Touchmedia CEO Micky Fung, 49, has placed more than 3,000 interactive, PDA-like screens on taxi headrests in Shanghai and will start adding thousands of screens in other cities next month.
Although seat-back taxi screens have been tried in the U.S. and other countries, Mr. Fung's China effort is unusual in a number of ways: Passenger interest is high, only a desirable target market of affluent Chinese can afford to take taxis and the content is fairly sophisticated. And major marketers are very, very interested.
The touch-sensitive color LCD screens play ads and video, but they also have icons that let consumers interact with brands, choosing the content they want to see.
According to Touchmedia data, 89% of passengers play with the screens. Each icon attracts at least 200,000 viewers, and the best icons get more than 350,000 viewers for more than three minutes each. Marketers receive reports detailing how many passengers saw their videos and entered their sites, analyzing what they did in each area.
"Advertisers are amazed to get this detail and be able to measure precisely their return on investment," said Mr. Fung, whose strong New York accent belies his Chinese heritage (his family immigrated to the U.S. from Hong Kong when he was 6).
Marketing programs on the platform cost $26,700 for one month in 1,000 taxis and include brand-building games; promotions; product demonstrations; and market research for brands such as Heineken, Chivas, Virgin and Nokia.
HSBC created a game promoting a golf tournament next month in Shanghai that allows users to "play" the 18th hole of the course, while Estée Lauder is promoting its upscale products alongside beauty tips for women.
Other marketers using Touchmedia include Procter & Gamble, Yum Brands' KFC, Volkswagen for its Polo and Skoda models, and Standard Chartered Bank.
The main appeal of Touchmedia is its location. Taxi passengers are almost certainly among the sliver of the population that can afford upscale products and services, given that they can afford to ride in a cab in the first place.
"Being taxi users automatically puts people looking at our screens in the top 10% of the Chinese population in terms of income," Mr. Fung said.
Ninety-six percent of frequent taxi users are 21- to 49-year-olds, 98% are white-collar workers and 45% have manager-level jobs, according to Sinomonitor. The average ride is 18 minutes long.
Christina Aguilera fans
"Touchmedia's in-taxi advertising is simply the most cost effective way to reach affluent white-collar residents of Shanghai and Beijing," said Jonathan Krane, CEO of Shanghai-based event organizer Emma Entertainment.
More than 4 million people watched videos promoting a Christina Aguilera concert in Shanghai earlier this year on Touchmedia screens. Emma's internal research indicated 49% of ticket buyers reserved them on a hot line they learned about from a ticketing icon on Touchmedia screens.
Mr. Fung started the company in late 2002, with plans to do a national rollout within six months, but the first units failed.
"There were problems with humidity, vibration, dust, the poor condition of many of the vehicles, and drivers didn't like them. They were also too expensive," he said. It took him three years to develop cheaper units, spending almost $4 million on research and development. He got the idea for Touchmedia after visiting his brother, who owns a taxi company in Fuzhou, in southeastern China.