DoorDash beefs up ad capabilities for restaurants, CPG brands

Dive Brief:

• DoorDash today launches a suite of advertising offerings to help restaurants and CPG brands reach consumers on the delivery platform, per a company blog post.
• Local restaurants can use new self-serve Sponsored Listings that appear at the top of relevant search results and only pay for ad placements that result in orders, not for clicks or impressions. CPG brands also can now boost placement in convenience and grocery categories with Featured Listings.
• DoorDash is looking to generate additional revenue by building out its advertising capabilities as revenue growth has slowed from the highs reached during the pandemic’s peak.

Dive Insight:

DoorDash’s new ad capabilities allow restaurants and CPG brands to easily reach its 20 million monthly users, while generating additional revenue for the delivery platform. In addition to preexisting banner placements and special offers, Sponsored Listings will allow restaurants to appear at the top of search results.

Early tests of the Sponsored Listings by small restaurant chains Pizza My Heart and Uncle Julio’s resulted in increases in orders and volume, according to the blog post. The new listings use a pay-per-acquisition model — rather than pay-per-click — that demonstrates the importance of performance marketing as advertisers look to increase efficiency of their ad dollars.

In addition to the Sponsored Listings, DoorDash is rolling out ad opportunities for CPG brands to capitalize on its expansion into grocery, convenience, alcohol, pets and other categories.

“Pepsi has been testing and using promotions and banner ads across our partner teams in the restaurant space for several months now and we are excited to expand our reach across the convenience and grocery verticals to allow for more commerce opportunities,” Alison Dempsey, PepsiCo’s head of e-commerce customer marketing, said in the blog post.

As it looks to remain competitive in the delivery app space, DoorDash must also be careful of not bogging down its platform with too many ads that could turn off consumers. It will limit Sponsored Listings for restaurants to one ad above search results and two ads for other areas, The Wall Street Journal reports.

By bolstering its ad offerings, DoorDash seeks to engage a range of advertisers on its platform as the company explores other revenue sources. While revenue grew 83% to $1.24 billion last quarter, the growth has slowed compared to earlier quarters during the pandemic. DoorDash and other platforms have also experienced fee caps that several cities instituted to protect small businesses during the health crisis.

DoorDash’s move comes more than a year after rival Uber Eats launched cost-per-click sponsored listings on its app. Competitors in the grocery and convenience areas of its business — like Walmart and CVS — have also beefed up ad capabilities that tap into their large pools of consumer data.