MobileAd

Driving is a huge hassle these days. No, I’m not talking about the fact that there's constant traffic or the fact that as more greenhouse gases are released each day into our atmosphere, more pollution fills the air, contaminating our water, food, and lungs. These are not the things I’m talking about when I say driving is a hassle. Rather, what really ticks me off about driving these days is constant drain of dollars and cents that are thrown away at the gas pumps. Gas prices these days are ridiculous. As of April 14, 2008, the average price of gasoline in the United States was $3.38 (Source).

When you consider that a car typically holds around 16 gallons, that’s about $50 every time you go to the pump (Source). With rising inflation and the crashing dollar, you may not think that $50 gets you very far these days, but it can really add up. If the average motorist drives 37 miles per day (Source), and a tank typically holds enough to drive around 300 miles, a tank of gas will last for 8 days. That means that every 8 days you’re going to go back to the pump, pay $50, and just wait another 8 days to repeat the cycle.

Over a year, these numbers equate to $2,280. I don’t know about you, but that’s a huge chunk of change to just be throwing away each year. And, at the current rate, it doesn’t appear that this price is going to get any smaller. Gas prices have and will continue to increase as time goes on. So, there must be some way to combat the oil companies practically picking the pocket of gas consumers. That is where MobileAd comes in.

MobileAd is a pretty simple concept stemming off of the huge revenues produced by the booming advertising industry. Today, when people think about advertising, they might think of Google or Yahoo! which are two of the kings of advertising in the Internet world. Each time you click one of their ads, they make money. You may think that you hardly ever do this (and you probably hardly ever click on an ad), but then again, search engines work under the law of large numbers. Little –by-little it comes in.

However, you may not be thinking about all the other types of advertisements that slap you in the face everyday. Think about billboards, advertisements on the lateral sides of buses, or posters on the inside of public transportation. You may take these for granted, but it costs a pretty penny to be able to advertise to such a large audience.

But people just like you and me go out into the world every day and have the opportunity to interact with hoards of people. If you commute to work, you probably spend the morning hours stuck in traffic alongside hundreds of thousands of people. I would say that having that sort of exposure would really entice a lot of different advertisers.

Then, why not advertise on the side of your own vehicle for money? This service wouldn’t be intended as a way to put food on the table, but rather, a stipend or reduction to one’s gas price. If advertisers are willing to advertise on buses and taxis, why not on ordinary vehicles that travel 37 miles per day on average? There could be stations built into BP’s or Shells in which you can sign up and an advertisement will be placed on your car. There will be various sizes and companies to choose from.

It will have to be put on professionally to ensure that the advertisement doesn’t fall off and to make sure that it actually stays on. Ultimately, if people can save anywhere between $5 to $10 every time they go to the pump, I don’t see why they wouldn’t do this. They can choose the company that they advertise, so it almost says something more about you aside from I drive a BMW or Audi.

Testing for Realism:

• Is it well accepted by a particular target demographic?
  

I think that there is a definitely a specified target demographic of people who would want to use a product like MobileAd. For starters, more generally, people who would like to use this service are those who are concerned with saving money. As the American Dollar continues to dive and gas prices continue to skyrocket ($116/barrel - 4.22.2008 - Projection), saving money when driving one’s vehicle is of premium importance to most consumers. But this isn’t enough for me to make a substantial argument for MobileAd.

Rather, I say consider people who recognize and even glorify advertisements on cars. Who am I talking about? The 75 million people who comprise the growing fan population of NASCAR. Aside from having 17 of the top 20 attended events in the United States, this motorsport profited $3 billion in 2007. The fans that make up NASCAR are considered some of the most brand-loyal fans in America, which causes Fortune 500 companies to sponsor NASCAR more than any other sport.

75 million people is a tremendous base to be able to guide MobileAd towards. That is a very conservative estimate as well, because this is just one group of people in particular who are accustom to having advertisements on cars. The benefits of MobileAd stretch to a wider audience, because it saves people money for simply driving around, which I don’t think too many people would disagree with.

• Does it fill a need?

To answer this question truthfully, I would say that MobileAd does not necessarily fill a need. However, as time goes on, and gas prices begin to climb higher and higher, the need to lower gas costs will be essential. The fact of the matter is that people are going to continue to drive cars. Just because gas prices go up 50 cents doesn’t mean that everyone is going to start commuting via train or public transportation. People will inevitably just head back to the pump and pay the price. Therefore, in order to combat this rising cost, I think MobileAd does indeed fill a need of lowering gas costs.

• Can it be setup by an individual or at most small group of individuals?

