‘The holy grail of e-commerce advertising’: Why DoorDash is bolstering its advertising offerings

Animation of a person scrolling on their phone.

DoorDash is beefing up its advertising offerings. 

Earlier this month, the online food ordering company rolled out self-serve sponsored listings capabilities, in which restaurateurs can purchase search-page ad units to increase their visibility on the platform. DoorDash has also recently moved to offer banner placements and featured listings. 

The eight-year-old, California-based company is looking to stand out from the competition by way of merchants paying only for orders placed via their ad, instead of paying for ad clicks or impressions, per the company. Advertising costs on DoorDash fluctuate depending on advertising goals, said Toby Espinosa, vp of ads at DoorDash. Seemingly, it’s a move to play catch up with the likes of Uber Eats, which rolled its own cost-per-click ad format with sponsored restaurant listings this time last year.

“This is the holy grail of e-commerce advertising if we can get this right,” Espinosa said.

Execs wanted to prioritize user experience for customers, Espinosa said, which led the team to initially limit the amount of ad space taken up for DoorDash users. Over time, Espinosa says the DoorDash team has “very large ambitions” with plans to improve the offering’s targeting capabilities. He did not provide further details.

“We just launched these services and I think the thing we underestimated was the power of the demand,” he said. DoorDash declined to disclose details around ad revenue. However, per Espinosa, in the first nine months of this year, those ad products generated $1.5 billion in sales for DoorDash brand partners that have utilized the platform’s advertising offerings.

DoorDash pointed to Northern California-based chain Pizza My Heart for this article. Chuck Hammers, president of the pizza chain, has been leveraging DoorDash’s new offerings for at least the last month and said the return on investment has been promising. 

“We’re really seeing the lift with sponsored [ads] for our new stores,” Hammers said, “People haven’t discovered that we’re in their neighborhood yet. [They’re] going on DoorDash, looking for something to eat and boom our sponsored ad pops up.”

However, because of the nature of DoorDash’s offering, a second price auction bidding process, Hammers says there is concern of outbidding and marketplace saturation. 

It’s a fair concern, according to Andrew Solmssen, president, California for Wunderman Thompson (WPP). While a great strategy for DoorDash, it puts additional pressure on the restaurants to pay and compete, he said. 

Still, it’s more efficient than buying media on other platforms, he added. “Once someone is on DoorDash, you know they are hungry and ready to be a customer — they don’t need to be convinced.”

If DoorDash gets it right, the online food company may set the tone for others in the space with more retail media shifting to a “pay per sale” model, according to Brad Gagne, vp of device analytics, Wunderman Thompson Apps.

Ashley Karim-Kincey, vp of media at Dagger agency, added that as first-party data becomes increasingly important, thanks to the decay of third-party cookies, retailers like DoorDash, with 20 million monthly active users, have an advantage in the retail media space.

“Advertisers can deliver smarter and more engaging content with dynamic ads and personalized experiences,” she said in an email. “DoorDash certainly won’t be the last brand to lean into this advertising space as a platform.”

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