How to monetize car data - 3 strategies for companies and 28 practical use cases

    Brook. Not a stream yet, though. But in the foreseeable future, it is going to be a proper river. What are we talking about? Data obtained from vehicles. Experts estimate that data inflow is likely to rise from approximately 33 zettabytes (this is how much we obtained in 2018) to 175 zettabytes in 2052. For OEMs and companies from the broadly-defined automotive industry, this means one thing. Endless monetization possibilities. Providing that they face the challenges connected with data capture, filtering and storage, and become familiar with the in-vehicle technologies enabling that.  

The potential is enormous. However, the Capgemini report shows that there is still a long way ahead before reaching its full potential. Today, as many as 44% of OEM customers do not yet avail of any online service in their cars, and still,  connecting to the network is just the starting point because without the Internet there is no option of monetizing data. And even if the vehicle is already connected to the network, only every second driver declares frequent use of this type of service.

Anyway, the condition of the Internet is a challenge in itself. Today, in modern vehicles, there are around 100 points from which information can be downloaded (in the future it is estimated that there will be up to 10,000 of them!)

Before we get to know the technologies that enable it (about which we will write in the second part of the article), let's have a look at the challenges and checkpoints that must be considered when creating a data monetization strategy for a software-defined vehicle.

5 things to bear in mind if you want to monetize vehicle data

1. Developing the customer value proposition

This is where it all begins- from creating a sales offer and an environment in which drivers will believe you have something unique and valuable for them. Without trade, no technology will guarantee your success. Customers will simply not want to share data.

Think about the unique offer you want to present to them and develop a clear data management policy. As a result, it should be followed by the selection of appropriate technologies, and then their implementation in vehicles.

Obtaining data to offer the driver safety or a good sense of direction differs from getting information related to entertainment or directing the customer to a sale in a nearby shopping mall.

It would be perfect if the developed customer value proposition was consistent with your brand's DNA and features that have always been associated with it. This would make it easier to convince users, remain in line with your business assumptions, and stand out from the competition. Focus on technology application, not on technology just to be used.

2. Consider matching technology with the data for which users are most likely to "pay"

Speaking of users’ preferences, even today, at the stage when the technologies of obtaining data from vehicles are not fully-fledged yet, it can be seen that for some services customers are willing to give up some of their privacy, while they are largely opposed or reluctant towards others.

Capgemini's research shows that the group with the greatest potential includes services related to safety and facilitating driving:

•  hazard warning;
•  collision warning;
•  theft detection system;
•  e-call;
•  interactive language assistance.  
  

On the other hand, the greatest objection among users is aroused by services related to broadly -defined shopping:

•  In-car delivery;
•  in car e-commerce.

Keep this in mind when choosing technology to help you monetize your data.

3. Data collector strategy

The data in the vehicle is acquired by means of special sensors and then sent to collectors, which are supposed to gather this data and enable it to be transferred to the cloud. To effectively filter this data and derive maximum benefit from it, you need reliable technology to facilitate it. Due to the huge amount of data and the interaction between various sensors, the universal data collector is the best solution, as it collects all information obtained from sensors in the car.

In order to fully use its potential, during the implementation phase of this technology, it is crucial to ensure close work of the engineering team with people responsible for digital data management (see the next section). Close cooperation of both teams will help to obtain more interesting data and implement new services more efficiently.

4. Provider of IoT data platform

Collecting data from vehicles is impossible without an  IoT platform connected to cloud solutions dedicated to the  automotive industry - this is where data is sent and analyzed to be later collected by the vehicle sensors.

Regardless of which platform you choose (the most popular solutions on the market today are: Microsoft Azure, Amazon AWS, and Otonomo, operating in the SaaS system), 5 features that such a platform should have are of paramount importance to enable the efficient flow of information.

 You can read more about it in     our article on this issue    .

5. Data enrichment

While this article focuses on technologies directly related to obtaining data from the vehicle, it should not be overlooked that the software-defined vehicle operates in a wider ecosystem. Monetization of data from vehicles will not be possible without technologies related to infrastructure (e.g. smart-road infrastructure,  V2X communication , or high-speed data towers), as well as coordination of back-end processes for which entities such as policymaker, cybersecurity specialist, technical regulator, road infrastructure operator or billing/tolling player are accountable.

