How about a little exercise in advertising futurology?

Think about every ad you see for a product or service that involves cars. Car insurance, car manufacturers, car rentals, car repairs, everything.

Now start to think about how much money those companies spend on those ads.

Listen to the story or continue reading below:

I’ll help you out: insurance companies spend $6 billion a year on advertising. Fiat Chrysler, Ford, Honda, Toyota, and GM are all billion dollar spenders themselves, adding another $10 billion between them. Add in companies like Kia and Volkswagen, who spend nine-figures every year.

Some back-of-the-napkin math will tell you that this makes up at least 10% of the total dollars spent on advertising in the U.S..

That’s a pretty healthy chunk, right? Big enough that any sort of turbulence in this industry would cause some real headaches for ad agencies.

Here’s where we look ahead: what effect will the self-driving car have on advertising?

I’m here to propose that autonomous vehicles will cause a major change in car advertising, and threaten that 10% number. It won’t happen overnight, or even in the next decade, but some major gridlock is on the horizon.

Joy Ride

autonomous vehicleAdmittedly, when I first started writing this article I was bullish, ready to put everyone in the marketing world on notice.

Then I talked to a few experts who advised me to pump the brakes a bit.

One of those experts was Simon Daukes. He’s been around the auto industry for decades as a Director at Haymarket Media Group, which runs a number of popular car publications.

“If I was an ad agency, I wouldn’t even begin to think about this for another five years yet,” says Daukes. “To think about tertiary consequences of something that won’t happen for 25-30 years is so ahead of itself.”

Alright, fair enough. Fully-autonomous vehicles aren’t even on the market yet, and even when they are available, they’ll represent a tiny fraction of new cars sold—and an even smaller fraction of actual cars on the road. As fast as the technology has been developed, we’re still likely 40 years away from living in a world where a majority of the cars on the road are fully-autonomous.

So think of this as a fun thought exercise—a look ahead to what the advertising landscape of 2037 might look like.

Detour Ahead

There’s this map that shows the most common job in each state, and ”truck driver” dominates most of the country—29 of 50 states. Most of the discussion about self-driving cars has focused on this: the further erosion of working class jobs at the hands of automation.

But the impact is going to spread further than you think.

The United States is obsessed with cars. We have the highest rate of vehicle ownership in the world—8 cars for every 10 people. self-driving carCar culture has crept into almost every aspect of our lives, and self-driving cars will cause a major disruption to a huge range of industries.

Take organ donations. Did you know 20% of donated organs come from victims of car accidents? It’s morbid, but self-driving cars will cause that source of organs to disappear. Reducing vehicle deaths is a good thing, but it has an unintended consequence that we have to consider and solve.

One of those unintended consequences could be advertising revenue.

The problem is two-pronged—a vast reduction in demand and a changing market.

Our cars spend 95% of their time parked, so there’s a tremendous amount of waste in vehicle ownership. If a car can be kept constantly working and moving, ownership could be split amongst multiple people—reducing the total number of cars on the road.

Besides reduction in demand, self-driving cars will change the needs of the market as well. Ridership programs will mean less focus on selling new models, and the elimination of human error removes the need for individual liability insurance—both of which will shake up the car advertising world.

A Gradual(ish) Process

Realistically, we’re still decades away from seeing a large amount of self-driving cars on the road. There’s a well-defined timeline that industry experts believe the development process will follow.

It’s called “The Three Stage Journey to Full Autonomy.”

autonomous carIt starts with “hands off” driving: technology that allows the driver to take their hands off the wheel and let the car handle basic control. We’re already seeing this implemented. Next comes “feet off” driving, which is still five years out. Finally “brain off” driving, which—despite what you might think about the teen driver next to you—experts don’t think we’ll see until around 2025.

Once “brain off” cars are available, there’s still a long way to go before they start to change the landscape. Like most technology, they’ll command a small fraction of market share for a few years. And even then, it will take decades before they represent a majority of cars on the road.

But when that does happen, things get interesting for some of the ad world’s biggest spenders.

Insurance

Insurance companies pump billions of dollars into the ad industry every year with more characters than a Disney movie—Flo, the Gecko, Peyton Manning, Mayhem, and J. K. Simmons playing some kind of weird insurance professor.

But Flo and Mayhem might want to start polishing up their résumés.

If a majority of cars on the road are fully autonomous, it’s likely liability for accidents will shift from vehicle owners to manufacturers. Without human input, how can you hold the driver responsible for accidents? This is already true to an extent with current liability laws.

Even without a shift in liability, self-driving cars will cause premiums to plummet, due to decreased risks.autonomous car

“Premiums should fall by half by 2025 and 80% by 2040,” says Jim Holder, Editorial Director at Autocar. “However it plays out, the insurance industry is not going to survive unchanged if it’s premiums are falling by 80%.”

Note that none of this eliminates the need for insurance—GEICO and Progressive could simply offer coverage directly to manufacturers. But either way, we’re talking about a major shift in the needs and strategy of insurance providers, perhaps away from the massive advertising budgets they currently enjoy.

Manufacturers

Shared ownership, or car subscription services, are another dream that autonomous vehicles could make a reality. In fact, Lyft’s co-founder, John Zimmer, predicted recently that car ownership will “all but end” by 2025.

“I think he must be smoking some very dodgy pot,” says Simon Daukes, cutting straight to the point. “But the only thing he’s wrong about is the date, not the actually reality.”

self-driving carShared ownership programs can be a bit confusing for people, so let’s break it down: you’re not sharing a single vehicle with a group of people, but rather subscribing to a service that brings you a car whenever needed. The cars in the fleet are constantly in use, since they can drive between destinations on their own after dropping off the passenger, and customers no longer have to worry about maintaining the vehicle.

Instead of taking out a hefty loan to purchase a new vehicle, you just pay your monthly membership. Jim Holder of Autocar says you can already see the foundations for this type of model with the increased preference for vehicle leasing over ownership.

“The private sales of cars in the U.K., just over 80% are leased now,” says Holder. “It’s accelerated, three years ago it would’ve been a different story, but it’s the norm now.”

Shared ownership cuts into cars per person. Plus, it pushes manufacturers to sell to a different type of customer. Many are already launching pilot programs of their own to try and get ahead of the curve—Daimler AG (the parent company of Mercedes) self-driving carlaunched Car2Go, a carsharing program boasting 2 million members in 30 cities. BMW and Cadillac have started programs of their own.

While it may shrink the total number of cars on the road, membership programs could open up the market to a wider range of buyers, similar to how cell phone companies have opened up the smartphone market through leasing programs—a move which has helped propel AT&T, Verizon, and Samsung into the top 10 biggest spenders in advertising.

Go With the Flo

Clearly, advertising isn’t going anywhere. And maybe my bold predictions are a bit… overstated.

But even if it takes longer than tech leaders would have us believe, big changes are on the way. Insurance and car ads could feel as dated as collect call commercials, and copywriters the world over won’t be able to rely on safety features for selling points.
And all of us must prepare for a world with fewer cars—manufacturers, consumers, and advertisers.

“Of course, (the manufacturers) all believe that the market will go down, but their personal volume will be okay, because they think they’ll do a better job (than their competitors),” says Daukes. “Of course we all think that about our businesses. That’s the nature of capitalism.”

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