Food-delivery apps are playing a deeper role in advertising as they struggle for revenue
DoorDash has also built an advertising platform that lets restaurants buy placements through a bidding system without the help of an ad-sales person. Restaurants pay for sponsored listings only when users click through the ads and order. DoorDash said the self-serve system is designed to help local restaurants promote their brands.
“Any mom-and-pop can walk into a shop, set a budget, and we only collect dollars when we receive a transaction,” said Toby Espinosa, DoorDash’s vice president of ads. Buyers can choose to direct their sponsored listings to new customers, existing customers, or all customers, but DoorDash hopes to expand targeting categories to include other groups of users, such as repeat burger buyers.
In addition to new services for restaurants, DoorDash is launching “featured listings” for consumer packaged goods brands to increase their placement in the convenience and grocery categories.
The move comes as a growing number of consumer-facing businesses, including Walmart Inc.
and CVS Health Corporation
, is providing advertisers with more ways to reach consumers using retailer data.
DoorDash, founded eight years ago, made a profit in the second quarter of 2020 as demand for home delivery in the Covid-19 pandemic fueled demand for home delivery, but it never turned an annual profit, according to paperwork filed for its initial public offering last year. . reported it net loss of $102 million in the three months ending June 30. The company says that there are more than 450,000 merchants selling through its platform.
But DoorDash is wary of locking consumers into the competitive food-delivery business by removing too many ads in its app. For restaurants, it will only display a sponsored list at the top of search results or in cuisine-specific sections of the app. For other areas, such as grocery, convenience, pet or alcohol categories, it will allow two ads.
“We cannot tamper with the consumer experience. You’ll never see us going overboard,” Mr. Espinosa said. “We’ve built an advertising platform that’s striving to align incentives between advertiser, consumer and DoorDash.”
DoorDash declined to disclose how much of its revenue comes from ad sales or how much revenue it expects to generate from new advertising products. The company said that its goal for its advertising services is to drive the success of its merchants, not just its own profitability. “We think this connects us with our merchant partners, creating the best long-term results for everyone,” said a DoorDash spokesperson.
DoorDash has more than half the US market share for delivery apps, ahead of competitors including Grubhub Inc. and Uber Technologies Inc. NS
Uber Eats and Postmates, according to Businesshala Second Major, a consumer data analytics company.
But each company is increasingly vying for not only consumers but also advertisers.
Uber, which has a growing advertising business, debuted sponsored listings in its Uber Eats app in the US last year with a pay-per-click model that asks merchants every time a consumer clicks on an ad. Charges a fee, even if they don’t make a purchase. Grubhub runs a marketplace that lets restaurants secure better placements in search results and provides other marketing support on a commission-based system. That company’s chief executive said earlier this year that advertising is the key to the company’s future profitability.
Nicole Milnathorpe, chief financial officer of Florida-based casual dining chain Smokey Bones, said her company works with several outside delivery companies but its primary partners are Uber Eats and DoorDash. With 60 full-service Smokey Bones restaurants in the US, two ghost kitchens and two delivery-only chains, he said a variety of advertising tools give chains flexibility.
“Different markets respond differently to different types of marketing,” said Ms Milnathorpe.
According to Ms Milnthorpe and, Smokey Bones ran an advertising test on DoorDash’s search results and the keyword “barbecue” in the app’s barbecue category, and saw a more than 30% increase in deliveries from the group of consumers who saw the ads. DoorDash.
“What we’ve seen from other partners or other advertising metrics is based on impressions, and it’s very hard to compare impressions to actual orders,” she said. “Payment for an acquisition is a very clear metric.”
Megan Graham at [email protected]