Uber Moves into the Advertising Business

Industry |

Uber has announced that it will enter the ads business by selling space to restaurants in its Eats app. 

It is hoped that selling the ads within the Eat app will increase revenue in Eats and improve Uber’s margins by increasing the number of food deliveries.

Uber has seen a significant drop of 40% in its share values since June as investors sell their shares after the expiration of the IPO lock-up.

Ads are seen as an opportunity to redress the balance and turn around the pressure on Uber's stock. The company has already launched a recruitment campaign to hire talent who can make the plan reality.

Uber Eats

In December Uber introduced 'Specials' which enabled restaurants to be featured if they would offer a discount. This gave a good indication of how well Uber could move a user towards individual restaurants. 

The company is currently looking at several ways they can work alongside restaurants by allowing them to use the Eats app to grow their revenue, making it a more efficient app and increasing margins for Uber.

The recruitment ad for Eats says that they need an individual on board who will be looking at establishing a vision for how the ads will work as the company moves away from giving free visibility. 

Instead of simply allowing dining establishments to offer discounts the move will set up a more formal advertising arrangement.

The company is looking for someone who will take full responsibility for developing and implementing a strategy to move them forward into this new arena and to develop the app to scale it worldwide.

This project will work alongside Uber's usual recruitment campaigns. Uber invests around $1 billion each year in a bid to hire riders and drivers and steer customers towards Eats.

This investment has seen more users look to Uber as a way to get to choose somewhere to eat and order food opening the way for Uber to seize the opportunity and move towards paid ads. 

Uber is now focused on promoting Eats as it operates within its normal taxi app, hoping to pull in more people and, of course, more restaurant businesses.

There's no information on the planned look for the ads, however, they will likely start to appear when users open the app, on the home page, browse section and when users are taken to their search results. Restaurants who opt to pay will then see their ads in various parts of the platform.

Amazon US successfully moved into its ad platform eMarketer with an anticipated growth of 33% in 2019 and is aiming to take around 7.6% of the US market. This would harvest an additional $9.85 billion in revenue and make Amazon second only to Google.

In this financial quarter, Uber lost $316million from Eats even though the revenue from the app has increased by 64%. The app is popular with users so ads are a good way forward for the company who hopes to see a turnaround in its fortunes.

Overall Uber lost $1billion this quarter, so it needs a way to boost its shares and moving into new business areas is key to this. One of the ways it aims to do this is to avoid having to share its new income with drivers or the restaurants that use Eats. 

It could also look to leverage the data it collects on customer demand to help restaurants make their savings in resource allocation.

As self-driving cars are moving into the arena it is likely Uber will be an early adopter, however, it is likely to be several years before the technology can help it with its current cost burdens.