Will telematics be hit by the recession?

telematicsThe economic perils facing the country are on the minds of the Lab’s practice leads. Contractions in aggregate spending are clearly going to impact consumers and marketers in Digital Out of Home, Gaming and Mobile.

As the person who focuses on Telematics/Infotainment (T/I), I know this space too will suffer in a down economy. SiriusXM stock has been crushed because of a combined slowdown in unit sales tied to new cars, and a slowdown in unit sales tied to consumers wanting to add the service to their existing cars. Sales of personal navigation devices (PNDs) heading into the holiday season will slow both because of the economy and because of the move by more and more automakers in developing their own “in-car” solutions. In short, slow downs and retrenchments will be seen across the spectrum.

The digital landscape however will continue to grow and show value. Those that use the downturn to re-double or establish their efforts will emerge in a stronger position. What we see here at the Lab is that people don’t suddenly become non-digital based on their own personal economics. “Digital” is a behavior for more and more consumers. Trends do not indicate that the general population over time will be less “digital” –even if their pocketbooks are hurting. Certainly we can expect that in these times they may not upgrade to a new device and may delay the purchase of digital devices–but their digital consumption will continue. They may change their mobile plan to one that costs less but they will not give up their mobile device. Consumers may also reduce the amount of viewing options in their cable package, but they will not likely give up their broadband connection.

Nothing about the above should be viewed as a reason to stay out of or away from T/I (or any other category at the Lab). The reality is, the automakers that remain focused on T/I understand that it is key to their future product set and that will not only be viewed as a value-add by their consumers but as a normal means of interfacing digitally; individually and collectively we become more “digital” over time, not less. When consumers emerge from all this, they are not going to use their disposable income to go on a magazine subscription spree. They are more likely to upgrade to the newest phone, get the coolest PND, or buy that car with the most tantalizing bits of technology possible. Marketers who position themselves to be first in line when consumers accelerate their digital profile will be the winners. Marketers who begin work now to understand Location Based Services, GPS or develop partnerships with automakers to enhance the value proposition of their “in car” systems will take and hold market share against those that ran scared.