Ride-hailing company Uber Technologies Inc. wants to help marketers target consumers with ads based on where they have been and where they are going.
Uber announced the new capability as it rolled out its mobility media division, offering ads across its ride-hailing app for the first time. These ads will be available in select markets at launch. The company sees huge potential for revenue growth in the new ad-targeting product, though some experts say it could raise concerns about consumer privacy.
Companies like Alphabet Inc.’s Google and Meta Platforms Inc.’s Facebook have long recorded users’ web behavior to target them with ads. Retailers such as Walmart Inc. and Kroger Co. can track when, where and how you shop for the benefit of brands that advertise with them.
Uber has been building its ad business for several years, though most of its growth to date has come from ads placed on the Uber Eats food-delivery app, said Mark Grether, general manager of Uber Advertising.
The ride-hailing ad business could grow far larger, Mr. Grether said, especially when self-driving cars become more common.
“Cars will become our next living rooms,” Mr. Grether said. “We spend eight hours a week in a car; it’s a huge advertising opportunity.”
At a February investor event, Mr. Grether said Uber’s overall ad revenue jumped to $141 million in 2021 from $11 million in 2020, and he predicted it would hit $1 billion by 2024.
The new ad-targeting product will let brands place ads using data drawn from both riders’ recent travel history and their precise geographic destinations, according to the company. If a user books an Uber to a specific retailer, cinema or airport, for example, a company could buy ads centered on that location.
Uber will also now let a single brand sponsor the entire trip, starting when a user first calls a car. These so-called “journey ads,” which will be sold on a per-trip basis instead of digital advertising’s common pricing by consumer impression, let brands show a user different ads at three points in the user’s trip: while waiting for a car, while riding in the car and upon reaching the destination.
The rider can also conduct transactions, such as clicking the ad to buy a product without leaving the Uber app, said Mr. Grether. Separate pilot programs in the U.S. and India will also include ads on in-car tablets, he said.
The geotargeting options could lead to legal complications, said Brandi Bennett, who leads the data-privacy practice at law firm The Beckage Firm.
“Precise geolocation data is what I call ‘digital plutonium.’ When you have geolocation data, you can unravel people’s lives,” Ms. Bennett said.
The Federal Trade Commission displayed a heightened interest in geolocation data by suing data broker Kochava Inc. in August, looking to halt the sale of data it said could be used to track people to sensitive locations. Kochava had previously sued the F.T.C. in anticipation of the suit.
Uber’s computers were breached by a teenage hacker in September, and in 2016 a former employee claimed that Uber staffers were able to search and review travel data for politicians, former romantic partners and celebrities like Beyoncé.
Uber has one of the tech industry’s richest data sets on users, including their credit-card numbers, home addresses and places they often visit, said Ms. Bennett. The Supreme Court’s decision to eliminate the national right to abortion presents another potential concern, as states where abortion is illegal could subpoena data on customers who may have taken an Uber to an abortion provider, Ms. Bennett said.
An Uber spokeswoman said the company doesn’t share individual users’ data with advertisers. The data it does share is aggregated information or data related to ad-campaign performance, she said. Users can opt out of targeted ads on the Uber app at any time, said Mr. Grether.
Uber’s advertising policy forbids targeting users by factors such as race, religion or sexual orientation, and it also prohibits basing ad targeting on certain types of destinations, including government buildings, hospitals and reproductive-health centers.
The company recently said it would cover the legal bills of any drivers sued for transporting women to abortion clinics. The spokeswoman said Uber will follow all applicable laws, including one recently passed in California that protects residents and businesses from lawsuits related to other states’ abortion bans.
Uber’s top competitor, Lyft Inc., officially launched its Lyft Media advertising division in August. Both companies began selling ads atop their cars in 2020.