Will advertiser-sponsored free charging play a significant role in the buildout of EV charging infrastructure in the US?
When you think of electric vehicle charging networks in the US, names like ChargePoint, Tesla Supercharger, Electrify America, EVgo, Blink, and perhaps others first come to mind. But San Francisco-based Volta is quietly building out a significant charging network in the US by taking a very different approach than the other networks.
What strikes you immediately in a conversation with Mercer is not only that he clearly is very smart and a natural-born entrepreneur, but that his mission to help foster the adoption of EVs is equal to his passion to build a great business.
As a marketer for 35 years, what is especially fascinating and exciting for me about Mercer’s vision for Volta is that the company is taking a completely different approach to building out EV infrastructure than virtually every other EV charging company. Mercer shared that Volta is fundamentally driven by three goals: “We want to (help) sell electric cars, we want to bring people to the properties as an amenity, and we want to use the screens as an opportunity for brands to advertise their products.”
Volta History: 2010 Through 2019
In 2010, and only two years out of college with a degree in finance, Mercer quit his job at a car restoration company and moved to Honolulu, Hawaii. With seed money in hand, he and a partner launched a pilot of the Volta concept in 2012. A new electric vehicle charging law in Hawaii helped spur interest in EV charging among local businesses and the ad-based charging concept was tested with Whole Foods at a popular Honolulu shopping mall.
In 2014, with the successful pilot proven in Hawaii, Mercer moved back to California and was joined by angel investor Chris Wendel, who now serves as president and co-founder of Volta. They attempted to raise a Series A round from Silicon Valley investors, but were rebuffed at first, as investors felt that being successful in Hawaii wasn’t proof that the business would be successful in the continental US.
As the concept of mobility began to emerge and it became clear to Silicon Valley that electric vehicles were not a fad, but the inevitable future, the company successfully raised a Series A round in 2015 and Series B in 2016 for a total of $27.4 million.
By 2016, Volta had 100 charging stations, located almost exclusively in California and Hawaii. As the business model was clearly now being proven out in the continental US, the company received additional rounds of funding, for a total of $99 million including a credit finance vehicle of $44 million. And as of the writing of this article, the company is now up to 930 stations. Volta would not provide me with the total number of locations, but I estimate they now have stations at between 350–400 locations (many malls have multiple stations located in different areas around the parking lots).
As covered by Steve Hanley in this recent CleanTechnica article “Free DC Fast Charging From Volta Charging,” Volta’s inaugural DC fast charging stations have now opened in October at the SoNo Collection mall in Norwalk, Connecticut. Volta plans to add 150 fast-charging stations in major metropolitan areas, including Los Angeles, San Francisco, Chicago, and Washington, D.C.
Marrying the Out of Home (OOH) Advertising Model with an EV Charging Network
While most observers probably view Volta as an EV charging network supported by advertising, my take is that the company is an “out of home” advertising network that also provides EV charging (for free).
First, many readers may be wondering what actually is “out of home” (OOH) advertising. As the term implies, out-of-home advertising is advertising that reaches consumers while they are outside their homes and includes billboards, signs, street furniture (e.g., bus shelters and benches), and digital or printed ads in airports, train stations, stadiums, and cinemas. The following are several statistics on OOH to provide some context for the size of the market that Volta participates in:
- OOH advertising revenue reached $8 billion in 2018, a 4.5 percent increase over 2017 — Out of Home Advertising Association of America (OAAA)
- OOH spend was up 7.2 percent in the fourth quarter of 2018 compared to 2017, representing the greatest quarterly growth since before the Great Recession of 2008 — OAAA
- Digital platforms (e.g., similar to Volta) represented 29 percent of total 2018 OOH revenue.
- Ranked in order of OOH spending, the top 15 advertisers in 2018 were Apple, McDonalds, Geico, Netflix, Google, American Express, Metro By T-Mobile, Amazon, M&Ms, Chevrolet, Facebook, Universal Pictures, Coca-Cola, AT&T, and Comcast. — OAAA
- Of the top 100 OOH advertisers in 2018, one-quarter were from the technology sector and include Facebook, Amazon, Apple, Netflix, and Google.
- OOH drives 4× more online activity per ad dollar spent than TV, radio, or print. — Nielsen study
In reading comments on previous articles here on CleanTechnica and elsewhere, one of the misconceptions I often see is the idea that the ads from their charging station displays are only seen by the people who are charging their EV. But in fact, individual Volta’s ads are viewed daily by potentially hundreds or thousands of consumers who walk, bike, scooter, or drive past the digital displays.
The photo below is at a small upscale suburban mall located not far from where I live. The two Volta displays are located next to the main parking lot road and in front of the mall’s main entrance and near a busy fitness center. To the right of the stations is a movie theater which also brings a lot of car and foot traffic past the displays, especially of course on weekends.
