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RED LIGHT

Honda drivers are getting new perks—in exchange for their data

line of hondas
AP Photo/David Zalubowski
Honda used to sell cars—next it might sell your data.
  • David Berkowitz
By David Berkowitz

Principal of Serial Marketer

Published This article is more than 2 years old.

It seems like no one in the advertising industry wants to be in the ad industry anymore. So why does Honda?

At the Consumer Electronics Show (CES) in Las Vegas last week, the automaker debuted an ad-supported loyalty program. For Honda drivers, this would mean downloading an app and earning points for certain activities, such as requesting Yelp to recommend good Indian restaurants nearby. As those points add up, they’ll be redeemable for tangible rewards, such as a free drink at Coffee Bean & Tea Leaf, extra popcorn with every movie ticket bought through Atom Films, or discounts on Chevron gas.

Honda’s foray into the ad market might create a new revenue stream for the company. However, it could also be a costly distraction—and a public relations nightmare.

The advertising business is hard and, in many ways, messier than it has ever been. As budgets shift to digital marketing, ad fraud is rampant, with Juniper Research anticipating it to reach $44 billion in 2022. Service and technology providers in the industry, tired of being despised almost as much as members of Congress, have come up with euphemisms to describe what they do, such as “digital transformation” or “storytelling.” Even a behemoth like Ogilvy doesn’t make ads anymore: Its homepage says they “turn the brand into an experience.”

If so few people in the ad industry want to admit they’re in the ad business, why is Honda rushing into it?

Honda first announced the prototype for Dream Drive at CES 2017, with separate versions for passengers and drivers. The passenger version is an app with media, mixed-reality games, and a console to control car settings. The driver app includes commercial options, such as letting drivers pay for gas, parking, and food, while offering other features such as location-sharing and booking restaurants. A slew of brands signed on as partners, including Visa, LEGO, Grubhub, and the partners mentioned above. As Digiday reported, Honda planed to roll out Dream Drive in its Odyssey vehicles this year.

In its latest announcement at CES 2019, Honda said it is testing a Dream Drive rewards program that offers “points” for drivers and passengers who consume media and purchase services. Honda will have a network of local and online retailers where consumers can trade in their points to redeem rewards.

Drivers may appreciate the rewards, such as free coffee or cheap gas, but this could adversely affect both them and their passengers—not to mention Honda itself. Here are some of the potential unintended consequences:

Privacy

It seems like every week there is a new exposé about a privacy breach. If your car knows where you are and what you’re doing at all times, how would you feel if that information was leaked? Will brands know when and where drivers are dropping kids off at school, going to the doctor, or making detours to sketchy highway-side motel rooms? Even the most upstanding driver who only goes to work, church, and the supermarket may be uncomfortable sharing so much information. How will Honda communicate what data it shares with which third parties, and which data brokers will be involved?

Consent

Will every passenger opt in? What about their children? When the driver shares his or her location, that location could be used to identify others in the vehicle based on where it drives, such as if it carpools from a passenger’s home address to that resident’s place of employment. Honda could also create a social graph and know which drivers are connected to which other drivers and passengers; that data could then be sold to target consumers across other media such as through television, social media ads, and out-of-home ads like billboards.

“Honey, why are all these divorce-lawyer commercials popping up whenever I’m in the car?”

The infamous story about Target tipping off a father that his teenage daughter was pregnant is bound to rear itself again through a program like Dream Drive—what if you could make inferences about your inner circle based on what ads they’re being served? (“Honey, why are all these divorce-lawyer commercials popping up whenever I’m in the car?”)

In the future, it’s not hard to imagine a Minority Report-like scenario where digital billboards are targeted specifically at people who are driving by. In a busy area with lots people who data brokers determine to be likely to be cheating on their partners, divorce-lawyer ads could be triggered. For a less busy stretch, the billboards could even target ads to an individual, change every 10 seconds, and be programmatically sold to the highest bidder. (As a bonus, lawyers are fairly price-elastic customers for ad buys. Saul Goodman would be pleased.)

Choice

Drivers and passengers may prefer using their own apps rather than Honda’s. (It’s hard to fathom a parent convincing their kid playing around on Snapchat or Fortnite in the backseat to download an automaker’s branded app instead.) If a driver likes reading reviews on Google Maps instead of Yelp, a chance to earn points redeemable for free coffee won’t be so appealing. Cars usually work best as docking stations for consumers’ phones where the individual decides which apps to use, not the automaker.

Maybe none of this matters. Maybe there won’t be a privacy scandal. Maybe Honda will set a good example for how brands handle transparency and consent. Maybe Honda can diversify into a new revenue stream. Maybe consumers will love the Honda apps and appreciate discounts. Maybe the new ad industry is so much better than anyone in the old ad industry realizes.

Or maybe Dream Drive will be a dream that will be largely forgotten by CES 2020.

If Honda is successful, nearly every auto manufacturer will parrot and expand on this model, creating their own exclusive partnerships. Few of these will scale well and make it worth advertisers’ time—unless enough of that consumer data can be used elsewhere.

If Honda quietly sunsets this program—or if it publicly crashes and burns—it will be a lesson in how an automaker should stay in its lane. Either way, this is a risky move that marketers and manufacturers need to track.

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