GM’s Data Mining Is Just The beginning Of The In-Car Advertising Blitz
The next data minefield is your car
By Andrew J. Hawkins, THE VERGE
October 17, 2018
It wasn’t until The Detroit Free Press reported on General Motors’ radio-tracking program — which monitored the listening habits of 90,000 drivers in the Los Angeles and Chicago areas for three months in late 2017 — that it became clear that the future of targeted advertising in cars is… well, it’s practically already here.
GM captured minuted details such as station selection, volume level, and ZIP codes of vehicle owners, and then used the car’s built-in Wi-Fi signal to upload the data to its servers. The goal was to determine the relationship between what drivers listen to and what they buy and then turn around and sell the data to advertisers and radio operators. And it got really specific: GM tracked a driver listening to country music who stopped at a Tim Horton’s restaurant. (No data on that donut order, though.)
GM says the whole concept is still theoretical for now. No one’s data has been sold (or “licensed,” as GM prefers to call it). But GM spokesperson James Cain says that connected vehicle data can help develop more accurate ways to measure radio listenership. That could prove useful to the terrestrial radio industry, which continues to lose territory and ad dollars to digital streaming services like YouTube, Spotify, and Apple Music. And GM sounds happy with the results.
“Our proof of concept has generated interest in the advertising and broadcast communities,” Cain says. “But we don’t have any new projects to announce at this time.”
Today, radio advertising is slapdash. The ads we hear when we turn on the radio are the result of a system that assigns listenership to specific radio channels, which experts say can be inaccurate and error-prone. Those errors can lead to one station charging more for ads than another, even though the lesser one has a better or bigger audience.
But in the future, with data like GM is collecting, in-car advertising can be more targeted and based on specific consumer habits, akin to the ads you see in your Instagram feed. The radio industry probably won’t be able to reverse its declining number of listeners, but better data might let stations change programming or more accurately reflect what is popular with listeners, says Michael Ramsey, a mobility analyst at Gartner. “GM just is showing one of the many ways its telematics data can be used to make money,” Ramsey says.
The experiment underscores how our cars have become rolling listening posts. They can track our phone calls, log our text messages, answer our voice commands, and, yes, even record our radio stations. And automakers, local governments, retailers, insurers, and tech companies want to leverage that data as best they can, especially as cars begin to become more automated and transform into self-driving shuttles.
According to research firm McKinsey, connected cars create up to 600GB of data per day — the equivalent of more than 100 hours of HD video every 60 minutes — and self-driving cars are expected to generate more than 150 times that amount. The value of this data is expected to reach more than $1.5 trillion by the year 2030, McKinsey says.
He adds, “We would all be much better off if GM simply stuck to selling cars and improving their vehicles, particularly with an eye toward improving safety.”
The Detroit Free Press report focused on a presentation by Saejin Park, director of global digital transformation at GM, at a September 12th meeting of the Association of National Advertisers.
“We can tell if they listened to it to the end,” Park said at the conference, according to WARC, a global digital subscription service that attended the conference and prepared a report on it. “Or, in the middle of the commercial, did they change it to another station?” Park added, illustrating the types of outcomes yielded by this test.
The experiment lasted from November 2017 through January 2018, and it showed, for example, that different GM nameplates may be associated with a certain psychological profile. The owner of a Cadillac Escalade, for example, “might be more likely to listen to 101.5. But someone else might be driving a GMC Yukon — same-sized vehicle, but a different brand — would be more likely to listen to 101.1,” Park said.
In another example, a driver listened to a country music channel often and stopped at a Tim Horton’s restaurant. GM wondered whether that driver might be influenced to stop at a McDonald’s instead if advertisers pitched, say, a new coffee drink on that same radio channel.
“We’re looking for ways to use these kinds of datasets,” Park said at the conference. “It’s a complicated, complex problem, and I don’t know what the answer is. But GM is really interested in finding out what the potential path could be.”
Buyers for that data are likely to be limited, though. Record label and music industry sources basically shrugged when they were informed of the data GM was collecting from its vehicle fleet. Streaming services like Spotify are widely seen as having some of the best data for advertisers, not car companies.
“Aside from being potentially useful for label promo and marketing folks, generally, the feeling of folks in the music biz is listening to music via terrestrial radio is declining, thanks to in-dash streaming apps,” said one music industry VP, who requested anonymity to speak candidly about the GM study. “Just overall less important to the music world.”
Still, GM’s use of connected car data is worrisome to market research companies that gather and sell information based on listener habits. “Data brokers are scared. It’s terrifying,” an executive at a music market research firm said. The executive also noted it would be difficult for GM or others to pinpoint the actual person controlling the radio in the vehicle when it could be a passenger or a child making those listening decisions. “Who is making the decisions in the car? Who are they trying to influence?”
Terrestrial radio isn’t irrelevant: 90 percent of Americans over the age of 12 listen to AM/FM radio at least once a week, according to the Pew Research Center. But that number is down 2 percent from 2009, and the revenue side of the radio dial continues to slide, down to $20.9 million in 2017 from $21.8 million in 2016. When asked if GM’s collection of radio-listening data was meant to level the playing field for terrestrial radio, Cain reframes the question.
“Another way to look at it is there are more than 15,000 terrestrial radio stations on the air in the United States across all formats, and somewhere around $18 billion in annual advertising is spent on the medium,” he says. “Improving audience measurement can benefit parties on both sides of the ledger.”
GM is ahead of its competitors in some ways. Not only is it tracking drivers’ radio habits, but the Detroit-based auto giant is also pioneering efforts to bring more services — and more brands — to the vehicle’s dash screen. Last year, around the same time as the radio study, GM unveiled a new service called Marketplace in which vehicle owners can pre-purchase coffee and gas or make restaurant reservations, all from the infotainment screen. GM called it “the automotive industry’s first commerce platform for on-demand reservations and purchases of goods and services.”
GM is certainly not alone in thinking about how it can monetize every aspect of vehicle ownership. Earlier this year, a Santa Clara, California-based company called Telenav announced a new product that it claims will revolutionize driving.
It boiled down to this: car companies that wanted to offer cool new options to consumers, like enhanced navigation or remote access, but didn’t want to charge them exorbitant fees, could instead buy Telenav’s software development kit (SDK) that would display advertisements on their vehicle’s center console screen. In exchange for free access to new features, consumers would have to view a few seconds of an ad for relevant companies like Shell or Starbucks. It was the automotive version of Pandora Radio, in which users get to stream hours of free music with a smattering of commercials that they can’t skip.
Clearly, this is where the automotive world was headed. As cars become more connected, more technology-focused, and more autonomous, it was only a matter of time before they become more branded. In some sense, the cars of the future will be the inverse of NASCAR racing cars: instead of being wrapped in corporate logos, the brand names will on the inside, facing us.