanket ad coverage of New York and could emulate this in any city where its cars are active. The ads are geo-fenced, are tracked and served in real-time, and can be activated on an array of variables such as weather, time, and location.
There’s an extra $400 income a month incentive for drivers to install Halo. It had previously restricted how many drivers could enter the scheme but now it is a Lyft subsidiary that number could skyrocket. There were 1.4m Lyft drivers as of 2017 and though it doesn't put a number on how many cars it has on the roads, there's clearly significant potential ad inventory to operate.
Almost in tandem with Lyft’s announcement, Uber revealed Uber OOH, its own digital out-of-home advertising platform in partnership with with Adonmi. Already atop existing in-car ads through a deal with Cargo, it plans to bring car-top ads to its network of vehicles in Atlanta, Phoenix and Dallas from April. The initial roll-out will involve 1,000 cars before reaching Chicago, Houston, Las Vegas, Los Angeles and San Francisco later this year.
Previously, Uber’s estimated 3m drivers could rely upon third-party ad vendors like Firefly which offered $300 a month to use their ad services. Now under Uber OOH scheme, drivers can make $300 a month with an extra $100 a week if they log over 20 hours of driving. As a particular incentive to attract brands into the ecosystem, Adonmi said it could sync car ads with its digital billboards, which it argues will increase effectiveness.
Both Lyft and Uber are pushing into the space just as programmatic tech unlocks new opportunities to deliver relevant ads. Andrew Phipps Newman, founder and chief executive of DOOH.com, said that Lyft has cannily opened the door to dynamic content on the move.
"It is gaining flexible prime space in an industry that relies on agility and mobility,” he added. "Being able to immediately access and understand the routes of the journeys means that brands can provide hyper-local dynamic ad content specific to the locations the car is passing through."
The amount of data generated by these transit brands could also prove to be a gold mine and inspire a shift from the tried and tested geo-fencing to micro geo-targeting.
"It is liquid gold for a digital car-top advertiser like Halo,” Newman continued. “When it is qualifying the value of its inventory space it will allow it to prove to their clients that it is reaching the right audience, increasing the rate card for those screens."
Balancing the books
Like any new advertising medium, proving effectiveness will be the first step in generating the kind of income that Uber and Lyft will hope can make an dent in their debts. Though established taxi companies have long relied upon advertising - it's unlikely they have the data and scale to compete with these new digital offers.
But they will have to show value. And fast. This pivot highlights that customer-generated revenue alone can’t subsidise the disruption of an entire taxi industry. Lyft's books are improving but it is estimated to have run a $900m deficit in 2018 while Uber's gap sits at around $1bn. In 2019, Uber cut more than 1,000 staff while Lyft, a trimmer operation, recently cut 2% of staff (90 jobs) in the face of mounting pressure to perform.
“Uber is a very strong brand with a global presence and despite the recent challenges in the business is trusted by millions of people. While the business has yet to turn a profit, it is a product that is definitely loved by its customers. Its DOOH move is intriguing to watch if it scales past the initial test markets,” said Andrew Jude Rajanathan, a global director at Zenith.
“The benefits are Uber still has a sizeable balance sheet to continue to diversify its revenue into newer profitable areas. What isn’t clear at this stage is ad pricing, formats and ultimately proving effectiveness for advertisers from these units.”
The diversification is not just limited to western competitors. Over in South-East Asia, Grab launched its own ad platform in 2018. GrabAds runs ads on in-car tablets and emblazoned on the outside too.
It wants to lean on this new line of inventory to work with brands and media partners to carry personalised ads, content and experiences. It said its mobile billboards journeying more than 100m km per week are seen by more than 10 million people a minute in Southeast Asia. The firm also boasts bikes and buses in its fleet.
It argued that the GrabBikes generated the highest brand recall of its fleet, with the bikes capable of entering pedestrian areas the vehicles can’t. It also leans on in-car and in-app ad engagements, all valuable surfaces in squeezing more revenue from users.
With transparency and trust in the online ecosystem under increasing scrutiny, digital ads in real-world locations may well prove favourable to many advertisers - Lyft and Uber are now among those hoping so.