Commentary

How the Rise of ‘Mobility as a Service’ Will Impact Local Marketing

January 6, 2016January 5, 2016 by Lokesh Kumar

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Marketing exists to induce behavioral changes in consumers — to get them to part with money in the interest of securing a service or product. This operates largely the same on a broad scale or targeted at a local audience. However a dramatic advance in the technology of one sector may be about to change that for marketers in many unanticipated ways.

Today’s car manufacturers, for instance, use everything from “cash-back” schemes to rebates to almost anything else that agitates chemicals in a consumer’s brain making them rush to a local dealer (Auto makers today spend big dollars on advertising, as evidenced here and here.) And this has been working great for a century.

By some estimates, marketing spend equates to nearly $1,000 per car sold, when you add up every form of advertising, which is nearly 2.5 months of a car payment on average. While the largest portion of these dollars goes to TV advertising for brand awareness, (thanks to the OEMs) there is significant money being spent on local car business marketing, because ultimately car buying is still frequently local.

Shifting Gears
However, a technological shift in the near future might completely redefine car ownership with dramatic impact on local shopping behaviors and, by extension, marketing techniques. I’m referring to what is becoming known as Mobility as a Service (MaaS) — in short, the average consumer will start buying MaaS rather than owning the vehicle himself. (GM and Lyft are the latest to get on board with this fast-moving trend.).

You needn’t look far to see that this trend is already under way, where many are giving up car buying in favor of short-term rentals (like Uber) or another of the many car-sharing services. The next evolutionary (or revolutionary) step in this process is going to be autonomous vehicles — vehicles that drive themselves, thus cutting the cost of the driver to zero (which is the most expensive part of a ride). Once that happens, and the cost of mobility comes down to 20-30 cents per mile, coupled with the pervasiveness of these vehicles, there is no reason for an average consumer to own a car.

Further, autonomous vehicles will put pressure on all kinds of players. The pressure will be felt not only by car manufacturers but all kinds of other industries including auto dealers, insurance companies and transit systems. All of these players will have to readjust their business models, and figure out new ways to generate revenue.

Imagine once these autonomous vehicles are pervasive on the roadways, the local pizza or flower delivery shop will not have to hire any delivery staff, rather just ring for an autonomous vehicle that picks the goods and delivers right to the door of the consumer. With about 20 cents per mile, almost all types of businesses could afford to do home delivery, without asking for any delivery fee.

This also means the descent of those questionable cash-back deals. No more marketing crash ratings, because crash ratings sort of protect a consumer against their own bad driving or someone else’s bad driving.

So who else will use these bot-like local mobile services? It is conceivable that initial adopters might be:

Seniors who cannot drive or do not want to drive.
People who cannot afford a car or don’t qualify to buy a car.
Corporations that might offer MaaS as a benefit rather than parking benefits, more like they offer mass transit benefits today.
Car-poolers who already are accustomed to traveling with their neighbors or even strangers.
People who already use mass transit systems, including metro trains and buses.

So assuming this becomes our new reality shortly into the next decade what kinds of local marketing campaigns would we see?

Subscription: Markets will shift to a mobility services model, with commercials about monthly subscription models — with familiar two-year contracts, more like cell phones. Shopping for subscriptions of mobility services may be through a portal like Amazon. You might get a code that you drop into your mobility app and be subscribed to the transport service of your choice.
Dealers: Far less marketing of cars — but could they market mobility services, and sell subscriptions at their locations? Could they have vehicles that will take you on a test ride, to check out how you feel, before you sign the subscription for next year for a vehicle to take you from home to office? They surely won’t need so many cars on the lots, and thus will have leaner operations. They might well be selling subscription of MaaS service providers (Lyft / Uber / Google Car) but not GM / Ford.
Insurance: There will be mobility service providers who would also offer insurance coverage for each ride with the contract – including bodily injury, life insurance etc. The local businesses might also buy insurance for delivery of the goods while using these mobility services for high worth delivery from store to home.
Car Food: Drive throughs for in-vehicle meals with a similar model as in-flight meals.
Accessibility: For seniors, the mobility service will offer vehicles that are accessible.
Travel: For business trips the consumer might choose a vehicle with video conferencing, plugged in monitors, to get larger screen for office work. Vehicles with larger space and entertainment functions might be needed when going on long vacations with kids, including recliners and beds.

Lokesh Kumar is a longtime technologist who has worked for Comcast and Wireless Matrix. He is currently co-founder of Urgent.ly and serves as the company’s VP of Technology.