MobileAd is a little more complicated to put together and initially set-up, but it can be done if one just talks to the right contacts. For starters, the first thing that needs to be done is for an agreement to be made between MobileAd and various marketing departments of companies. If we consider a sample size of companies, lets say Burger King, Taco Bell, and Wendy’s, all three of these marketing departments have to be contacted. They each have to agree to distribute their logo on private vehicles, and each may determine a different price per mile (more on this later).

If they all agree to the terms, this is spectacular news. The next thing that will need to be done is creating the various advertisements that can be placed on cars. There can be several different makes that people can opt for.

For instance, people can choose to have an advertisement on their hood, trunk, lateral sides, or at the top of their car. Each one of these placements may alter the amount of money that advertisers are willing to pay per mile, but this is up to the person driving. I think that providing people with several options will make MobileAd a much more profitable endeavor. I’m not sure how this advertisement will actually be created, but it has to have the ability to be attached and taken off, but only professionally, because we have to ensure our advertisers that people are actually keeping this advertisement on their car.

It also has to be done in such a way that it does not alter the car in any way. If we can get past these two first initial steps we’re doing superbly well. Next, either one of two things will happen. MobileAd will connect itself to BP’s, Shell’s, and Amaco’s all over America, or it will be independent of gas stations. This will require engaging in agreements with gas stations or buying up real estate to be able to service consumers who want to use this product.

I think it would be very convenient to have this service available at gas stations, but think that it will be far more complicated. Buying up real estate to house the office in which MobileAd can work is far more likely, but it also takes away the immediate payoff that one will receive, because they won’t receive their reduction at the gas station.

They will rather have to drive to another location and get paid there. I don’t foresee this as being a terribly large problem, but it hurts the product a little bit.

Within each office of MobileAd it is a very simple set-up. Essentially, people can walk in and browse around the room for various types of advertisements that they may want to place on their cars. It’s almost like shopping for a cell phone.

You walk into the store and find an advertisement that works best for you. Do you like Wendy's or Dell? After picking out an advertisement that works well for the person, they approach an attendant at a computer. The computer is outfitted with a database which holds the following information. It contains information regarding a person’s name, car, license plate, advertisement choice, rate of pay per mile, and miles logged on their cars. Creating a database like this is quite easy, but maintaining it and streamlining it is quite a task.

In order to make it easiest for both the person working for MobileAd and the consumer, an electronic card will be given to people who take part in using MobileAd’s services. Contained on this card will be all of the aforementioned information that when slid across a magnetic strip will automatically bring up the consumer’s information in the database.

All the person who works at MobileAd has to do is update the miles that the consumer has driven. The computer program that handles the database will have to be able to also check for falsely reported mileages. That is to say that given the amount of time that the person last came to MobileAd and how many miles have been traveled. So, the card will also store information regarding when the person last came to receive a payment. This will safeguard against people trying to run up miles in order to receive higher payments.

There will have to be a significant amount of safeguards in place to make sure that when people come to receive payment it is truthful and honest. Once the payment is given to the consumer, the job of MobileAd is complete.

• Can it generate income?

MobileAd has the potential to create enormous income. According to AdGrove.com the advertising industry represents a $190 billion dollar a year industry. This is tremendous and will continue to grow as it has done previously. So, there is no lack of money in the advertising industry, this is clear. But how does MobileAd profit from any of the services that it seeks to provide. Quite simply, lets crunch some numbers.

• According to a video posted on 5min.com entitled, “How much advertisers pay for your attention in NYC” the price of advertising on the lateral side of a bus per month is $500.
  

Find more how to and instructional Marketing videos on 5min.com

I consider this to be quite premium adverting space, especially because it is a bus and definitely even more so because the bus is in New York City. The rest of my calculations will go off of the premise that a bus in New York City costs $500 per month to advertise on.

In the MobileAd system, drivers are rewarded on the number of miles that they drive, not the time that they have the advertisement on their car. This has to be the case with private vehicles, because some of the time those vehicles will not be in use either because they are parked in a facility or a garage.

This essentially means that the advertisement isn’t doing its job. However, you can be certain that the advertisement is at work when the car is clocking miles, because it must be out in the open. So let us then determine how much this $500 per month equates to in dollars per mile for a New York City bus.

If we assume that New York City buses operate 24 hours a day every day of the month, this gives us a total running time of 720 hours per month. Furthermore, according to Schaller Consulting in a document prepared for Transporation Alternatives NYPIRG Straphangers Campaign in which it was studying the patterns of New York City buses, they determined that the average speed of a bus is 7.5 miles per hour.

