Maximizing Revenue for Delivery Platforms with Retail Media
Delivery Apps: Rising Orders but Challenging Environment
The on-demand delivery industry, including restaurant and grocery delivery platforms, has emerged as a cornerstone of modern convenience, pushing the boundaries of quick commerce and innovative technologies.
Food delivery and ride-hailing players like Uber Eats, DoorDash, and Instacart have led the charge in the delivery industry in the US. At the same time, platforms like Delivery Hero, Careem, and Deliveroo dominate the landscape on the other side of the ocean, namely in Europe, the Middle East, and Africa.
Emerging players such as Ninja, Jahez, and Mrsool are taking the model even further, offering ultra-fast delivery options that promise to bring orders to customers in as little as 15 minutes. These platforms have changed the way consumers access their favorite restaurants and grocery stores, offering seamless, on-demand services online.
But behind this quick ordering experience that consumers enjoy hides complicated economic challenges. The rise of the quick commerce model has come with significant logistical and operational costs, placing companies in a precarious "life or death" situation and making the long-term sustainability and profitability elusive like a mirage.
Even industry leaders are not immune to these challenges. DoorDash, for example, has posted profits only once during the height of the pandemic, underscoring the financial strain delivery platforms face.
As Christopher Payne, Chief Operating Officer of DoorDash, puts it, “This is a cost-intensive business that is low-margin and scale-driven.”
Meanwhile, consumer expectations are evolving just as quickly as the industry itself. Not only are today’s consumers seeking speed and convenience but also increasingly expect personalized experiences when ordering online. They expect tailored recommendations and marketing campaigns that reflect their preferences, raising the bar for delivery platforms.
To make things even worse, add in the current macroeconomic pressures like rising inflation and geopolitical tensions, making the path to profitability even more uncertain for delivery platforms.
So, where do you go from here?
What’s the Secret Sauce for Enhanced Monetization?
While delivery platforms can reduce operational costs to inch towards the profitability path, there is another powerful tool: targeted advertising offered by Retail Media. By embedding Retail Media in their apps, these platforms are tapping into a new revenue stream, one that allows them to monetize the data they are already sitting on.
Uber Eats, Instacart, and Lyft have already embraced this shift by building their own ad businesses to offer restaurants, grocery stores, and other sellers multiple creative ad formats such as Sponsored Products and Display to promote their products directly to hungry shoppers who are in the mindset of making immediate orders.
As Dr. Mark Grether, VP and General Manager at Uber Advertising, explains the process:
"Advertisers bid on inventory, and ads are ranked based on click-through rates and conversions, ensuring more visibility in the Uber Eats feed. These ads integrate seamlessly into the user's experience, looking similar to organic content and enhancing, rather than disrupting, the browsing process."
With advanced targeting options, these ads reach users at the perfect moment, whether it is encouraging them to add a specific soda to a grocery order or suggesting chips with their burger delivery.
Can Retail Media Platforms Really Deliver?
The incremental revenue impact of advertising is already undeniable, with substantial sales lift from Retail Media for global and regional delivery platforms. Established only 2 years ago, Uber is already aiming for a $1 billion revenue goal for 2024. And, Instacart’ their Retail Media arm, Instacart Ads, is projected to bring $1.18 billion this year, growing 25.5% from the previous year.
Equally, global CPG and FMCG brands advertising on these leading platforms are also seeing exceptional return on investment. KFC campaigns on Uber Ads saw 84% sales uplift for their kid’s bucket sales. Using Sponsored Products, Nespresso’s campaign promoting their coffee capsules and innovative machines on TeknoSa and a leading grocery platform, resulted in a 3,300% ROAS. Finally, Coca-Cola’s DoorDash campaign, for example, resulted in 89% sales uplift.
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Forecasts provided by GroupM Nexus can give you an even bigger picture with the global Retail Media market expected to reach $160 billion by 2027, representing 25% of total advertising spend. Even more impressive is the profitability potential of Retail Media Ads: Sponsored Products, a.k.a Listings or Search Ads, coupled with Display Ads are expected to maintain above 80% EBIT margins across European networks through 2025.
GoWit RMA: Your Recipe for Retail Media Success
Partnering with leading delivery platforms across MENA and Europe, GoWit has developed and optimized high-performance ad monetization businesses through its best-in-class AdTech - GoWit RMA. As consumer behavior increasingly leans toward delivery services and the competitive landscape tightens, GoWit RMA empowers delivery platforms to unlock the full potential of targeted advertising through:
Using GoWit RMA, our partners in the delivery sector and their advertisers have already achieved remarkable outcomes, and the numbers speak for themselves:
When to Consider Adding GoWit RMA to Your Menu?
Conclusion: Retail Media is a New Revenue Driver for Delivery Platforms
The rise of retail media advertising within on-demand delivery apps is still in its early stages, but its potential is unquestionable. Leading giants like Uber Eat, Lyft and others have already launched their high-margin ad businesses to stay ahead of their competitors and offer more personalized deals to consumers.
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