Food delivery companies make up losses with ad sales

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The food delivery business is still not profitable for most of the big players, although their markets are growing in popularity. Seeing the opportunity for a revenue stream that does not involve high labor costs or complicated logistics networks, these delivery services supplement their delivery revenue with advertising revenue, providing restaurants and retailers in food, the possibility of increasing their products in these high traffic markets.

Last week, Shipt, Target’s owned grocery and staple delivery service, expanded its advertising business by partnering with sponsored product advertising solution CitrusAd, the latter said. The partnership allows brands on Shipt to place advertisements and boost sponsored products in the buy grid with non-sponsored items, integrating marketing into consumers’ e-commerce experience.

“As we continue to develop our retail partnerships and expand the categories we serve, our team works hand-in-hand with brands to meet their unique needs and effectively reach customers,” said David Young, Vice President of Consumer Packaged Products at Shipt. in a report. “We know that many of our partner brands are already leveraging CitrusAd technology, and we are delighted that this integration makes it easy for them to optimize their campaigns. “

For now, even the top performing of these advertising companies remain a large but relatively small fraction of delivery service revenues. In 2020, for example, Instacart’s revenue totaled $ 1.5 billion, Forbes reported. The company’s advertising business, meanwhile, grossed $ 300 million in 2020, the Wall Street Journal reported. However, the delivery service plans to increase that advertising activity to $ 1 billion this year, a more than three-fold increase.

“A lot of Instacart’s new executive hires come from Facebook, and Facebook is an advertising company,” Dmitry Shevelenko, co-founder and president of last mile logistics robotics company Tortoise, told PYMNTS in an interview on last month. “By connecting the dots, is Instacart’s future really more as an advertising company, because of its prominent place in the buyer funnel?” “

Related News: Tortoise Moves The Focus Of Automated Delivery To The Present

In 2019, Amazon expanded its advertising activity to its Amazon Fresh grocery branch, providing sponsored product opportunities to food brands and CPGs. In June, the company expanded its demand-side Amazon DSP platform to offer in-store allocation in Amazon Fresh locations. It was reported on Sunday (September 19) that Amazon was adding more sponsored products to search results, boosting its advertising activity.

See also: Amazon Ups Sponsored Ads in searches

Restaurant delivery services are also turning to advertising sales to increase their revenue. In the spring, Ad Age announced that DoorDash was looking for a new Ad Sales Manager, and according to job postings currently posted on the Delivery Service’s site, the company is still building its new Ads team and promotions. The publications indicate that the company is advertising both for restaurants and for consumer packaged products (CPG) brands. DoorDash, Uber Eats, and Grubhub all offer Sponsored SEO opportunities, allowing restaurants to strengthen their market presence, becoming more visible to more consumers on the platform.

These businesses will only continue to grow as online food ordering becomes more and more popular.

“We’re at one of those inflection points where people are asking ‘what’s going to happen in the future? Webster in a recent conversation. “Because one could imagine that with a return to [on-premises dining], online orders are expected to decline. What we see in our numbers is that it is part of the lifestyle of some people that they would like to keep.

Read more: Paytronix CEO: Restaurants reopen, but digital control is here to stay

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NEW PYMNTS DATA: TODAY’S SELF-SERVICE PURCHASE JOURNEY – SEPTEMBER 2021

On: Eighty percent of consumers want to use non-traditional payment options like self-service, but only 35 percent were able to use them for their most recent purchases. Today’s Self-Service Shopping Journey, a PYMNTS and Toshiba Collaboration, analyzes more than 2,500 responses to find out how merchants can address availability and perception issues to meet demand for self-service kiosks.


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