Three Baselines for Setting Up a Car Data Monetization Strategy
What Is a Connected Car?
According to Statista, an online statistics portal, it is predicted that some 70 percent of light-duty vehicles and trucks will be connected to the Internet by 20231) . To simply put, every 2 out of 3 cars on the road will have access to the Internet.
Then, what is a connected car? It is a car with Internet access. It includes Internet-enabled devices and software applications that have access to the Internet and also communicate with traditional automotive components, such as the engine and electronics, as well as the smart devices of a driver.
At the industry level, the connected car market further includes software, applications, infrastructure, services, etc. that are used to collect data or use the collected data to provide safety, convenience, and entertainment.
Inevitably in a car equipped with such connectivity, every action that a driver takes generates data: destinations visited, routes taken, apps run, services used, etc. Given that the connected cars’ ratio reaches 70% soon, the amount of data they pour will be huge, and the need and possibility of monetizing that data will only grow.
Monetizing Car Data
Although the opportunities in monetizing car data have been highlighted for years in the connected car market, a key to a success does not unfold yet. However, there are some baselines that a carmaker has to keep in mind when setting up a strategy for car data monetization.
- Focus on customers
Use cases and business models driven by car data should provide values for customers. Rather than being obsessive in making immediate profits from the car data – for example, selling it, explore a long-term revenue model – developing products or services using the data that customers are willing to pay. So, your ultimate goal will be offering customers with what they need and eventually providing practical values that they can appreciate in their lives.
Especially for OEMs, this effort will help create brand loyalty that can be led to long-term revenues.
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- Create an ecosystem
A success in data monetization is not achievable if you work alone. Create an ecosystem with partners who own resources needed and share values to deliver to customers. Monetizing car data is certainly a new type of business even for OEMs and Tier-1 suppliers, and unlike the traditional car manufacturing, they cannot perform all the activities throughout the value chain of the car data. It requires a much diverse set of players in the circle – infrastructure, service providers, etc.
This ecosystem shall include not only tech companies that will help accelerate the development speed and reduce development costs, but also marketers and distributors that will facilitate after-development activities such as marketing, sales, and maintenance.
Although OEMs have an advantage as they have access to the data, they would rather cooperate with others in making ways to benefit customers, instead of claiming the ownership.
- Stay current on laws
Pay heed to the current and upcoming laws and regulations on data collection, storage, and usage. Since connected cars may send out personal data about drivers or passengers, in addition to vehicle-related data such as sensor data, privacy laws and regulations apply too.
When signing on a partnership agreement, data treatment related articles should be thoroughly reviewed to prevent any unintended violation of relevant laws.
Depending on the current value of your business, the growing amount of car data may benefit or threaten it – or both. And yet how willing customers are to pay and how happy they are about allowing their data to be used are still a barrier to overcome to make profits using the car data.
However, for automotive manufacturers who are experiencing a double whammy this year, the continuing decline in car sales for years and a plunge in consumer spending worldwide due to Covid-19, the surge of car data and its monetization are certainly a change that is unavoidable and at the same time an opportunity that should not be missed.
Set up a long-term strategy and prepare a sustainable business model for car data monetization. It may take time but will certainly pay off.
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