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CES 2016

What Marketers Need to Know About Cars as the Next Must-Have Mobile Devices

Self-driving rides are just around the bend

Self-driving car technology advanced at highway speeds last year. ILLUSTRATION: EDMON DE HARO

Drive-time DJs and radio ad-sales folk must be shuddering at the thought of a world in which the self-driving car is a reality. As if music streaming apps weren't bad enough, stealing away all those listeners, drivers will soon be able to devote their time and attention to any number of diversions. Want to catch up with your favorite Netflix series as you're stuck on the highway? How about checking out your favorite YouTube channel as you're headed to the ball game? Maybe even connect on a split screen with a friend who could likewise be headed somewhere in his or her hands-free, software-chauffeured wheels.

What was once the stuff of sci-fi is suddenly just around the bend, all in an automobile smart enough to steer itself and connected enough to serve up any piece of media anyone could possibly want. In other words, the iPad of tomorrow comes with bucket seats. That's why the automobile—rather than another handheld gadget—is primed to be the talk of the Consumer Electronics Show in Las Vegas this week.

"Cars are essentially becoming the next must-have mobile device," says Jason Harrison, global CEO of Gain Theory. Driverless cars open "an entirely new opportunity for advertisers. Assuming Wi-Fi-enabled cars would be targetable in the same way other devices are, they would offer high-quality targeted-audience opportunities, with an added contextual dimension such as parents and kids on the way to school, daily commutes and so on."

While predictions vary about when self-driving vehicles will actually hit the road in significant numbers, analysts lately suggest that millions will be in use by 2020—giving passengers more freedom to consume content and advertisers a fresh opportunity at reaching a captive audience. PricewaterhouseCoopers projects that spending in the autonomous-car industry will balloon to $43.2 billion globally by 2021.

The marketing upshot is that automakers will soon be charged with selling the tandem concepts of their assisted-driving features and dashboards for infotainment. An AutoTrader study set to be released today finds that among 77 percent of shoppers, technology is more important than car color.

"In the end, tech won't seem different whether you are using it at home, at work or the time spent in the car," says Thomas Müller, Audi's engineer for developing braking, steering and driver-assistance systems. "Whatever you have in your living room, you will have in your 'auto room.'"

Müller will find a swarm of his peers at CES, with 115 auto-tech players setting up shop in Vegas, taking up 25 percent more floor space than at last year's show. Companies are in a race to outdo one another in turning the car into the ultimate computer on wheels, developing software that lets passengers change their musical selections or the temperature of the taxi with hand gestures, or direct cars to park themselves with the push of a button. All this auto innovation promises to make CES worth the price of admission alone.

"It's almost become the big show, in many ways, for automobile marketers to make a splash," says Ed Brojerdi, CEO of agency KBS New York, who compares CES to venerable auto-industry events such as Detroit's North American International Auto Show and the Paris Motor Show. (Meanwhile, as the mania surrounding self-driving technology has led automotive journalists to go to extreme lengths to get information about and photos of tricked-out cars, the companies involved have doubled-down on security in the lead-up to CES.)

In Vegas, Müller will show off Audi's latest high-tech wares for the 2017 editions of its Q3 and S4 models. But he knows much of the chatter around the show will hinge on what's going to be available in 5 to 10 years, and he's not afraid to tip his hand a bit on the German engineering in the works. Müller envisions a day when he kisses his wife goodbye in the morning, then selects a two-hour route to the office in a self-navigated car versus a one-hour option so he can knock out more emails and phone calls.

To think of it another way, business class, as in air travel, will one day be coming to an interstate highway near you. "We should talk about cars as similar to airplanes—they should work 99.9999 percent of the time," explains Müller, asserting that smarter vehicles will make for safer travels, with less human error leading to fewer accidents.

And yet, there's still that 0.0001 percent to consider.

Safety is a dominant part of the conversation when it comes to the autonomous car, with concerns ranging from vehicles without a steering wheel or cars that brake themselves when a pedestrian is dangerously close. It's a thorny area, with unprecedented questions arising about auto insurance and regulatory barriers. Regarding the latter, California last month dealt at least a temporary blow to Google and Tesla's dreams of getting a completely driverless car in the Golden State when it declared that vehicles must, for the time being, have a steering wheel in order to be street legal. Such regulations are expected in other states, according to Praveen Chandrasekar, a researcher at Frost & Sullivan.

Just days after California tapped the brakes, Ford reportedly struck what many perceive to be a potentially historic deal with Google to collaborate on the automaker's autonomous ambitions. Details were scant, but it is perceived as an on-ramp of sorts where the self-driving car is concerned. And just yesterday, General Motors revealed it's investing $500 million in the car-service app Lyft in a move designed to empower itself to beat its competitors to the self-driving future.

Consumers, according to the Autotrader study, are slowly warming up to the idea of self-driving cars. In 2015, 60 percent believed they were dangerous, versus 65 percent a year prior. Meanwhile, 70 percent of 1,012 individuals surveyed said they were more likely to consider a car with autonomous features such as parking assist, traffic-jam guidance, lane warnings and collision avoidance.

"The car needs to be socially acceptable," insists Maarten Sierhuis, director of Nissan's innovation center in Silicon Valley. Sierhuis entered the world of autonomous automobiles in 2013 after 12 years at NASA where he developed a computer language to help Mission Control communicate with the International Space Station, as well as an autonomous system that monitors astronauts during space walks.

"An astronaut at NASA used to tell me all the time, 'That space suit is my home, my work environment and my life support—don't screw it up,'" he relates. "And when I moved to Nissan to work on these vehicles, I realized a car is kind of the same thing—it's a robot I'm inside of."