To create more valuable and attractive services, a coherent policy is necessary, as it will enrich the data stream from third parties and the user themselves, and will improve cooperation between elements of the ecosystem.

Checkpoints inside the car

In-car technologies are not the only gateway for data that companies can obtain from drivers (another entry point may be, for instance, the driver's smartphone or road infrastructure). However, they are the ones over which OEMs and manufacturers have the greatest control, technically at least.

Before we directly describe the technologies in the vehicle allowing that data to be obtained, let's focus on the  checkpoints that are crucial for the capture of information, its quality, and value for building services.

In the software-defined vehicle ecosystem, we can identify three such areas, a kind of bottleneck on which the flow of data depends. These are:

1.     Vehicle interior and infrastructure.  
2.     Connection to cloud.  
3.     Data cloud.  

Let's have a look at the first area, which is practically entirely the responsibility of the automotive company and is directly related to the equipment in the vehicle.

We can list the following groups of such checkpoints which require closer attention when building a data monetization strategy.

1. Gateway to the customer

Key points due to the start of data gathering and the user's experience - their willingness to share data, and thus increasing the value of the gathered data for the manufacturer.

•     HMI    (i.e. a set of technologies enabling the driver to activate the vehicle and begin collecting data, e.g. touch screens, visual sensors, voice commands, etc. - certainly a topic for a separate article)
•     Data gateway    (port, mobile data connection, USB port, radio connection)
•     Customer ID  

2. Points that build loyalty and the need to buy

That is, the contact points with the offer that allow you to easily download new applications, pay bills and influence the user's willingness to renew the service. The more transparent, engaging, and easy-to-use, the more likely the user is to continue their subscription.

•     App store / ecosystem  
•     Billing platform  
•     In-vehicle infotainment (IVI)  
•     Apps/ content  
   

3. Key points for data security, data analysis and usability

•     CPU/ control unit  
•     Car sensors / actuators  

Software-defined vehicles do not run in a vacuum

When creating a data monetization strategy for a software-defined vehicle, one should always bear in mind the wide ecosystem in which such a vehicle operates. It is not enough to equip it with the technology itself and wait for the flow of  data that will turn into specific value for the enterprise . In such a complex and extensive ecosystem, nothing happens by itself. There is no room for improvisation, omitting checkpoints, and presenting half-baked offers. Yes, the technology that downloads data from the vehicle is crucial, but it won't work unless we bear in mind the broader data management context that reaches beyond collecting and analyzing it.

 The collection of data and its subsequent monetization  wouldn’t be possible without the ‘’attachment points" in the form of technologies already used in vehicles and controlled parts and systems. It's also common knowledge that car data monetization is based on three main sets of factors, covering quite different areas. These are automotive technologies, infrastructure technologies, and back-end processes. In this article, we are going to reverse-engineer in-car technologies.

There is no harvest without seeds. In relation to vehicles, these "seeds" are all the elements and systems that make data collection possible at all.

The proper design is the key when we talk about the effective use of information from the vehicle and from the users directly. Let's have a closer look at these crucial technologies.

8 technologies necessary to retrieve data from a vehicle

1. Technical sensors

For  OEMs and suppliers , sensors are the foundation on which they can build knowledge about the vehicle's performance and possible breakdowns. Due to that, they are able to see how their products endure the operation.

With these resources, it is much easier to determine the cause of a particular fault. The biggest challenge? The type of setting and frequency of data collection and integration of results into R&D processes. These issues are yet to be discussed.

2. High-performance processing

Real-time processing and communication are pivotal in unlocking the data potential in the vehicle.

However, it is necessary to define, from the very outset, which specific processing elements are to take place in the vehicle and which in the cloud. Whether the hardware is upgradeable is also an important variable.

3. Interface (HMI) and customer ID

HMI is a bridge between a human and a machine. Any technology, tools, and devices allowing human beings to "communicate" with vehicles - request the operation, change the setting or read for example the current status of the engine.