The goal of Volta’s ad network, like any other, is to create visibility for brands and drive sales. Volta uses ad research firms such as Nielsen to track impressions, lifts in brand awareness, and sales. Individual stores are also increasingly conducting their own pre- and post-advertising sales analysis.
If Whole Foods, for example, promotes a specific organic milk product on the station displays in front of their stores, they can track sales before, during, and after the ads run to determine sales impact and advertising ROI. The model and advertising seem to be working, as Volta continues to add new advertisers and retain existing advertisers.
Location, Location, Location = Advertising Reach
The old real estate adage of “location, location, location” is overly simplistic, but it is fundamentally at the core of Volta’s strategy. While the company’s business model is selling advertising and not charging, its focus is on putting its charging stations in the right metropolitan areas where demand for charging is also the highest.
Mercer told me that Volta’s location strategy is to target the 15 largest DMAs (Designated Market Areas), but then prioritize them based on overlaying EV sales and other data. Volta uses data modeling and machine learning to determine current and future charging needs in order to place stations in high-traffic locations that also have consumer demographics that are attractive to advertisers, and where electric vehicle owners are likely to spend time.
Like any advertising network, brands are looking to most efficiently reach the right target market across a geographic area. As such, Volta’s strategy is to build out its network widely in each individual market it enters so that advertisers can have a strong reach and make an advertising buy across the entire market. In other words, Volta has built an advertising sales model that is in sync with exactly how media buyers at brands and agencies are used to buying ads.
Volta’s advertising model is, however, flexible and attractive to both local and national advertisers. Mercer shared, for example, that a Hawaiian bank, one of the company’s first customers, still advertises on the station located in front of its bank. On the other hand, large brands like Jaguar will advertise across every location within a specific market. An emerging opportunity for Volta is what is called “programmatic media buying.” This is computer-driven media buying that basically purchases available ad inventory, often using a bidding process. While not a major part of Volta’s business and revenue, programmatic buys enable the company to “fill in” advertising between the regular media buys.
A high percentage of Volta’s charging stations are located at shopping mall parking lots. However, they are also located at sports stadiums, universities, hospitals, and individual retailer locations. (See the Volta Charging Overview table above for examples.)
Volta is currently expanding local networks in Boston, New York, Atlanta, and Dallas and is targeting triple digit year over year (YoY) network growth within target metropolitan areas over the next 5 years. With nearly 930 Level 2 charging connections in the US, Volta ranks as the #7 network in the US based on number of Level 2 connections.
While well behind ChargePoint, Tesla Destination Charging, SemaCharge, and others, with Volta’s geographic-market-based location approach, it likely has a greater number of connections in certain markets than some of the larger networks. In reviewing several markets on the Volta station map, I discovered that most locations have 2 connections with some having just 1 and several with 4 (or more) stations.
The location with the most connections that I found is the Glendale Shopping Mall, which has two separate charging station areas at the mall for a total of 26 connections. This seems to be part of the Volta model, as I noticed that at several malls, like the Oakbrook Mall in Illinois (screenshot below), Volta has 6 different locations in the mall parking lot, with 2 stations at each area.
Mercer told me that Volta’s charging stations have a “70–80% utilization rate, about 3 times that of other charging networks.” (Note: I don’t have access to third-party data to verify this, but Mercer says he does have the data.)
Future Plans and Competition
Volta’s near-term focus is building out its fast charging stations and expanding Level 2 stations within its existing markets, but the company has several new features in the works and many future possibilities. These might include enabling brands to offer instant downloadable offers and coupons from the Volta mobile app, custom promotions, contest entries, and enabling social media engagement with the stations.
As for competition, Mercer tells his team that the other charging networks are not the competition, but rather the existing oil company–driven fueling ecosystem. And while advertising is core to the Volta business model, the vision is for Volta to help create and build the “fueling infrastructure of the future.”
Volta’s ad/sponsorship approach to free charging looks to grow in popularity, but it is unclear if many other charging networks will adopt this or similar approaches. Mercer shared that he has seen a few other companies unsuccessfully attempt their model, as it takes a lot of effort to understand and get the advertising aspect of the business right. To that end, in the future we might see outdoor media companies approach some of the EV charging station networks to form partnerships and leverage each others’ respective expertise and networks.
I can also envision a future where EV charging follows a similar model to how hotels charge for WiFi. When you stay as a guest, regular WiFi is free, but if you want faster Internet access and download speeds, you have to pay. Many restaurants, hotels, and malls already offer free Level 2 charging to paying customers, but in the future may offer DCFC at prevailing rates or offer discounts to members of loyalty programs.
One concern some readers and people in the industry may have is that Volta’s model is based on targeting markets that are “attractive to advertisers,” and to date this means mostly in upscale or higher-income areas. While this is probably a fair criticism, for now Volta is simply locating stations where EVs are concentrated. As EVs go mainstream and reach into lower-income markets, I would expect Volta and advertisers to follow.
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