When most people think about the next generation of vehicles, they think about self-driving cars. Driverless technology is without a doubt an exciting area of development for the future of cars. However, connected vehicles have the potential to revolutionize the marketing landscape and the relationship between drivers and their cars.
A ‘connected’ device, or in this case vehicle, is one that is part of the ‘Internet of Things’. The Internet of Things is a network of everyday physical devices that are connected to the internet and each other. These devices can then communicate and share data with each other. Connected cars will be able to access the internet at any time, offer advanced ‘infotainment’ (for example, music and video streaming or social media) to both drivers and passengers, and interact with any other connected device in real time.
Most of the critical technology to achieve this already exists – artificial intelligence, sensors, near field communication, cloud computing, and LTE connectivity are some examples. In fact, there are already over 200 million connected cars on the road.
Currently, connected cars can only react to conditions in their immediate surroundings. The next generation of connected vehicles will expand this field of awareness using V2X technology, which will enable the car to communicate with any other device on the Internet of Things.
When combined with other growing technologies like autonomous driving, 5G, and digital wallets, connected cars’ functionality can be taken to the next level, changing marketing and the relationship between consumers and their cars.
How Will Connected Cars change Marketing?
When connected cars reach their full potential, they will significantly change the marketing landscape in important ways.
Car Commerce is the concept of creating a shopping experience from the consumers’ car, where they can make and pay for a purchase without ever leaving their seat or even opening their wallet.
VISA offers a view into their vision for the future of car commerce in this video:
As a consumer drives to any destination, there are countless different options and opportunities for commerce including stores, restaurants, gas stations, and more. With a combination of AI and internet connectivity, cars can help drivers make purchasing decisions, streamline the buying process, and pay for products. Not only does this give brands a new way to reach and sell to consumers, it also gives them new opportunities to advertise. Companies could pay for sponsored placements and recommendations about where consumers are advised to go.
When factoring in autonomous driving technology, car commerce can be taken to an entirely new level. With the driver’s hands and mind freed up, they can browse items and destinations and make any number of purchases from their seat. Drivers could select and purchase a bouquet of flowers on their way to a dinner or a toy while driving to a birthday party. Companies like Tesla, Honda, Mastercard, Visa, and more are already working on what is projected to be an $86 billion digital channel by 2025.
Car commerce is still a fragmented industry with many different players trying to find the right way to bring the technology to mainstream consumers. Without widespread autonomous driving, there are also concerns about safety and distracted driving. So, for now, the aim is to make small, habitual purchases like coffee and gas easier and hands free.
With cars that can both receive and transmit information to other devices, connected cars create brand-new advertising possibilities and revitalize radio and out-of-home channels.
In the U.K, advertisers created a billboard that could scan and identify a card on the road. They could then show the driver a targeted message based on what vehicle they own.
In New York’s Times Square, this idea gets taken to an entirely new level. Billboards can communicate with people’s cellphones to identify the users walking around on the streets below. Then, AI systems update billboard ads in real time based on the data it receives from those cell phones and existing personal information including gender, race, age, and income.
It’s only a matter of time before cars can communicate the same kind of unique IDs to billboards on the road. Next time you drive down the highway in your connected vehicle, you may see an ad for a website you were just browsing only a few minutes earlier. And just like the billboards in Times Square do now, that ad could then be shown to you on another billboard down the road, or even back on your phone later on. Including vehicles in the network of advertising channels and using them to take existing channels to new heights is a massive opportunity for advertisers. It helps bring dated channels like OOH into the digital world and gives them many of the capabilities that a desktop or mobile ad would have.
It doesn’t stop there, either. Connected cars will also have widespread impacts on radio advertising. GM conducted a study using Taco Bell ads where it cross referenced geo-fencing data around Taco Bell locations with vehicle location data and radio logs. The company could determine when a consumer heard an ad for Taco Bell, and then see if, when, and where they visited a location. Currently, advertisers have little opportunity to identify if their radio ads are resulting in purchases. Connected cars can begin to solve this attribution problem.
One of the biggest opportunities for marketers in the age of connected vehicles will be data collection. It’s estimated that a single connected vehicle could produce more than 1 terabyte of data per hour. That’s enough data to fill 8 128GB iPhones each hour!
A connected car will be able to collect data about its location, surroundings, the driver and passengers using cameras, sensors, and GPS. Cars will use driver biometric data to be locked and unlocked, or to authorize a payment. This data can be enriched when combined with existing data from smartphones that have access to social media and other entertainment options. With car commerce capabilities, data about purchasing habits can be added to the mix. Using all of this data, connected cars will be able to learn their owners’ and passengers’ preferences, personalities, needs, and problems.
To process all this data into useful insights, it will likely have to be analyzed in real time using a method called streaming analytics. This will enable immediate data aggregation, instant predictive analytics, and the ability to view only the meaningful insights instead of sorting, storing, and analyzing large sets of data as they are transferred.
This data will be used to make the user experience easier and more personalized. It will also help improve drivers’ journeys, making it easier to find a parking spot, get directions, or make a purchase. It could be used by car manufacturers to make necessary software updates or even to help design future years’ vehicles. Most notably, it will be extremely valuable to advertisers to take ad targeting and personalization to the next level. This is something that was previously impossible to do for drivers.
Concerns About Connected Cars
Before connected cars can truly reach their full potential, there are critical concerns around road safety, data privacy, and cyber security that will need to be addressed.
Until cars can become truly autonomous and require no oversight from a human driver, the potential of connected vehicles is limited. The safety of drivers and passengers has to be prioritized, so new functionality of connected cars must be limited to what won’t distract drivers from the road. There are still significant opportunities to take advantage of, but ultimately having a driver with an unoccupied mind and hands is the key to reaching the next generation of connected vehicles.
Data Privacy and Security
Connected cars will generate and collect significant amounts of data, and this data will have to be transferred to the cloud to be processed, analyzed, and stored. This data will be extremely personal and contain details about the driver and passengers, their location, biometric data, and more. The issue arises with how many parties will have access to the data. Between car manufacturers, software developers, cloud storage providers, and OEMs, sensitive data will be shared and stored in many different places.
Data collected from connected cars must be protected and privacy of consumers must be absolute. In 2014, a group of auto manufacturers in the United States volunteered to abide by a set of privacy and data security principles to protect consumers’ information. These guidelines included being transparent about what data is collected, giving drivers the chance to opt out, increased data security, and deletion of any personal identifying information. Abiding by these principles and having global adoption will likely make consumers more willing to embrace the data collection side of connected vehicles.
Car Cyber Security
With connected cars having internet connectivity and keyless entry, they become susceptible to hacking. Hackers could target driver safety, private data, or attempt to steal a vehicle. As such, car manufacturers and software providers will have to invest heavily in cyber security to make connected vehicles safe for their owners and drivers.
Connected cars can transform the way brands sell to, communicate with, and learn about their consumers. They can also make drivers’ journeys much easier and simplify existing tasks like purchasing gas. Ultimately however, the success and adoption of connected cars will depend on how the concerns of road safety, data privacy, and cyber security are handled and overcome.
Master of Marketing student and FOMI Editor
Schulich School of Business