User experience is the key. Making sure the vehicle operations are as intuitive as possible is the end goal of every interior and UI designer. Adding augmented reality, advanced HUD, gesture operations, or fancy ambient lights makes the driver feel at home, capable of quickly changing the vehicle settings, and always aware of the current situation and hazards.

4. Software platforms

They support various vehicle applications and high-speed data transmission protocols. In the context of monetization, two aspects are of paramount importance: the reliability of the  over-the-air software updates and for which of what consumers will be able to pay.

5. Communication

The connection between the vehicle, sensors, internet, and onboard devices is essential. Network gateways include Wi-Fi, Bluetooth, RFID, as well as a high-speed 4G / 5G modem gateway. The latter is the greatest challenge.

The problem that needs to be dealt with is mainly the stability and cost of the aforementioned connection. As the vehicle moves, it can reach locations with low- or even no- mobile internet coverage. This results in interrupted connections, operation retries, or unavailability of services.

6. On-board data storage

It is a local hardware repository for data generated by the vehicle. It must be clear what  data is stored     on the cloud   and who has access to it (e.g. insurers). It is equally important to reassure customers that their information is protected from unauthorized access from outside.

7. Location and navigation technologies

Monetization also depends on location data. The biggest players of software-defined vehicles must decide how to locate a vehicle (GPS) and decide which specific navigation information should be collected and which map's "technical archetype" to adopt.

8. Environmental sensors

It is not only what happens under the vehicle bonnet that matters, but also what influences it. Therefore, environmental factors provide valuable data. They detect parameters related to e.g. road conditions, weather, etc. They also focus on nearby vehicles and people as well as on the cockpit interior: passengers, transported goods, and the driver.

As for the latter, environmental sensors monitor its physiological condition. Based on fingerprint readers, cameras, and microphones, the technology determines, for example, the driver’s sobriety or the degree of fatigue. It is also possible to control vital signs such as heart rate and blood pressure.

To what extent is such data monetized? It all depends on how willing the customer is to share bio information about themselves and their passengers.

Categories of data collected in the vehicle

Which elements, systems, and subsystems are responsible for collecting valuable data that can be monetized  in the automotive industry ? It's time to look at the specific spots in the vehicle that show the greatest potential for data aggregation.

•     Front collision sensor      
     Information about the seriousness of the accident / collision and where it occurred.  
  
•     Doors and windows    
   The condition of the convertible roof, sunroof, doors, windows, bonnet and boot, spoilers and service lap.  
  
•     Driver identification      
     Identifying the person in charge and setting preferential settings for them.  
  
•     Drivers health      
     Pulse, data for diabetics, measuring stress levels.  
  
•     Trip parameters      
     Parameters such as mileage, acceleration / deceleration, remaining range, ECO or SPORT mode activation time, average distance, driving style rating, average fuel consumption, braking intensity and gear behaviour are taken into account.  
  
•     Electric vehicle      
     Battery status and voltage, charging profile and status, power consumption, recovered energy measurement.  
  
•     Engine      
     Ignition status, oil and engine temperature data when we are talking about gasoline/ diesel engine.  
  
•     Fuel      
     Tank capacity and remaining range.  
  
•     General data about the vehicle      
     Information from the display, outside temperature value, VIN number, environment temperature, air conditioning temperature, network connectivity, teleservices availability, vehicle orientation and position.  
  
•     Lights      
     The condition of the headlights and indicators.  
  
•     Liquids      
     Coolant and oil temperature, coolant and oil levels, brake fluid parameters.  
  
•     Navigation and positioning      
     GPS speed, navigation destination, vehicle location (latitude and longitude), time and distance remaining to reach the destination, vehicle alignment, vehicle movement status, most visited places to suggest destinations of travel.  
  
•     Security      
     Technical condition of the seat belts and their fastening, information about airbags.  
  
•     Service and maintenance      
     Date of the next brake fluid inspection and change, time threshold for the main test and exhaust fumes test, ‘check engine’ information.  
  
•     Smartphone      
     Pairing with smartphones, driver behavioural patterns.  
  
