Waze begins monetization push with location-guided ads

Waze, a crowd-sourced navigation app, has become an important free tool for 30 million users, who spend an average of 440 minutes a day in the app each month. That’s a lot of people spending gobs of time telling Waze where they’re going and what they’re stopping for on their trips.

Waze, location-based adsNow the company is hoping that’s a recipe for serious revenue as it turns on its first location-based advertising platform called Waze Ads. Retailers and brands can pay to insert themselves into Waze’s maps and search results when their locations are on the route of Waze users. So when a Waze user launches the app to navigate to work, home or some other location, they will be able to see ads and discounts from a gas station, restaurant, coffee shop or store pop up on their navigation map. Waze will not show more than three ads on a map at any given time.

Waze said what makes this different from other location-based ads is that it can understand where people are headed because they set their destination, not just where they are at the moment. That allows it to show ads that are relevant to users and only appear along the route towards a destination.

Waze could track where individuals have visited in the past and target ads based on that, but it wants to be careful about that. So it’s using more general group data to serve up what people might want. For example, it might know that a person visits Starbucks (s sbux) every day, but it doesn’t want to serve that person with only coffee ads because it could be creepy knowing that Waze is tracking your every move. But in the future, Waze is looking at how it can layer in more data from users, including Facebook (s fb) likes and other user behavior.

Waze, location-based adsThe company said 20 percent of users already search and navigate to restaurants while in the app, and 15 percent search for fast-food establishments and 10 percent for coffee shops. Waze surveys have also found that more than half of the service’s users routinely make pit stops along their routes, with 30 percent doing so to shop.

Waze Ads is launching in the U.S. with advertisers such as Dunkin Donuts, Circle K MACS, Kum & Go, Wyndham Hotels, Jamba Juice and Procter & Gamble. Some will offer discounts to users, while others can just advertise their location or ask for users to download an app. Waze is looking at employing payment tools to help confirm when a user spends money as a result of seeing an ad impression. It recently integrated with CardSpring to sync offers to debit and credit cards and will look at rolling that out in the future.

The launch of the mobile ad platform follows a test of ads for gas stations in June.