FinHow

Advertisements on large bill board, on steps of stair case, on electricity and metro rail pillars, and on the cabs are a common occurrence. Can one earn while commuting daily to work or while going to meet family and friends? If you can make that happen you can earn just like google earns.

Background

The taxis with Meru or Quick cab are frequently seen flaunting advertisements of themselves or the third party advertisers. It is rare that private cars have advertisements. In fact, if there are advertisements on cars then most of the time those advertisements are

• from the car dealer that has sold the car to the owners or that has last performed maintenance service on the car
• unsolicited pasted “Do not honk” stickers
• someone showing a particular passion such as pasting team-bhp sticker
• (rarely) someone advertising his product or website. Some of the websites that I have seen are finhow.com, oyehoye.com (I saw its ad when it not even launched), shanidham.in

On an average a person drives 10,000 km every year. What if advertisers put their advertisement on this moving bill board – one’s personal car – and pay the car owner (publisher) for the advertisement displayed? Someone will need to coordinate between advertisers and the car owners to strike the deal, and that’s where your venture is.

Your venture

You need to introduce advertisers (whose ads are placed) to the publishers (who publishes the ads on their property, car in our case) just as google does. You may stick to the format that advertisers (and many a times publishers) are familiar with.

Advertisement Formats

1. Tiny portion on the body of the car – Team BHP is frequently seen on the side of the car and “Do not honk” is seen on the bumper of cars.
2. A folding/imprinted advertisement on the rear glass – These folding advertisements are semi transparent, letting the advertiser show the advertisement and yet letting the driver see through the rear window.
3. Full body advertisement – Such advertisements are mostly seen on the long cabs.

Pricing Models

You may determine the price of advertisement on the basis of the following parameters:

1. Make, model and color of the car – Bigger, shining and attractive colors draws attention, so advertisers may be willing to shell out more money for advertising on such cars. How about BMW flaunting your advertisement?
2. Size and Placement of advertisement on the car.
   • Bigger the ad, more the money.
   • Advertisement placed on the rear of the car fetching more money
3. Location where car frequently goes and location where car is frequently parked (if visible to onlookers). If an advertiser wants to advertise in a particular location and car frequents that location then advertiser may be willing to pay the premium, or willing to pay only when car is in that location.
4. Distance the car travels in a particular duration such as a week or month.

Challenges

1. Devising a mechanism to track that advertisement once put on the car will not be removed/tempered with. This can be easily achieved by customized temper evident seal mechanism. One of the vendors that provides temper evident seal is Label Lock .
2. Tracking the location and speed of the car so that advertisers can be charged for location and time and publishers can be paid for location and time. A car can be easily located via GPS trackers. GPS trackers are in the range of USD 200. Some of the vendors are GoTrack EZ, MapmyIndia, Brickhousesecurity.com, Tarzan.co.in 
3. Since GPS devices are costly, you need to factor in the security and cost of the device –
   1. should you ask for security deposit (collateral) of device from publisher?
   2. should publisher buy the device?
   3. should advertiser buy the device?
   4. How to account for the depreciation of GPS device?
   
   
4. Advertisements should be placed judiciously so that it does not impair the car driver in driving, or distract the passers-by vehicle or people so much to cause any accident or invite any legal action
5. Since your venture requires to track the location of a private car, you may need to seek legal opinion about privacy laws.

Return on Investment

Parameters/Assumptions

• Assume our pricing model is price per km that a car runs.
• Assume Rs 1 per km charged as advertisement fee from advertiser.
• Assume 10,000 cars as our publishers and each car runs 1000 km every month.
• Assume cost of advertisement material including tamper evident seal will be borne by advertiser
• Assume that 50% of the advertisement revenue is returned to publisher (that’s what would attract a publisher)

Calculation

Revenue

• Total revenue earned = 10000 X 1000 X 12 = Rs 12,00,00,000 per annum (12 crore per annum)
• Revenue returned to publishers = Rs 6,00,00,000 per annum
• Net revenue earned = Rs 6,00,00,000 per annum

Cost

• Cost of 1 GPS = USD 200 = Rs 11,000 (assuming exchange rate of Rs 55 per USD)
• Cost of 1000 GPS = 11,000 X 1000 = Rs 1,10,00,000
• Cost of creating a website = Rs 1,00,000
• Cost of establishing a company = Rs 50,000
• Cost of maintaining a staff of 10 people (1 manager, 9 office staff) = 1 X 50,000 + 9 X 30,000 = 50000 + 270000 = Rs 3,20,000 per month
• Cost of maintaining facility = Rs 1,00,000 per month
• Total cost in a year = ((320000 + 100000) * 12) + 11000000 + 50000 + 50000 = Rs 1,61,40,000 per annum

Profit

Profit per annum – Total cost in a year = 6,00,00,000 – 1,61,40,000 = Rs 4,38,60,000 per annum

This is whopping Rs 4 crore per annum (271% profitability) and that too in the first year when GPS cost is the highest. Next year the cost may still be high on account of

• GPS units getting damaged or stolen,
• new publishers getting added to the pool and
• the need to reduce profit margin and increase revenue share of publishers because of competition offering higher revenue percentage.

Conclusion

Despite all the odds, probability of this venture’s profitability is very high. Will you start this venture? If yes, go ahead and share your story. If no then stay tuned for next venture idea.