Transportation Network Companies haven’t exactly been profitable for some time, and recent reports estimate the operating losses trend to continue. Many apps monetize their product by implementing in-app ads. You know, those pesky little pop-up windows with various advertisements of offers and/or services? Typically users have the option to go “ad free” by purchasing a premium version of the app. Upgrading removes the ads, so you can enjoy the product hassle-free.
Given the popularity of ridesharing apps (e.g., Uber and Lyft) it would be logical that TNCs might additionally monetize their services via adverts. Especially since they haven’t been profitable recently by many experts’ accounts. So, how would that look to users? Pax that use ridesharing apps are basically looking at a real-time map while on trip. For example, while the Uber app is open pax see the car they’re in travel along its route to their destination. This feature is primarily why people feel comfortable ordering rides for other people (e.g., parents who order rides for their kids). Although functional, there’s technically some space available for ad placements while you’re riding in your Uber or Lyft.
Rideshare-apps’ advert experimentation?
On the flip side of the coin, drivers use a completely different (although complementary) smartphone app for ridesharing. This app is a bit more complex than the rider version; however, functions in much the same way. Drivers are dispatched trip requests, which they have the option of accepting. Once a trip request is accepted, a pick-up destination is provided and navigation too. But here’s the rub, drivers have an option to use internal (i.e., Uber’s stock nav) or external (I.e., another nav app like Waze or Google maps) navigation to drive to their pick-up location.
*Update* Uber has upgraded their navigation significantly, and now it’s the default (and only) option to use while driving to drop-offs.
Furthermore, some navigation apps already use in-app adverts (e.g., Waze) which appear in little banners that drop-down occasionally. Although these ads are distracting, they don’t subtract from the functionality of the navigation itself. TNCs may never resort to using in-app ads because ridesharing is already a paying service; however, riders would likely shoulder the burden of adverts exposure since they logically aren’t preoccupied while getting a lift. This decision wouldn’t happen without consequences though. Ridesharing app users probably don’t want to be exposed to ads; especially when they’re already paying for the service that that app provides.
Despite Uber’s $60 billion+ valuation, I wouldn’t put it past them to experiment with ad placements in their apps. For drivers this could be seen in the form of drop-down banners within the Uber stock navigation; for example, while navigating to pick-up and/or drop-off a fare (similar to Waze). For pax this could similarly represented while they’re on trip. If so, the desperation of Uber and Lyft to become once again profitable will be glaringly evident. Of course, this tactic is different from rideshare drivers’ having adverts displayed in and/or on their vehicles for extra cash. As any product placement revenue from the rideshare companies would likely not be shared with individual drivers.
Since turning over a new leaf in the form of kicking Travis Kalanick out, Uber has continued to face stiff competition from other US-based rideshare apps (see Investopedia article above). Similarly, in the biggest rideshare-app market of NYC there are several other players like Via and Juno to contend with. If you’ve read this blog at all, you’d know that I’m a big Via-driver, and have compared the two rideshare companies together in several posts (here and here and here).
I’ve always felt that NYC is the perfect experimentation-lab for rideshare apps, which is perhaps why there are more rideshare-app companies here than anywhere else. So the competition is not likely to get any easier going forward. Especially if either Via or Juno (which recently acquired Gett btw) beat Uber to profitability. And there’s always Lyft to contend with, which doesn’t seem to be going anywhere anytime soon.