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General Motors to "push" ads to drivers

GM's OnStar division will begin experimenting this year with location-based advertising beamed to vehicles through a cellular network.

    DETROIT--Imagine this: As your fuel gauge nears empty and you begin searching for a gas station, a computerized voice takes over your car's stereo speakers and says, "The BP station at the corner of Second Avenue and Main Street has gasoline that is $1.43 per gallon, 8 cents cheaper than any other station within 5 miles."

    Sound fantastic? Executives at General Motors say they are preparing to debut exactly that kind of service as soon as this year.

    GM's OnStar division will begin experimenting this year with location-based advertising beamed to vehicles through a cellular network, OnStar president Chet Huber said Monday during an interview with CNET News.com at the North American International Auto Show.

    The service will be part of OnStar's "Virtual Adviser"--an automated, cellular-based concierge service that will be offered as an option on most GM vehicles starting in late January.

    In addition to cheap gas alerts, drivers who indicate they want so-called push advertising could also become the target of other sales and marketing pitches. For example, Huber said, a golf store might send information about a sale to a golf aficionado whenever his car is within a 2-mile radius of the store. As the driver approaches the store, a computerized voice could override music on the stereo and say, "All golf bags are 50 percent off."

    To receive the location-based, automated data, OnStar subscribers will first have to fill out a confidential questionnaire detailing exactly what kind of advertisements they want to receive. Subscribers may also enter their credit card information into an OnStar database so that they can purchase items directly from their vehicle and later stop at the store to pick up merchandise.

    Huber emphasized that OnStar would not become a spam-happy advertising medium to target people while they're driving. Certain customers, for example, could indicate they only wish to receive updates on sales at Nordstrom, and in that case they wouldn't receive notices from any other retailers. Virtual Adviser subscribers may also opt to receive no advertising whatsoever.

    Screaming at you?
    "Most OnStar subscribers put a priority on the safety and security features--that's always going to be the most important part of OnStar," Huber said. "We want to be very, very careful as we broaden our brand position. We don't want this to become something like a talking billboard that is screaming at you from inside the car."

    OnStar has not yet finalized deals with any third-party advertisers. But Huber said potential advertisers--ranging from online financial service providers to sporting goods retailers--have barraged OnStar with requests to advertise.

    Virtual Adviser's first advertisements will be from financial service providers, including Fidelity and Charles Schwab, that will sponsor the service's stock updates. The four-second ads will debut with Virtual Adviser later this month. Just before the computerized voice gives the driver an update on selected stocks, the driver may hear, "This update is brought to you by Fidelity."

    Experts say location-based push advertising is poised to become one of the hottest marketing trends of the next decade. Revenue from location-based wireless services in North America will increase more than 100-fold, from less than $30 million in 2000 to $3.9 billion by 2004, according to market researchers at The Strategis Group.

    Although handheld computers and cellular phones are fertile ground for location-based ads, many say the automobile has much greater potential.

    The market research-intensive automobile industry has already collected a wealth of data on customers, ranging from household income and educational status to mortgage applications and satellite TV preferences. If automakers share that data with third-party retailers, they could pinpoint advertisements and thrust them on a captive, targeted audience.

    Letting advertisers subsidize the cost of onboard navigation and concierge systems is another advantage. Although navigation systems and onboard cellular services are relatively common in Japan, American customers have been far less willing to pay for the services. Huber said advertisers may eventually subsidize a fraction of the cost of OnStar, which ranges from $199 to $399 annually.

    Automatic emergency calls
    OnStar's Virtual Adviser service is conducted through a hands-free, voice-activated phone. The driver hears a computerized voice through the vehicle's stereo speakers, while a microphone embedded in the vehicle's headliner picks up the driver's commands.

    Beginning later this month, Virtual Adviser customers will be able to hear numerous types of Web-based information, including updated stock prices, weather and sports scores. Customers must first select which information they want to hear by filling out an online questionnaire. Sunnyvale, Calif.-based General Magic provides the voice-activated user interface (VUI) for the Virtual Adviser's Web content.

    Roughly 800,000 people subscribe to OnStar, and the GM division is expecting dramatic growth. Toyota features optional OnStar service in its luxury Lexus vehicles, and Honda will feature it as an option on its luxury Acura models beginning in the second quarter of 2001.

    OnStar equipment is currently included in roughly one out of four GM vehicles, and about 5,000 new customers sign up for the service every day. It is offered as a standard or optional feature on all GM vehicles except for compact cars, such as the low-end Chevy Cavalier. OnStar debuted two and a half years ago as an option on Cadillac luxury sedans.

    OnStar comes in two levels of service. The Safety and Security package, which costs $199 per year including all per-minute cellular charges, features a single emergency button that links to OnStar customer service representatives at call centers in Troy, Mich., and Charlotte, N.C.

    Representatives can remotely open the car doors if a person is locked out, or conduct simple diagnostic research if the car stalls. The service also sends out an emergency call if the air bags deploy, in which case a representative will either confirm that the driver is safe or dispatch an emergency vehicle to the site.

    "Premium" service costs $399 per year including all per-minute cellular charges and is only offered on Cadillacs. It includes all the Safety and Security features as well as routing assistance for 5 million points of interest in North America. A concierge service is also included, in which a call center representative will purchase tickets or make reservations at local entertainment events and restaurants.