Uber Follows Amazon, Unveils Ad Business

Uber Follows Amazon, Unveils Ad Business

Uber needs profitability because its public share price has become an international yoyo, about 50% less than its last rumoured private valuation. One new plan in the playbook is to run adverts in its UberEats. If that becomes successful, Uber could make a strong case that its future is assured before those concerned investors.  Interestingly, selling ads in UberEats is a great vision because it is likely going to be far more effective to tell someone who is looking to eat, a place to eat, than showing ads to someone, as Google does, who may just be researching “eating”. My point is this: merchants and owners of restaurants may get better value on UberEats that whatever they get on Google.

Uber will become an ad platform, selling space inside its Eats app to restaurants hoping to lure in more food delivery orders. A recent Uber job listing spotted by TechCrunch seeks an Uber  Eats Ads Lead “to lead the team and efforts responsible for creating a new ads business that enables eaters to discover new foods and restaurants to grow their customer base.”

An Uber spokesperson confirmed the company would be entering the ads business, telling TechCrunch, “We are exploring relevant ads in Eats.” Selling ads could help it improve margins on Eats, where it only takes 10.7% of gross bookings as adjusted net revenue because it pays out so much to restaurants and drivers.

This mirrors the Amazon playbook where the ecommerce giant sells ads in its ecosystem. The Amazon ad business remains a very big growth area in Amazon, and is systematically picking some market share from Google. Yes, over time, merchants have realized that Amazon ads business has a better conversation ratio than Google’s. It does make sense because the Amazon visitor has come to spend money unlike Google which shows ads to visitors who may be visiting for something unrelated to shopping, relying erroneously on search keywords.

As Uber moves deeper into adverts – “The effort is separate from Uber’s own marketing efforts that see it spend more than $1 billion per year to recruit riders, drivers and Eats customers. Uber will start selling the ads, not just buying them” – Yelp, a restaurant discovering ecosystem, may have new challenges as most merchants may decide to spend money on Uber ads over Yelp. Focusing on UberEats is strategic as the unit is growing very well within the ride-hailing pioneer. You can add this as part of Uber double play.

Uber could use any revenue it can get. This quarter the company lost $1 billion, with $316 million of that loss coming from Eats. But Eats’ revenue grew 64% year-over-year, showing it’s increasingly popular, and could command enough user attention to make advertising lucrative.

As Uber looks for new markets, Google continues to advance its search. The ad leader just unveiled a new feature which makes shopping ads to appear on YouTube’s home feed and search results.

There’s a new kind of ad coming to YouTube . Google  announced today the launch of Shopping ads on YouTube, which lets brands advertise their products and services right in the YouTube home feed and search results. For example, if a user searches for “Puma shoes review,” a Shopping ad may offer a row of suggested products at the top of the page before the video results..

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