Didi Chuxing is working with ride-hailing fleets in Shanghai to display ads on tablets attached to the back of passenger headrests as it explores ways to accelerate revenue growth.
Why it matters: The in-car screens are an attempt to expand the company’s existing revenue streams for more sustainable growth, after it pulled back under heavy scrutiny following the murders of two female passengers by drivers of its carpooling service Hitch in separate incidents last year.
- Since the incidents, Didi has pledged to focus on safety rather than profit and growth. It introduced a series of features including facial recognition for drivers to tackle safety issues on its platform.
Details: Didi is asking local ride-hailing fleets to place tablets inside vehicles as mobile advertising displays in Shanghai part of an extended trial, Chinese media on Monday reported citing several of the company’s partners as saying.
- The ads in addition to a route map and safety reminders display on a tablet which attaches to the back of the front passenger seat headrest, according to observations by a TechNode reporter in Shanghai last week. Restaurant recommendations and tourism pointers are also available via the touch screen.
- Didi procured the displays from a supplier in the southern Chinese city of Shenzhen at a cost of RMB 1,000 (roughly $142) per unit. Installation is not mandatory and ride-hailing drivers will not be charged for use, the report said.
- A trial has reportedly been running since mid-year 2018, but has been deployed on a limited scale and “very likely may end soon,” a person familiar with the matter told TechNode on Tuesday.
- Many local taxi operators and ride-hailing companies such as Yidao have tried this type of advertising and none have profited, the person added.
- A small-scale launch only has the potential to reach a limited audience, making it less attractive to advertisers, another person close to the company said. The initiative is likely to be short-lived as the company will have to bear the significant upfront hardware investment and risk minimal payoff, the person added.
- The company did not respond to questions regarding the size of the hardware purchase and covered areas and cities.
Context: Didi is not the only ride-hailing company looking to make extra cash from ads in a quest for profitability.
- Uber has worked with a New York-based startup Cargo on a “limited pilot” to put ad displays on its cars in Atlanta earlier this year. Drivers who accepted the offer could earn up to an extra $150 per week, according to an Axios report. Screen displays for digital ads have also been deployed in Lyft and Uber vehicles in major US cities by ride-hailing entertainment startup Octopus.
- Ride-hailing giants have been mired in a tide of red ink: Uber lost $6.2 billion in the first half of this year, and expects to turn an adjusted profit in 2021. Rival Lyft also promised profitability at the end of 2021, and last month estimated its net loss will be at least $700 million for all of 2019.