•     Warning systems      
     ESP (Electronic Stability Program), ADAS (Advanced Driver Assistance Systems). Data on automatic eCall, battery protection. Messages from sensors (parking, distance, speed).  
  
•     Wheels      
     Tire pressure status, brake pads.

Challenges related to technical possibilities

People responsible for the development and implementation of modern solutions face various challenges. How well they handle them determines the success of monetization.

When analyzing individual systems, you need to take into account such aspects as:

•  the frequency of data collection,
•  the possibility of updating,
•  the improvement of sensors that allow collecting personal data
•  maintaining the stability of connections,
•  identifying entities that have access to collected data.

 When talking about data monetization in the automotive industry, we tend to focus on technology, safety, sensors, or cloud solutions. However, all these elements fade when confronted with the ultimate element - the driver of the vehicle. Without taking into account their needs and expectations, there can be no question of generating revenue. Any vehicle data monetization strategy must be mindful of this.

We can fine-tune the system, we can find exceptional partners to implement the software in the vehicle, but without a deep understanding of the vehicle user, no one will benefit from the solutions developed. Our organization will put a considerable amount of effort into building the team and implementing the technology, but the new vehicle features will not be used by the driver.

For this to happen, we need two factors: a value proposition of the brand- which explains clearly and transparently what the user will get out of it, and a coherent action strategy based on a market-back methodology that stems from specific market needs and allow us to develop services that are desired by the customer.

What benefits do customers most often look for in a software-defined vehicle?

Remember that just because people want to use a service, it doesn't mean that they will pay for it. What matters here is not just the benefit, but also the way it is presented, the user experience, and the pricing model. Only the combination of all these elements determines the success of the service. First of all, it is worth focusing on the benefits themselves and only then selecting the right technology to match them.

What are users willing to actually pay for and what are they willing to share only? Many studies indicate that the main factor motivating consumers to share data is gamification and rivalry - this aspect has not changed for years, as we can see for example in social media or e.g. "free" applications, which from time to time appear on the market, gather millions of interested users and vanish in no time. However, when it comes to paying for such "services", users are not so willing to use them.

In vehicles, it looks slightly different. Capgemini's research shows that the connected car services that are most popular with consumers are those related to the "core" functionality of vehicles, such as:

•     safety,  
•     driving comfort,  
•     time saving  
•     reduction of vehicle operating costs.  

Among them, however, the services that are most willingly paid for are:

•     hazard warning,  
•     collision warning,  
•     theft detection systems / vehicle finder.  

Of course, just because entertainment or gamification isn't on the list doesn't mean that automotive companies should avoid them. It's also a way to distinguish and find their own individual voice that corresponds to the broad brand strategy and allows them to stand out in the market. It's about the way they are served, presented to the consumer, and showing that they can actually derive real benefit from them.

It also works the opposite way. Simply creating a "hazard warning" service in a connected car does not immediately guarantee success. It still needs to be packaged properly, run smoothly, and be provided with a payment model that suits the consumer.

Examples of customized connected car services

In-vehicle ads based on navigation and user experience

Is it possible that a driver will like the ads that will be displayed in the car? If we adopt the message to their needs and preferences, in all likelihood, it is. For example, if we often go to McDonald’s, the navigation system can mark such places on our route. We have our favorite clothing brand, right? We will certainly react differently to a sale offer in a shopping mall we just happen to be driving past. The context of shopping and the consumer’s needs are decisive, and the software-defined vehicle is perfectly suited to ensuring that the advertising message is 100% tailored to the driver.

Contextual payments

Removing barriers to shopping and being able to buy everything everywhere is a popular trend in modern commerce. In a vehicle where the driver is focused on the road and has their hands full, such a service makes even more sense. With the development of voice assistants, drivers will be able to pay this way not only for fuel or tolls but also for purchases beyond typical vehicle-related payments. Voice shopping on the way back home from work, instead of looking for a parking space in front of the mall and returning in traffic jams in the evening? Why not?

Sharing information about driver behaviour

Sharing data about the way we drive may not appeal to everyone. But if in return for sharing this information, a company gives us a huge discount on our car insurance or a super attractive leasing offer, then things may take a totally different turn. In cooperation with an insurance company or a bank, such services become a specific bargaining chip the OEM can play with when dealing with the driver.

