Dive Brief:
- Waze, the traffic and navigation application that has 80 million active monthly users, may start selling ad space on Carpool, a separate app that pays drivers for sharing a ride, according to a blog post by the company. The move is to launch a revenue stream for the Carpool app, as it currently doesn’t charge a commission on passenger payments to drivers, Recode reported.
- Waze’s original navigation app displays location-based ads to drivers. The ad formats include branded pins that appear on the real-time maps, promoted search, sponsored pointers and “zero-speed takeover” images that flash a picture to be clicked for automatic navigation to a sponsored location.
- Waze Carpool currently handles about 2,000 rides a week in the San Francisco Bay Area, Josh Fried, head of business development for the app, told Recode. It's set to boost its reach throughout California by June 6, but was previously only available in the Bay Area and Israel, with plans to expand to Brazil.
Dive Insight:
Waze Carpool faces several thorny issues in attempting to monetize its service. While location-based ads may seem like a great idea, targeting multiple riders in the same vehicle may limit their effectiveness. Drivers and passengers typically have to build a consensus on what actions to take, like whether everyone has time to stop at a restaurant, grocery store or coffee shop, for example.
It's unclear exactly how a mobile app will change the routines of commuters, given that many people cherish the freedom that comes with having their own car. About 9.4% of working Americans carpool to work, according to a 2013 Census Bureau study, while 76% drive alone and 5.2% use public transportation.
To change these established commuting patterns, Waze Carpool needs to find a way to improve incentives for people to pick up other riders. Currently, the app doesn't have a means of making money. It charges riders what it calculates as their share of the cost of gas for a ride and gives that amount entirely to the driver. The payment structure is limited by IRS rules, but Waze Carpool said the app isn’t intended to give people another source of income, but instead lower commuting costs — and traffic congestion — for both drivers and riders, according to Forbes magazine. Waze Carpool tried pilot programs with large employers like Kaiser Permanente and the University of California, San Francisco, to encourage ridesharing, but the early results of those tests have not yet been released.
