• DoorDash officially launches an advertising business with new advertising formats.
  • The food delivery service explained how it tries to differentiate itself by showcasing data on its millions of users.
  • It also offers features like the ability to target people based on their purchase history.
  • See more stories on the Insider business page.

DoorDash is officially launching a full-fledged advertising business that aims to capture performance advertising budgets from Google, Amazon, and other retailers.

The food delivery company is rolling out new ads on its website and app for small restaurants, large chains like Burger King, and consumer goods makers like Kellogg’s, Procter & Gamble and General Mills.

With the push, DoorDash is trying to stay on top of the food delivery wars and compete with the advertising companies of Uber and Instacart. He also sees advertising as a way to compensate for the low profit margins of food delivery.

DoorDash has a long history of offering restaurants promotions such as free delivery to gain new customers. He started creating self-service advertising products 18 months ago, like the one for restaurants that tops search results.

With its new advertising products, DoorDash offers advertisers data on its 20 million monthly users, such as restaurants that people order from and whether they are a first-time or repeat user of DoorDash. For example, Burger King can’t target ads to McDonald’s customers, but can target people who love fast food, said Toby Espinosa, vice president of ads at DoorDash.

“Marketers really wanted pure ads – they wanted ways to reach new consumers and existing consumers,” he said.

DoorDash also tries to make sure people get ads that match their buying preferences. So a small business owner may pay less to advertise to a consumer who prefers to buy from such small businesses, while chains will pay more to reach the same person, Espinosa said. In this sense, this new advertising platform standardizes the rules of the game for independent restaurants.

The advertising blocks for CPG companies complement DoorDash’s move to its new line of business: on-demand grocery shopping. Brands can buy the first search ad space in the grocery section of DoorDash – similar to the ad formats Amazon, Walmart, and Instacart offer to advertisers.

Unlike competitors like Amazon who saturate their websites with ads, Espinosa said DoorDash will limit the number of ads on its platform. For example, each search result will only display one ad at the top of the page. And DoorDash’s engineering team designed tools to limit the number of exposures so that people weren’t repeatedly bombarded with the same banner ad – a tactic that could avoid annoying people but also cap it down. DoorDash advertising revenue.

Espinosa declined to comment on the size of DoorDash’s advertising business or its growth target, but said the company grossed $ 1.5 billion in sales to advertisers in the past year. EMarketer estimates that advertisers will spend $ 24 billion this year on e-commerce ads, with most going to Amazon.

DoorDash has also learned lessons from the retail media industry. DoorDash plans to price its ads based on how e-commerce ad buyers are used to transacting. DoorDash currently bills restaurants if someone clicks an ad and places an order, and charges manufacturers of packaged products a flat fee to advertise. But it plans to launch the common cost-per-click (CPC) and cost-per-thousand (or CPM) ad buying mechanisms.

Espinosa said DoorDash is also testing a second-price auction similar to Amazon, Instacart, and eBay. In such auctions, the highest bidder usually pays a penny more than the second bidder. If the highest bid is $ 2 and the second highest bid is $ 1, the winning advertiser might end up paying only $ 1.01, for example. Second-price auctions are widely favored by advertisers because they keep ad prices low, and sellers like second-price auctions because they keep ad prices competitive.

DoorDash has already hired advertising workers from Pinterest, Amazon, Google and Facebook and plans to hire more in the coming months.

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