Gone are the days of automobiles with center-consuls featuring buttons, knobs and exquisite wood trim. Instead the center stacks of today’s cars more closely resemble a computer screen, replacing buttons and knobs with digital user interfaces complete with changing graphics and video monitors. For years radio has found an ally in the car, but now as the “Internet of Things” continues to ingrain itself into our culture, the one place where radio was once safe, is now in trouble.
Just as it did with newspapers and broadcast television, the digital revolution is staring down radio’s one-time monopoly of in-car audio. According to the Infinite Dial 2013 survey conducted by Arbitron and Edison Research, when asked what form of in-car audio people most frequently listened, respondents overwhelmingly chose AM/FM radio at 58%, with only internet radio making up 4% of the total. The same study also said that only 6% of cars have information/entertainment systems in their center stack. This year, every new generation GM vehicle will come with a Wi-Fi hotspot and apps like Apple CarPlay and Android Audio are allowing users to plug their iPhones and Androids in and mimic the phone’s interface on the vehicle’s screen.
As technology advances the in-car audio experience, it only deepens the schism between traditional and digital advertising. As U.S. ad revenue is projected to increase over the next three years, a majority of that growth will come from online advertising. To put this into real life perspective, this year the Walt Disney Company announced it will be selling 23 local radio stations and taking their Radio Disney kids programs completely digital. As the access to digital media in-car continues to increase Disney seems to be the first to buy-in to an all-digital approach. But why now?
The biggest factor is connectivity. Bluetooth has helped internet radio to permeate the in-car audio scene, but the technology is not perfect for consuming media. With interruptions from phone calls and spotty connections, Bluetooth does not provide an optimized way to stream content. However, the Connected Car will allow users to connect and stream media from the internet directly to their center stack interface; making already popular internet radio apps like Pandora, iHeart Radio, and Spotify more readily accessible.
With the capabilities of a smartphone or tablet mirrored in the connected car, internet or digital audio will divert some of the market share of in-car audio from AM/FM radio. This is not necessarily a bad thing. With AM/FM radio controlling less of a monopoly on in-car audio, it opens up a world of opportunities for advertisers. According to the Edison/Arbitron study, out of 100%, the percentage of people who listened to AM/FM radio before arriving to the store of their last shopping visit was 49%. With the makeup of in-car audio poised for a change, advertisers will have more ways to connect with the audience.
The Connected Car will allow advertisers to treat the in-car entertainment experience just like an internet users experience; tracking impressions, clicks, and being able to target and optimize ads to better reach consumers. The Connected Car’s ability to transmit and process data will help bring other digital marketing practices to the in-car experience. Now advertisers can reach consumers via a host of specifically designed driving apps like Waze and Google Maps. A couple of weeks ago the Monitor Blog did a piece on beacon technology. The combination of beacons and the connected car will allow advertisers to target and reach consumers in real-time. It is not a far off idea that someone driving down the road at 12:30pm, listening to Pandora via the Connected Car, hears an ad for today’s lunch special at the restaurant they are about to drive by. The level of information the car is now able to process makes the days of an analog driving experience with CD players and AM/FM radios, seem as distant as 8-tracks and cassette players.