Rise of the sub-brand

For its part, Kia has pledged $2 billion to get an autonomous car to market by 2030, and at CES will announce a new sub-brand of self-driving products dubbed DriveWise. Kia Motors America's chief technology strategist Henry Bzeih says DriveWise will comprise many of the technologies Kia already has or will have on the road over the next two decades, such as urban autonomous driving and blind-spot protection.

Sub-brands offer fringe benefits too. As the industry and consumers come to embrace self-driving cars, autonomous features will inevitably malfunction, potentially causing injuries or even death—and hitting automakers in terms of bad PR and the bottom line.

Adam Padilla, CEO of agency BrandFire, applauds the creation of Kia's DriveWise brand as a generally savvy marketing strategy, but he does not believe such moves will protect an automaker's flagship brand in the case of a mishap. "The reality is that the name of the self-driving vehicle will be so tied into the manufacturer's name by the press and popular conversation, a failure on the sub-brand's part will certainly still have a ripple effect upward," he suggests.

Volvo's concept of autonomy could in some ways be a recursive compromise between Google's dream of a world without steering wheels and one where drivers don't have to fear the worst. Volvo aims to have a limited run of its self-driving vehicle, called Concept 26, on the road in 2017, offering the owner three modes: drive, create (with the driver's seat tilted back) and relax (almost like lying on a couch). And to up the ante, the company recently announced it would assume full liability whenever a Volvo is in autonomous mode and an accident happens. "Without trust, a self-driving vehicle is of limited use," explains Erik Coelingh, Volvo's senior technical leader.

While safety is paramount, consumers also want the latest bells and whistles, many of which will be on display at CES. Nearly four of five prospective buyers would delay a purchase by one year to get a vehicle with connected services from their preferred brands, per a recent study by AT&T and Ericsson. And with integration comes the opportunity of data collection for marketers—and information on travel routines, temperature preferences and music preferences could all be used to target ads. "It's just so rich," says Fred Sattler, svp at MediaLink. "The car is effectively a one-ton cookie."

Since accessories have never been more important to auto marketing, streaming service Pandora wants to be a bigger part of that conversation. At CES, the company is promoting a dealership-education program to aid car salespeople in pitching the service as a key entertainment option. Already, 14 million consumers have come to Pandora thanks to partnerships with automakers including Ford, Honda and Subaru, covering 160 models. "Automotive is our fastest-growing listening category," says Geoff Snyder, Pandora's vp of business development.

In 2014, Pandora began selling in-car ads to marketers separately from its Web and mobile app promos (as well as combination packages). Pandora asserts that its audio ads are getting better marketing results compared to other digital promos.

Amy Peet, senior manager of digital marketing at automaker FCA U.S., says that in-car advertising is "always on everybody's road map." She adds, "You've seen many [original equipment manufacturers] come out and speak about their desire to get there."

It might take a few more years for the entire industry to truly get there. But as the automobile increasingly becomes a Wi-Fi-enabled media apparatus with a range of watching and listening options, might the consumer eventually have more control over avoiding advertising via ad-blocking technologies now used via desktop computers and mobile devices? "The car of the future could easily become a content-blocking machine," says marketing consultant David Deal, while adding it will also be "a great marketing venue for useful, entertaining content such as brand-sponsored programs."

When it comes to autos, brand marketers can employ what they've already learned from the ad-blocking phenomenon, according to Terry Young, CEO of agency Sparks & Honey. "We need to rethink ads [and] content and find new ways to tell stories," he says. "I don't think the car will be a bad marketing venue—instead, it will be held to the new standard of advertising that is reshaping the industry. Consumers expect more and can demand it by leveraging technology."

That said, the era of connected cars isn't just about rolling entertainment. For example, Mercedes-Benz joined with connected-home player Nest to create ETA, a tool that enables a car approaching one's house to send a signal to adjust the thermostat ahead of time. Mike Soucie, Nest's product partnership lead, reports that some 11,000 independent developers are working on such connectivity via his company's open-source platform.

With such technological sophistication comes the need to understand how to use it. So in Las Vegas, Hyundai will unveil a technological solution to the onerous owner's manual. The automaker will unveil an augmented-reality app that lets a driver point a smartphone or tablet camera at the part of a car engine giving them trouble. Up pops a short, tutorial-style video. The app, called Virtual Guide, works inside the vehicle, too, helping car owners do such routine tasks as setting a clock or streaming music. "Rather than opening up an owner's manual that's 500-600 pages long, you watch a little bit of the video, put the phone down and do step one, and then pick the phone back up again to learn about step two," explains Miles Johnson, a connected car rep at Hyundai.

A long time coming

While automotive innovation would seem to be approaching at 100 mph, the truth is, it's been about 100 years in the making. Francis W. Davis, an engineer who in the mid-1920s developed the first widely used power-steering system, should be an inspiration to the likes of Google and Tesla, the latter of which announced last week that it is adding 1,600 employees to fast-track its autonomous driving efforts.

With little more than a U.S. patent, Davis had no way of knowing whether his hydraulic-based invention could be successfully marketed, according to a book about his work called The Unreasonable American. But Davis pressed on, eventually working with GM and other manufacturers to change the business. And yet, it would take 30 more years before another mechanically assisted layer—cruise control—was rolled out en masse.

Such perspective is why Audi's Müller comes off nearly as excited about developing body-control systems that effectively manage motion sickness as he does talking about cars that park themselves. His company's innovation, he realizes, builds on the accomplishments of many great tinkerers before him. "We believe the machine—the car—at some point needs to be like us," he says. "The big step is what happens when the customer takes his feet and his hands from the controls."

 

 

This story first appeared in the Jan. 4 issue of Adweek magazine. Click here to subscribe.

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