In-car ads: Are they worth it?
For the past few days, I have been on the lookout for resources to help me develop a good product sense. Mayank Yadav and Marily Nika, Ph.D’s Product Breakdown series has been of great help in my PM journey. In this series, they consider a relatable product (that most of us have either heard of or used) and analyze the product strategy while sharing their predictions in the end.
My favorite episode is Mayank and Shubham’s discussion on OOH (Out of Home ads). In this article, I summarize my takeaways from their discussion.
Product Description:
Mobility service companies like Uber and Lyft displaying ads outside the car (on top of the car) and inside the car (on a tablet). These are called OOH (Out of Home ads).
Background
We have seen two categories of ads so far:
a) Traditional ads involved displaying ads through different channels like billboards. Problems with these ads were scale and couldn’t be targeted to a specific type of audience.
b) Online ads: Tech giants like Google and Facebook came up with websites that could offer ads that could be associated with specific actions (sign up, etc.), could target specific eyeballs, and better scaling.
This model offers the best of both worlds. Capturing the attention of the rider and people on the street with personalized ads.
How are these different than the local cabs displaying ads?
1. Scale: You can scale these across different geographies with minimal effort.
2. Targeted: Uber/Lyft can give you personalized ads based on the data they collect on user behavior. Example: You can be shown an ad for a bar with a discount coupon if you typically visit one on a weekend.
Product Strategy
More eyeballs, Targeted ads in the offline world, and clear attribution lead to more revenue.
Example:
Cost of running an ad in a cab → $500 per week → $2000 per month
Reach of ads: 1 million drivers in NYC
Replication of device: Tablet or the digital screen at the top of the cab + Maintenance cost of these devices
Typical device cost: $5000–12000 Not as cheap as the online ads model. It is super expensive. Is the ROI worth it?
Model:
MVP Phase: We give them the device initially to capture the market. Later, they bring their own device. We need to compute the percentage of cars with those devices and the impressions they create.
Future Objectives
Why would brands engage? If this is a good source of quality eyeballs converting to customers, brands might engage with this model as a new way of advertising.
People will definitely experiment but will this scale? Is it going to give us enough revenue?
Conclusion:
If the cost of the devices goes down to under $2000, then there is exponential value to it. Else, the cost of the device becomes an overhead to scale and the ROI might not be sufficient.
