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In-Vehicle Advertising to Fall Flat - Commerce Is The New Revenue Stream For Car Makers

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ABI Research

14 Apr, 2021, 08:00 GMT

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OEMs will make US$3.94 billion in revenues with In-vehicle payments in 2026

LONDON, April 14, 2021 /PRNewswire/ -- Connected vehicle subscriptions hardly offset the costs of providing connectivity, so OEMs are looking for strategies to extract revenue from their installed base. In-vehicle advertising can be swiftly implemented in vehicles with a display and generate attractive profitability. However, OEMs have had reservations due to the harm it could cause to their brand reputation. Instead, they are gaining interest in commerce platforms developed to promote businesses offering in-vehicle payment via non-intrusive smart personalization. ABI Research, a global tech market advisory firm, estimates that carmakers revenues with in-vehicle payments made via the vehicle HMI will reach US$3.94 billion in 2026.

"Today, vehicle connectivity is nearly imperative. Nevertheless, it incurs cost to the automaker, and there is still no consensus about who should pay for it. High churns from customers who see no value in renewing their subscriptions are the elephant in the room that OEMs are still trying to avoid by continuously extending free trial periods," explains Maite Bezerra, Smart Mobility & Automotive Research Analyst at ABI Research. " In-vehicle advertising and payments are two possible strategies to monetize from the connected vehicles' installed base by repurposing components and technologies already available in-car, without significant upfront investments."

With advertising, OEMs would profit from ads displayed at the vehicle's touchscreen, while drivers benefit from a free ad-based connectivity subscription. The concept finds better reception among entry and medium-level vehicle owners used to advertising-based models from apps like Pandora and Spotify. "However, unlike phones, vehicles are expensive goods, and customers who made such a significant investment will likely get frustrated by constantly seeing ads on their screens. While in-vehicle ads can generate extra revenue for OEMs even in low-adoption scenarios, the potential reputation damage can easily lead to vehicle sales losses that outweigh the potential revenue," Bezerra explains. Although not the best-suited strategy in the traditional vehicle ownership model, ads could find traction among subscription-based ownership models or in usage-based MaaS fleet scenarios.

Even in a low user adoption scenario, in-vehicle payments made via the vehicle touchscreen can generate a higher revenue than advertising, and the chances of brand reputation damage are minimal. It can even offset connectivity costs in scenarios with large end-user adoption, but that demands a compelling digital experience to drive revenue-generating touchpoints. Today's in-vehicle commerce solutions (e.g., GM Marketplace and FCA's Uconnect Market) have a fair amount of friction with fragmented payment methods and requiring drivers to download apps and create an account with individual merchants. Therefore, OEMs are currently working with marketplace vendors (e.g., Cerence, Xevo, Telenav, and SiriusXM) to provide a better experience to the final user by integrating the payment features with vehicle sensor analytics (e.g., vehicle location, fuel level, or driver identity) to enable context-aware use cases. Nevetheless, projects have been delayed due to the COVID-19 pandemic. Significant deployments should be expected between 2023 and 2024.

"In-vehicle commerce platforms will have to compete against the several well-established remote payment solutions available today, such as contactless cards, smartphones, and wearables, as well as smartphone mirroring. Thus, they must offer a compelling user experience to achieve the high adherence levels required for reasonable profitability. In this regard, the increasing adoption of Android OS could help OEMs increase touchpoints with their embedded systems," Bezerra concludes.  

These findings are from ABI Research's Automotive In-Vehicle Advertising and Commerce application analysis report. This report is part of the company's Smart Mobility & Automotive research service, which includes research, data, and ABI Insights. Based on extensive primary interviews, Application Analysis reports present in-depth analysis on key market trends and factors for a specific technology.

About ABI Research
ABI Research provides strategic guidance to visionaries, delivering actionable intelligence on the transformative technologies that are dramatically reshaping industries, economies, and workforces across the world. ABI Research's global team of analysts publish groundbreaking studies often years ahead of other technology advisory firms, empowering our clients to stay ahead of their markets and their competitors. 

ABI Research提供开创性的研究和战略指导,帮助客户了解日新月异的技术。 自1990年以来,我们已与全球数百个领先的技术品牌,尖端公司,具有远见的政府机构以及创新的贸易团体建立了合作关系。 我们帮助客户创造真实的业务成果。 

For more information about ABI Research's services, contact us at +1.516.624.2500 in the Americas, +44.203.326.0140 in Europe, +65.6592.0290 in Asia-Pacific or visit www.abiresearch.com.

Contact Info: 

Global                                                             
Deborah Petrara                                                           
Tel: +1.516.624.2558                                                    
pr@abiresearch.com

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