Columnist Brian Smith explains how ride-sharing services and self-driving cars will open up a host of new opportunities for local businesses.
Are you ready for pay-per-car marketing? That’s right, PPC is about to take on a whole new meaning.
Uber and Lyft recently began testing programs in which local businesses pay for your ride to their locations — assuming you’ve splurged the requisite amount at their cash registers. The result: local marketing is about to be transformed.
Local search to certain purchase
You’re traveling out of state for business. It’s dinner time, so you search on your phone for restaurants near your hotel. You narrow your choices down to two restaurants. Both restaurants offer the same type of food. Both have the same ratings. Both have a similar price range. The only difference? One restaurant is offering to pick up your Uber fare if you choose them. It’s not much of a choice, is it?
As ride services grow in popularity, paying for a customer’s ride will increasingly help businesses stand out of the PPC pack.
The primary beneficiaries of this new marketing model will be restaurants and retailers. Spend a certain amount on your meal or buy this product? Your ride is on the house.
Uber is currently testing this marketing model with their Uber Offers, and Lyft has rolled out a similar service in Portland.
As of right now, these “free” rides are limited to the ride services’ apps and their partner affiliates. But it’s only a matter of time before this new form of marketing integrates with more traditional search methods and competes in the PPC realm.
And look out when they do. I suspect that the conversion rates for these types of ads will be significantly higher than the more traditional PPC approaches for local. After all, once a customer selects your ad and orders an Uber, backing out of a purchase will cost the customer money. The ride will only be validated with purchases.
So, when can you expect to start seeing these pay-per-car ads gain wider adoption? You’ll start seeing them more over the coming year, but they won’t truly take off until self-driving cars hit the streets.
Ride services and self-driving cars
It’s no secret that Uber and Lyft are at the forefront of developing self-driving cars. Why? If they can cut out the driver by operating their own fleet of autonomous vehicles, the cost of a ride drops dramatically.
Currently, drivers for both Uber and Lyft take home 75 percent of the fare profit. If you cut out the driver, you can expect Uber and Lyft to significantly cut prices, even with the added costs of maintaining their fleets. Cutting prices dramatically will make it much more affordable for businesses to pick up a user’s fare to their locations.
When this happens, expect Uber and Lyft to see even more dramatic growth. Likewise, expect pay-per-car ads to grow right along with them.
The dark horse in this race is Tesla, which plans to run their own autonomous ride service through their Tesla Network. While Uber and Lyft are both experimenting with self-driving technology, Tesla is already baking the hardware for full autonomy into every car — and has been since October of last year.
Additional local marketing perks
The implications of chauffeuring customers around, whether human or self-driven, is that it frees up the hands of the rider. What will riders do with their newfound freedom? The same thing they do when they’re not driving: spend time on their phones. This will open up additional local marketing opportunities for customers in transit, ushering in a new era of pit stop impulse buys.
Likewise, as soon as Uber and Lyft begin to operate their own autonomous fleets, you can expect to see the center console and the back of every headrest sporting a screen promoting advertisements.
Having local businesses pay for rides will also help close the online-to-offline local marketing attribution gap. After all, if a ride is validated via Uber or Lyft, it’s easy to know that a sale was made and the source it came from.
And finally, ride services will help with verifying business locations. Simply by asking customers feedback about whether the destination was correct, it should help clear up some of our location data issues.
How should marketers prepare for the coming changes?
Local marketers need to ensure that their location data is accurate and up to date, particularly the information about their products in stock. For example, if a customer shows up to your location via Lyft and can’t find the product she was looking for, you’ll have one very unhappy customer on your hands.
You also need to start improving the quality of your location data in anticipation of self-driving cars. You don’t want your geocodes to be off and have these self-driving cars drop your customers off in the wrong location. In the long run, data issues will likely be cleaned up by the driving services themselves, but we’re probably years away from this becoming a reality. In the meantime, the old way of establishing and verifying geocodes will still hold true.
Finally, local marketers need to get their heads around the fact that with Uber, Lyft and self-driving cars, your potential customers are riders, not drivers. Be creative and start thinking of ways to take advantage of the opportunity. Who knows? Billboards might start making a comeback!
In short, ride services and self-driving cars are about to open up an entire world of local marketing opportunities. The question is, will you be ready for it?