Startups Experiment with Ads That Know How You Drive

As businesses race to connect our homes and cars to the Internet, unleashing new streams of data about our everyday lives, one mobile ad company scents a new opportunity.

San Francisco-based Kiip plans to sell a new kind of ad targeted according to people’s actions at home or on the road, offering rewards or deals in exchange for certain behavior. The company claims that format will be tempting to its existing customers, which include McDonald’s and Amazon.

“You get to your meeting early and you should get a free coffee from the place around the block,” said Michael Sprague, head of partnerships for Kiip, at the ad:tech conference in San Francisco in March. “You just logged 100 miles on a road trip; your phone says, ‘Here’s a Red Bull.’” Sprague believes that kind of promotion will be well received by consumers and will help brands ensure that people keep them in mind next time they’re looking for coffee or an energy boost.

Kiip’s move comes at a time when more and more data on people’s actions in the real world is becoming available as wearable devices, Internet-connected home automation equipment, and cars with integrated data connections head to market. Those new data streams could form the basis for many new services and products, but they also bring new privacy concerns.

Ads tailored to driving behavior will be possible thanks to a partnership with fellow startup Mojio. It will launch a $149 device in June that plugs into a car’s diagnostic port and streams vehicle data to a smartphone app to help users track their driving, their fuel economy, and their vehicle’s maintenance status. Kiip will use data from that device to target promotions inside the Mojio phone app.

Sprague says that getting access to data from a car’s engine and safety systems could unlock some unprecedented approaches to ad targeting. Mojio’s device can tell when a car’s airbags are deployed, or whether crash sensors on the bumpers have been triggered, potentially allowing ads pegged to incidents on the road. “It could be you just had a little fender bender, and you need something to lift you up,” he says.

Similarly, Sprague says that gaining access to data from connected home gadgets, such as thermostats or home automation systems, could also allow for creative new ads. Kiip hasn’t yet announced any partnerships that that might provide that data, though.

Kiip currently sells ads to brands including General Mills and American Apparel. These ads target coupons on the basis of actions taken in a mobile app, such as completing a game. The startup first experimented with selling ads against people’s real-world actions by offering coupons on behalf of brands such as Pepsi to people who logged workouts in fitness-tracking apps such as MapMyRun.

The kinds of “rewards-based” promotions offered by Kiip and some other companies make it clear that a person is getting a direct benefit in return for sharing data, says Jeremy Lockhorn, vice president for emerging media at the ad agency Razorfish. He says the approach could translate well into more real-world scenarios. “There’s potential there for sure,” Lockhorn says of Kiip’s experiments in the car.

The ad industry in general is interested in finding ways to use online-style ad tactics in the real world. Razorfish and some competitors, for example, are testing ideas about how to use “beacons,” devices that can detect and interact with nearby smartphones. “When I’m at a physical retail store and can determine that a person who has my app and opted in has spent five minutes browsing the toy section but didn’t make a purchase, I know something about that person I can use,” says Lockhorn. “That kind of microtargeting becomes the real-world version of the targeting we can do online.”

However, Kiip and other companies moving in that direction must try to find a way of offering advertisers new ways to reach people without leaving those people feeling that they no longer control their own data. “The user that’s going to interact with your brand really needs to know what they are giving up,” says Jay Giraud, CEO and cofounder of Mojio. “If I’m being offered an insurance discount because Geico looked at my data, I want to be the one in control. The way I drive my car is personal information.”