How Google Could Use Online Advertising To Own The Taxi Industry
Google self-driving cars are pretty cool, but until last week’s announcement that Google Ventures was putting almost $250M into Uber (a technology-driven limo service), it was unclear to me how Google planned to actually monetize these robot cars. But imagine a driverless car that picks you up (using Google Maps/Waze for navigation, of course). That could be a cheaper and more efficient taxi service than our current human-controlled ones.
Consider this: according to the Bureau of Labor and Statistics, there are currently 48,370 people employed in the “taxi and limousine service” business. All told, the U.S. taxi industry makes almost $11 billion of revenue and $1.4 billion of profit a year, the most expensive cost being wages, which annually comes in at over $7.4 billion. Driverless cars could take that $1.4 billion in profit to $8 billion or more without the cabbies. That’s a nice addition to Google’s top and bottom lines (Google’s annual revenue in 2012 was over $50 billion, with profits of $10 billion).
But wait, it gets even better. Most cabs in big cities now have advertising integrated into the inside and outside of the car. These ads are – for lack of a better term – dumb ads. Basically, advertisers buy a “run of cabs” and get their ad into rotation on every cab in the city – either on the side or top of the car, or in the form of video broadcast to passengers. Imagine how much better this advertising could be if Google took this space and used its knowledge of cab location and passenger demographics and psychographics to come up with smart ads?
For example, using GPS, it would be easy for Google to know exactly where a cab was at any given moment. So rather than advertising the hottest Broadway show to users 40 miles from the theater district, Google could allow advertisers geo-targeted advertisers to outbid the “run of site” theater ads. For example, a local hair salon could never afford to buy top-of-cab billboards across all of New York City, but might be able to buy an ad on top of a cab that is within five miles of its actual location (and let’s not forget day-parting – that hair salon could limit ad time to its hours of operation). This is not only a more relevant ad for people who see the cab, but it opens the top-of-cab ad space to more advertisers, which results in more revenue per billboard for all involved.
What’s even more interesting is what Google could do inside a cab. Consider this scenario: a cab ride from NYC to JFK airport normally costs about $50. What if, in exchange for watching targeted videos on your ride, that cab ride’s cost could be reduced by $15-$25? Here’s what I’m thinking: when users enter an Uber/Google cab, a prompt shows up on the video monitor asking them if they’d like to save money on their fare by watching a few ads. If they are willing to do so, they enter their Google account details (or perhaps use NFC to transmit this from their phone). At that point, Google is able to access tons of specific information about that user – information that is very valuable to advertisers.
And better still, Google could require passengers to answer questions after each video ad to ensure that they were paying attention. If a passenger wasn’t watching the ads – and got the answers wrong – the fare would go up with each wrong question. Passengers who got the answers right (and thus saved money on their fare) would associate that good feeling of saving money with the brand sponsoring the ad.
So let’s review: cheaper labor costs, more accurate mapping, better ad monetization, and potentially lower costs for passengers – this sounds like a great opportunity for Google to disrupt yet another offline industry. And it’s a good starting point for what is clearly Google’s ultimate objective: ad-monetized hyperloop!