From A to B: Uber steers into advertising
By Isaac Ang Dec. 15, 2022
By connecting people who need to commute with nearby drivers, Uber has long been a company that prioritizes user experience. But with the launch of its Journey Ads campaign, the company will begin displaying advertisements in cars and within its apps, generating revenue by taking advantage of their consumer database. Yet in the pursuit of profit, Uber may run the risk of compromising user experience and privacy.
According to The Washington Post, since Uber’s inception in 2009, the company has amassed a wealth of customer data—including eating preferences, travel destinations and past fares paid by riders, enabling it to share targeted promotions.
To maximize brand exposure, Uber’s Journey Ads will allow companies to sponsor an entire trip, during which the rider will be shown commercials along various points of their journey—starting from when they open the app to when they step off the vehicle, per technology magazine Gizmodo. Promotional materials will be embedded in menus on the UberEats app, displayed on cartops and in-car tablets attached to the back of seats.
However, many are worried that commercials will detract from passenger experience. In addition, ride fees have risen by 45% in the past three years, Bloomberg states, prompting consumers to inquire whether Uber will reward customers with lower fares for watching advertisements. The degradation of user experience paired with expensive fees may drive consumers to choose other ride-hailing companies.
“Advertisements can distract me if I want to relax during the ride. The user experience is just as important as the transportation service; by displaying distracting advertisements, Uber is obliged to lower its fares,” Senior Atharv Bhavanasi said.
Despite operating on a global scale, Uber has struggled to turn a profit. Slate Magazine reports that since the company went public in 2019, it has lost $30 billion, largely due to a lack of travel during the pandemic. The Journey Ads campaign is a possible long-term solution to this; the company predicts the program will generate $1 billion in revenue by 2024. It also claims that this revenue can help raise drivers’ pay, which may in turn lower prices for riders, per The Washington Post.
“Uber’s desire to make a profit off its customers is understandable and an interest in maintaining a positive reputation will likely prevent it from abusing its capacity to advertise. However, Uber should not sell customer data to other companies,” Senior Abhishek Kaushikkar said.
As Uber uses first-party data to tailor advertisements to riders’ interests, numerous travelers have expressed concerns about a possible breach of personal data. A 2016 study by the National Bureau of Economic Research reveals that Uber has amassed enough data that its surge pricing algorithm can pinpoint individuals’ willingness to pay ride fares with precise accuracy. Past incidents substantiate that Uber’s data is not secure; The New York Times reports that an 18-year-old successfully hacked into Uber’s internal network after texting an employee for login credentials.
Other companies have also transitioned into advertising networks. For example, Netflix, facing competition with Disney+, introduced advertisements as an additional source of revenue last month. In August, Uber’s competitor Lyft launched Lyft Media, a media division that aims to entertain their riders through engaging commercials displayed on car tablets.
Uber’s new marketing plan has garnered mixed responses; it may eventually lower costs for riders, but existing public concern over high prices, breaches of consumer privacy and the potentially disruptive nature of advertisements could erode the reputation of the brand.
About the Contributors
Isaac Ang
Investigative Report and Last Word Page Editor
Isaac Ang is a senior at Leland High School and is the Investigative Report and Last Word Page Editor. During his free time, Isaac enjoys rock climbing, coding, and reading/watching Lord of the Rings.
Daniel Choi
Artist
Daniel Choi is a sophomore at Leland High School and an artist for The Charger Account. During his free time, he enjoys to watch shows, do art, and play video games.
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