Manufacturer's connected car applications

Saving money on car maintenance and taking care of the overall condition of the car is a benefit that most drivers will appreciate. A practical and thoughtful manufacturer app that warns of potential breakdowns, component replacements, or servicing will allow the user to enjoy a well-functioning vehicle for longer and sell it at a higher profit. In this way, the OEM gets the driver used to have the vehicle repaired at an authorized service center, and the user, due to the loyalty shown to the brand, can expect future discounts and lucrative offers.

Practical use of telemetry

Sharing telemetry data may seem profitable only to OEMs - after all, as they draw better conclusions based on the collected information and save on R&D processes. However, it is important for companies to make vehicle users aware of the benefits of such services, as well. After all, driving style data can be used to suggest solutions that improve road safety, work on fuel efficiency or reduce overall vehicle operating costs. In each of these cases, the winner is the driver. Example? When a vehicle frequently skids and triggers the ESP/TC system, the system can suggest that the driver should get better tyres (by a specific brand, of course).

Unlocking extra features on the subscription model

Paying for heated seats, just to use them for three months a year, may not be worthwhile for everyone. Well-known to us from streaming portals, the subscription model definitely meets the users’ needs. The customers themselves choose which functionalities they want to pay for and over what period of time. The OEM only has to take care of the right vehicle software that will enable that. And, of course, be careful not to alienate those customers who see this as "yet another" way to squeeze additional payments out of them. That’s how manufacturers can provide both functionalities directly related to the vehicle itself - e.g. better lights or engine boost - as well as those associated with in-car entertainment providers such as Spotify or Apple CarPlay.

What can be done to make the user more eager to pay for data monetization services?

A well-thought-out user experience is essential

In today's digital world, UX and mobile-friendly approaches decide whether a service is viable. If the product is presented in an unclear and incomprehensible way, and it is difficult for the user to find the desired options - they will not use it. The size and color of buttons, the messages displayed, the stability of the application - all of the above is of paramount importance and determine the popularity of the product. Keeping in mind the latest trends, mapping the market, and adapting to consumer trends is necessary to offer the vehicle user service of the quality known to them from e-commerce or their own AppStore.

UX itself is not only a practical tool that helps better track consumer behavior and how they use the service, but also a constant theme to promote and boost brand interest. Does Apple really need to upgrade iOS every year and does Instagram have to offer users a new feed layout every quarter? The answer is obvious. It's simply profitable for the brand.

Start with anonymized data

When creating a strategy for in-vehicle data monetization efforts, it's a good idea to start by developing services that don't require the sharing of personal data. A lower "pain threshold" will make it quicker for the user to learn the benefits of the system and how convenient or useful the service can be. Thus, it will be easier to convince people to use products that require more openness to data sharing. And this may be the next step in the implementation of technological solutions.

Focus on heavy-vehicle users

People who spend most of their day in the car or drive long and demanding routes happily embrace any technical innovations designed to make driving easier and safer for them. It is this group that should be targeted at the beginning of developing your own data monetization model.

Minimizing risks and accurately selecting the group will not solve all challenges, but it will increase the chance of success and help gain a new, loyal group of consumers who will help transfer the technology to other users.

Last, but not least: a flexible payment model

Convenience should accompany the user at every stage of the use of a new service. Not only when it is most beneficial to the user, but also when it is easiest for the user to give it up: whilst paying for the next billing period.

It is worth taking care of the flexibility of the payment model (e.g. one-off payment, freemium model, annual or monthly settlement), adjusting it to the user's needs and not hindering payments.

The smoother and more tailored to the user's needs the whole process of interacting with the service is - from understanding the need to using it to making payments - the greater the chance that the stream of data flowing from a given vehicle will not dry up after a short period of use (read: being frustrated using an underdeveloped product for the first time).

Let's remember that data monetization can succeed provided that it really understands the user, is fair and transparent to them and focuses on user experience. If we didn't have time to get to know the customer's needs, why should they waste their time on services they don't understand and don't need?