Ad terminals in taxis are a thing of the past

Many years ago, taxis in Shanghai were often equipped with a touchscreen on the back of front passenger seat headrest.

Passengers sitting at the back could watch ads, many of which interactive. You could do role plays, solve mysteries, participate in lucky draws … Of course, these are all advertisements.  

Fast forward to now – when you take a taxi in Shanghai (if you still do not use Didi or Meituan), you will almost never see such a screen.

In fact, the company which operated these terminals declared bankruptcy in 2016, after years of struggles.

Why?

Many pundits blamed internal problems and lack of localisation (the company was funded by an American Chinese). We believe the fundamental problem is that they failed to capture the shift in advertising towards digital.

It is a very simple function here: 1) how many people can you reach out, 2) who are you reaching out, and 3) what is the touchpoint.

How many

The number is surely not great, and dwindling. Think about it: one taxi can do maximum 30 trips a day, and each trip you have one or two people sitting at the back.

So one touchscreen, which requires maintenance and update, can only reach 60 people a day. This is in no way great.

Not to mention that many of the passengers would switch off the screen as soon as they sat down.

To make it worse, many passengers were deserting taxis for Didi, causing the outreach to further dwindle.

Who

It is seemingly easy to define the persona of target customers – people who take taxis from point A to point B.

Ad agencies sell the story that people who take taxis regularly are the people with spending power.

Alas, the screen does not know where the passenger is going, and why they are taking a taxi. There are much better ways to reach out to more targeted consumers, and more of them.

The touchpoint

People taking taxis are usually busy or tired. Why would you watch noisy and irrelevant ads, when you could talk to your friends and business partners using WeChat?

If you understand all these three, then it should come as no surprise to you that the business of in-cab advertising screens went bankrupt.

Just having a digital screen does not mean you are offering digital advertising.

How about lifts

You might ask, but in China you see advertising screens in lifts, in fact, all the lifts.

Actually you see them in many lifts in Jakarta as well.

Why do they persist?

Well advertisements in lifts are much, much better than those in cabs:

1. They reach out to more people: everybody living in apartment blocks and working in city offices need to use the lift – and many office and apartment blocks in China are 25 storeys or above.
2. It is a very captured touchpoint: smartphones often do not work in lifts (even in many of those where China Mobile claim to have coverage); and it is socially awkward to stare at your phone in a crowded lift;  
3. They create repeated impressions: if you take the lift up, you need to take the lift down; if you stay or work in the block, you take the lift up and down repeatedly;
4. It is highly local, and targeted – in fact, much more targeted than taxis.

Therefore it is no surprise even after the success of Focus Media, many are still joining the fray to fight for market share. Xinchao, a new player, has recently raised CNY1 billion (US$157 million) to go head on against Focus Media.

Just emerging in Southeast Asia?

Weird enough, we only start to see in-taxi digital ad screens appear in many parts of Southeast Asia.

We think this is doomed in the long run.

Of course, in the short term, when your ad agency has not evolved, they might still put money into the drain.

Just like how they have been doing Google Ads nowadays.