Therefore, if we know that there are 720 hours per month that a bus is on the road, and if that bus will travel at 7.5 miles per hour on average, we can determine that the average bus in New York City travels 5400 miles per month (720 x 7.5). Therefore, in order to extrapolate the rate per mile at $500 a month, we simply divide $500 per month by 5400 miles per month and arrive at a rate of 9.26 cents per mile.

Essentially, advertisers are paying buses 9.26 cents for every mile that they travel, based on our calculations here.

Now, remember that I told you that I thought that advertisements on a New York City bus was premium advertising space indeed. Therefore, for a private vehicle, I think that a reasonable rate would be around a third of that for a bus.

This means that I would consider an advertiser paying 3.08 cents per mile for advertising on a private vehicle very acceptable. If we recall back to the beginning, an average gas tank will get you around 300 miles. So, the maximum amount of money that people are looking at making or reducing from their gas consumption is around $9.26 per fill up.

However, MobileAd is a for-profit company, and needs to make income as well. Pricing is an unbelievably complicated procedure, but I will provide several pricing options here and I will determine which one is best at the end. If we consider taking a slice out of the 3.08 cents per mile provided by advertisers in chunks of 10% up to 70% we arrive with the following:

10% - MobileAd makes 0.308 cents per mile and consumers make 2.772 cents per mile equating to $8.31 per 300 miles for consumers and 93 cents per 300 miles for MobileAd.

20% - MobileAd makes 0.616 cents per mile and consumers make 2.464 cents per mile equating to $7.39 per 300 miles for consumers and $1.85 per 300 miles for MobileAd.

30% - MobileAd makes 0.924 cents per mile and consumers make 2.156 cents per mile equating to $6.47 per 300 miles for consumers and $2.77 per 300 miles for MobileAd.

40% - MobileAd makes 1.232 cents per mile and consumers make 1.848 cents per mile equating to $5.54 per 300 miles for consumers and $3.70 per 300 miles for MobileAd.

50% - MobileAd makes 1.54 cents per miles and consumers make 1.54 cents per mile equating to $4.62 per 300 miles for consumers and $4.62 per 300 miles for MobileAd.

60% - MobileAd makes 1.848 cents per miles and consumers make 1.232 cents per mile equating to $3.70 per 300 miles for consumers and $5.54 per 300 miles for MobileAd.

70% - MobileAd makes 2.156 cents per mile and consumers make 0.924 cents per mile equating to $2.77 per 300 miles for consumers and $6.47 per 300 miles for MobileAd.

The key at this point is to determine what would be the Just Noticeable Difference in order to set the price. Recalling back to our first example, gas costs around $3.38 and cars hold around 16 gallons giving a total gas purchase of $54.08 for the average motorist.

With these numbers, I would probably favor a share of 40% MobileAd to 60% consumer when it comes to advertising payments. The reason that I conclude this is because the theory of Just Noticeable Difference relies on the fact that people are generally able to tell the difference in 50% of cases. With this 40/60 split, consumers will receive $5.54 on average everytime they fill their $54.08 tank. This equates to a price reduction of 10% ((54.08-5.54)/54.08 = 90%), which is a sizable price reduction.

I think this will be able to motivate people enough if they know they can reduce their costs by 10% and move their payment from the 50’s to the 40’s. If we go off of this pricing model and consider the demographics of the people who may use our service we conclude the following (very conservative estimates):

• 2% of NASCAR Fans = 1.5 million people
• 1% of the rest of the US population not including 75 million NASCAR fans = 2.25 million people
• Total people using service = 3.75 million
• 3.75 million x 37 miles per day = 138.75 million miles per day.
• 138.75 million miles per day x 3.08 cents per mile = 4.27 million dollars per day.
• 40% for MobileAd = $1.7094 million per day
• 1.7094 million per day x 1 year = $623.931 million per year

As you can see, there is a significant amount of money that can be made from MobileAd. At the same time, it also pumps money into the economy which would be supremely beneficial in a hurting economy.

• It is marketable?

The idea of MobileAd is a little different than any that has previously existed. It is almost a little faux pax to place stickers on one’s car, however, with the changing times; people are going to have to change in order to deal with the higher than usual costs.

Placing an advertisement on one’s car isn’t a mainstream thought today, because there has never really been a need for it. However, if things continue as they have, something like advertising on one’s car may become the norm in just a few short years.

I think the key is really finding the “tipping point” with this idea. I don’t expect MobileAd to be a well accepted idea, but only up until a certain point. There is a point at which gas prices will just become too much and an easy alternative will have to exist.

In years from now, cars may not come in simple colors like white, green, red, or black, but rather fully advertised all around it. I feel like MobileAd is a preliminary step between now and then, which provides extremely high profits.