Can GM’s In-Car Advertising Bring in Big Bucks?
General Motors (NYSE:GM) chief executive Dan Akerson says his company is actively engaged in advancing in-car entertainment and navigation systems, which, if done properly, could boost revenue substantially in the coming years.
According to Automotive News, the primary technology GM has been focused on is making Internet-capable vehicles that will allow passengers to stream online video. The first of these models is predicted to appear sometime in 2014, but GM said keeping in-car entertainment up-to-date has been troublesome in the past.
Up-to-date or not, online streaming provides a clear path toward web advertising for GM and its competitors, Ford (NYSE:F) and Toyota (NYSE:TM). Seeing as the average American driver spends four hours each week commuting to work, the advertising potential could be gargantuan.
“For example, what happens if when the logo shows on your screen, it says ‘brought to you by Allstate (NYSE:ALL)’?” asked Akerson. “How many times is that going to pop? And how much can you get from Allstate?”
What makes the prospect of in-car advertising all the more enticing is the progress Google (NASDAQ:GOOG) has made with its driverless cars. If drivers could spend their four-hour weekly commute watching television instead of the road, advertising revenues could go through the roof.
Citi analyst Itay Michaeli believes GM to be in the driver’s seat in terms of taking advantage of global trends, but don’t expect the competition to be far behind. Ford, for one, has already partnered with online radio service Spotify to bring streaming music to customers.
One of the more overlooked benefits is the ability for these gadgets to attract younger drivers. Alexander Edwards, president of research firm Strategic Vision, said that the average age of buyers interested in these technologies is 45, about nine years younger than the average car buyer.
This isn’t one of those technologies that you hear about once and then don’t hear from again until a decade later, argues Citi’s Michaeli. He believes that by the end of the decade, over 40 percent of drivers will have Internet-capable cars. That could certainly translate to a lot of ad dollars for GM and Ford.