Picture this: You're driving home from work, contemplating what to make for dinner, and as you idle at a red light near your neighbourhood pizza shop, an ad offering $5 off a peperoni pie pops up on your dashboard screen.
Are you annoyed that your car's trying to sell you something, or pleasantly persuaded? Telenav Inc., a company developing in-car advertising software, is betting you won't mind much. Car companies – looking to earn some extra money –hope so, too.
Automakers have been installing wireless connections in vehicles and collecting data for decades. But the sheer volume of software and sensors in new vehicles, combined with artificial intelligence that can sift through data at ever-quickening speeds, means new services and revenue streams are quickly emerging. The big question for automakers now is whether they can profit off all the driver data they're capable of collecting without alienating consumers or risking backlash.
"Carmakers recognise they're fighting a war over customer data," said Roger Lanctot, who works with automakers on data monetisation as a consultant for Strategy Analytics. "Your driving behaviour, location, has monetary value, not unlike your search activity."
It's all bout you
Carmakers' ultimate objective, Lanctot said, is to build a database of consumer preferences that could be aggregated and sold to outside vendors for marketing purposes, much like Google and Facebook do today.
Auto executives emphasise that data-crunching will allow them to build a better driving experience – enabling cars to predict flat tires, find a parking space or charging station, or alert city managers to dangerous intersections where there are frequent accidents. Data collection could even help shield drivers from crime, Ford Motor Co.'s chief executive officer said last month at the CES technology trade show.
"If a thief got in the car and took off, would you want us to know where that robber went to catch him?" Jim Hackett asked the audience during a keynote in Las Vegas. "Are you willing to trade that?"
Dangle the right carrot
It was hardly a hypothetical question. Car companies are betting if they offer you the right carrot – discounted car insurance, a coupon at the gas pump – you'll share your data without blinking, just as you do when you post on Facebook or type a query into a Google search.
"The benefit there is hopefully an improved relationship, so we know you better, we understand you better and we're able to deliver better services to you," Don Butler, Ford's executive director for connected vehicles and services, said in an interview in Las Vegas.
The potential to share data – both anonymised and personalised – with third parties represents the biggest opportunity, Ford's Butler said. Like most auto executives, he's quick to point out that customers will have the choice to opt in to services that require sharing information, such as their location or driving habits.
"Your driving behaviour, location, has monetary value, not unlike your search activity."
Luxury of freedom
Telenav, the Silicon Valley company looking to bring pop-up ads to your infotainment screen, has been testing a "freemium" model borrowed from streaming music services to entice drivers to share their data.
Say you can't afford fancy features like embedded navigation or the ability to start your car through a mobile app. The original automaker will install them for free, so long as you're willing to tolerate the occasional pop-up ad while idling at a red light. Owners of luxury cars won't have to suffer such indignities, since the higher price tag paid likely would have already included an internet connection.
"For the luxury car, it's their safe haven, it's their quiet time," said Ky Tang, director of business development at Telenav. Tang says his research shows "strong receptivity" among low-end and middle-tier vehicle owners to look at ads in exchange for free services in the car.
"This is a business model that has been proven many times over on web and mobile," he said.
But no third party, yet
The kinds of car-data tools in play today are much smaller scale. General Motors Co., which pioneered the connected car with its OnStar concierge service, sent a software update to million of vehicles in December, introducing an e-commerce system that lets drivers order coffee or make restaurant reservations while driving – to the chagrin of some safety advocates. Longer term, GM may look to monetize traffic and parking data it'll collect as its self-driving cars get on the road next year.
If consumers want to take advantage of these kinds of new connected features, especially making purchases while driving or using ride-hailing apps, they'll have to give up at least some privacy, said Mike Abelson, vice president of strategy at GM. He said the company isn't currently selling data to third parties.
"We're not considering that," he said. But he added: "I wouldn't want to make a statement for forever."