The company has been in the news lately for its aggressive marketing tactics, but this time it’s with a new feature called Search.
DoorDash, a food delivery service that is currently available in the US, has introduced search. The company has released this new feature to help customers find what they are looking for faster.
As businesses in the mostly unprofitable food-delivery sector delve further into advertising to generate income, DoorDash Inc. has begun selling restaurant advertisements that show above the search results on its app.
Before testing the technology earlier this year, the business allowed advertisers pay to run advertisements promoting free delivery or discounts, as well as banner ads, but it didn’t provide ads above its search results.
DoorDash has also developed an ad platform that allows restaurants to buy ad spots via a bidding system without the assistance of an ad salesperson. Restaurants only pay for sponsored listings if customers click on them and place orders. According to DoorDash, the self-serve approach is intended to assist local eateries promote their brands.
Toby Espinosa, vice president of DoorDash Ads, said, “Any mom-and-pop business can go in, establish a budget, and we only take money if they have a transaction.” Purchasers may target new customers, current customers, or all consumers with sponsored postings, but DoorDash wants to extend targeting categories to include additional user groups, such as regular burger buyers.
DoorDash is introducing “featured listings” for consumer packaged goods companies to improve their ranking inside the convenience and grocery categories, in addition to the new restaurant services.
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The move comes as a growing number of consumer-facing companies, such as Walmart Inc. and CVS Health Corp., are providing marketers with additional methods to contact customers via retailer data.
According to papers submitted for its first public offering last year, DoorDash, which was established eight years ago, made a profit in the second quarter of 2020 when demand for home delivery soared early in the Covid-19 epidemic, but it has never made a yearly profit. In the three months ended June 30, it recorded a net loss of $102 million. According to the business, it has over 450,000 merchants selling on its platform.
However, DoorDash is cautious about alienating customers in the competitive food-delivery market by cramming too many advertisements onto its app. Only one sponsored listing will appear on top of search results or in cuisine-specific areas of the app for restaurants. It will enable two advertisements in other categories, such as supermarket, convenience, pet, and alcohol.
“We can’t muck up the customer experience.” Mr. Espinosa said, “You will never see us go far overboard.” “We’ve created an ad platform that tries to match incentives between advertisers, consumers, and DoorDash.”
During the epidemic, demand for meal delivery has increased, but businesses are battling to stay afloat. Delivery services are battling for market share in a highly competitive sector, while also being pressured to reduce commission rates and offer greater protection to their employees. Jaden Urbi/WSJ video/photo
DoorDash refused to say how much of its income comes from ad sales or how much money the new ad items are expected to bring in. The business said that the aim of its advertising services is to increase the success of its merchants, not simply its own profits. “We believe this better aligns us with our merchant partners, which benefits everyone in the long run,” a DoorDash spokesperson said.
According to Bloomberg Second Measure, a consumer data analytics firm, DoorDash has more than half of the U.S. market share for delivery apps, beating out rivals such as Grubhub Inc. and Uber Technologies Inc.’s Uber Eats and Postmates.
However, companies are increasingly competing not just for customers, but also for advertising.
Last year, Uber launched sponsored listings in its Uber Eats app in the United States, using a pay-per-click approach that compensates businesses each time a customer clicks on an ad, even if they don’t make a purchase. Grubhub operates a marketplace that allows restaurants to improve their search engine rankings and offers other marketing assistance on a commission-based basis. Earlier this year, the company’s CEO said that advertising is critical to the company’s future profitability.
Nicole Milnthorpe, chief financial officer of Smokey Bones, a Florida-based casual dining business, said her firm works with a variety of outside delivery providers, but Uber Eats and DoorDash are its main partners. She said the businesses’ versatility comes from having 60 full-service Smokey Bones restaurants in the United States, two ghost kitchens, and two delivery-only chains.
“Various markets react to different kinds of marketing in different ways,” Ms. Milnthorpe said.
According to Ms. Milnthorpe and DoorDash, Smokey Bones conducted an ad test on the key phrase “barbecue” in DoorDash’s search results and in the app’s barbecue category, and observed a more than 30 percent boost in deliveries from the group of customers who saw the advertisements.
“A lot of what we’ve seen from other partners or simply other advertising analytics is based on impressions, and it’s very difficult to correlate one impression to an actual order,” she said. “A pay-for-acquisition measure is very clear.”
Megan Graham can be reached at [email protected]
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DoorDash, a food delivery service, has introduced search to their app. The search feature allows users to find restaurants and see the estimated time it will take for them to arrive. Reference: doordash revenue 2021.
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