S.K. Gupta Company: Waze Inc. (a subsidiary of Google Inc)
Industry: GPS Navigation Software
Founder(s): Amir Shinar, Ehud Shabtai, Uri Levine
Year founded: 2006
CEO(s): Noam Bardin
Headquarter: Palo Alto, CA, USA
Acquisition cost (2013): $969 Million
Products & Services: Navigation services, Waze Carpool, Waze for Drivers, Waze for Riders
Competitors: Papago | TomTom | Garmin | iOS Maps (Apple) | Here Maps (Nokia) | BlackBerry Maps (RIM) | Google Maps | Trapster.
How many difficulties have you faced to reach work on time because of annoying traffic jams?
Have you ever wished to know about everything that’s coming your way during your commute so that you drive smartly?
Well, you may have. I also wished once. Quite surprisingly, a company made it come true!
Introduction
Waze was founded with the aim of contributing to the ‘common good’ on the road. It has wonderfully improved the lives of every commuter by providing them a hassle-free, relaxing and smart traveling experience. With the use of GPS navigation software, Waze provides users turn-by-turn navigation data via smartphones and tablets with GPS support. It signals you about the potential traffic jams and suggests you optimal, shortest and fastest routes to your destination.
And, that’s not all. It also gives you travel times and route details submitted by other users of Waze. It gathers most accurate and latest information from the drivers who are on the route and choose to share the real-time traffic and road information to save the time and gas money of other riders. Waze is one of the world’s largest Crowd Sourcing navigation applications.
So, car accidents, traffic jams, road closures, police traps and all kind of unpleasant events can be prevented along the way using Waze. With Waze Carpool, you can find your co-workers and friends commuting on your route, coordinate their arrival times and catch up.
Free to download, easy to use and quite helpful, this app provides updated maps to make you outsmart traffic by working together. All you have to do is type in your destination address and drive with Waze app open on your phone. You can also take active participation by sharing the current road situation with other users to give them a ‘heads-up as what’s to come.’
How Does Waze Make Money?
Since Google has acquired Waze in 2013 for around $ 969 Million, questions like:
Why Google needs Waze and what was the purpose of acquiring such company which makes no money keep popping up in the minds of many people.
Google, being the world’s map leader, didn’t find only Waze’s navigation system interesting for making such hefty purchase but the real crux lies in the increasing popularity of the app. Over 100 million drivers are currently using Waze to avoid traffic and road hazards.
Thus, the social data of millions of people as well as the real-time traffic information possessed by Waze compelled Google to clinch the deal. For Google, it was reasonably cheaper to gather up-to-date navigation data of large audience through Waze acquisition as it has to spend massive expenditures on obtaining location information.
Now that you know all about the Waze acquisition and its free services, your question; how does Waze make money’ is justified. So, here we have presented Waze revenue model to give you an in-depth insight into the company’s revenue streams:
Before we move on, I want to share another lucrative benefit Google earned through Waze acquisition. If you see through the advertising viewpoint, Waze is quite valuable to Google due to its self-service advertising service.
And, that is your answer! Advertising is the primary revenue stream of Waze through which it makes money.
1. Location-based Brand Advertisements
Waze provides an opportunity for businesses to advertise their brands to the drivers along their way. It allows companies to claim their listings in the app and advertise their locations when drivers approach the listings.
Through Waze, brands of coffee shops, restaurants, and grocery stores show their ads like new deals and discounts to the drivers depending on their nearby location and time. They can get many perks like targeting nearby drivers, tracking in real-time, and setting their own budget to spend on advertisements each month.
See the following ad formats through which brands can show their ads to drivers on Waze:
- Branded Pins – These branded pins are dropped on Waze maps which are like a store sign. It shows up when the user is driving. These branded pins raise company awareness and draw in on-route customers to the stores.
- Zero-Speed Takeovers – It’s a digital billboard that pops up when the drivers come to complete stop at least for 3 seconds. For example, at a traffic stop light.
- Promoted Search ads – These are displayed when the driver is searching for a restaurant, shopping malls, movie theatres, etc.
Branded Pins
Zero-Speed Takeovers
Promoted Search ads
Pricing
According to Waze pricing, companies can start by spending only $2 per day on their advertisements. Have a look at the below two pricing strategies of Waze for brand advertisements:
Small Customers: 1 -10 locations
- Starts at $ 2 per day
Large Customers (big brands): multiple locations (1-50)
- Starts at $ 100 per day
Thus, this app is so much a lure to advertisers to reach an extensive audience that they are happy to pay Waze its advertising costs.
Examples
Restaurant & Stores
Let’s take an example of Dunkin Donuts.
Waze offered its advertising products to Dunkin Donuts at the minimum price of whopping $850 a day. Well, as high as these costs are, benefits are also massive for these companies.
Drivers can place their orders ahead of reaching the restaurants/stores and even avail discounts on new deals if active, which of course, benefits the businesses. As of now, advertisers are charged on a cost-per-thousand impressions basis.
Gas Stations
Another unique feature offered by Waze is its suggestions to the drivers about the nearest and cheapest gas stations to fill up while saving some gas money.
For this, Waze has partnered with several gas stations for mutual monetary benefits. Many gas stations use Waze to advertise their businesses and reduced real-time gas prices.
2. Waze Carpool Commission
Unlike Uber and Lyft that connect professional/part-time drivers with riders, Waze Carpool encourages the regular day drivers to do carpooling. After verifying people’s workplaces by their email, Waze allows drivers two carpools a day. In this regard, it has partnered with several schools and organizations like Amazon to motivate people to use this feature.
Amazon employees can, therefore, carpool with their co-workers through Waze to get to the workplace which saves them both time and money.
The riders are charged at 54 cents-per-mile. Also, there are other factors that determine the cost of each ride.
Below is the price breakdown for Waze carpool:
- Base price – On the basis of route and number of riders in the carpool, Waze calculates the base price for affordable commuting.
- Number of riders – Driver can accept as many riders as he/she wishes. Prices may vary on riders’ joining or leaving the carpool. However, it won’t exceed the original price shown at the time of ride confirmation.
- Service fee – Waze has currently waived service fees.
- Subsidies – Riders can sometimes get subsidies and may pay lower prices than the driver gets.
Following are key points about Payment Terms in Waze:
- Rider is required to pay the costs if Driver charges for the ride.
- Prices should be mutually agreed between Rider and Driver prior to the ride confirmation.
- A driver can pick multiple riders if he/she has enough seats and can charge from each rider.
- Prices can vary if other riders join or leave the carpool. Thus, payment for each rider may reduce if other riders join in or increase if they leave the carpool. These changes can be viewed in Waze Carpool app.
- Payments are to be made through Waze Carpool platform.
- Google may deduct a commission from the Driver’s Payment. ‘Reimbursement’ is the amount received by the driver.
- Riders need to pay drivers at the end of the ride which will be completed once the Driver drops the Rider off at their destination. They’ll also be required to share their feedback regarding their trip.
Final Words
Waze is based on the simplest idea of mapping and navigating users along their way but how interestingly it has progressed thus far is really commendable. Although many companies are on the same track of providing navigation services to users, Waze is an exception with its unique app features, attractive layout, excellent user services, and efficient tech systems. It wouldn’t be a bit of stretch to say that this community-focused and driver-supported navigation app has truly achieved its aim of contributing to the common good for the world.
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Ava Abbott
Brianna Parker
Kevin Johnson
Please mention the author and the original publicity date?
Author: SG
Date of publish: March 29, 2019