Deliveroo cuts marketing spend, sees ad income grow | WARC | The Feed

Deliveroo cuts marketing spend, sees ad income grow

Deliveroo, the food delivery brand, sharply reduced its marketing spend in the second half of its financial year, while also seeing a contribution from its advertising business for the first time. 

The marketing cut

• Marketing spend in H2 was £88m, compared to £127m in H1; in the previous year spending was consistent at £134m in both halves. 
• The company reported that marketing spend had been “refined and optimised” in light of the consumer environment to produce greater efficiencies. 

The advertising opportunity 

• Deliveroo reported the “first real contribution from our nascent advertising business”, estimated to be worth £40m on an annualised basis. 
• So far, this comes mostly from sponsored restaurant ads in the app but a new platform allows FMCG partners and other companies to advertise their products.
• “We’re really excited about the opportunity long term. And we do expect this to be a much bigger part of the business in 2023 than in 2022,” CEO Will Shu told an earnings call. 

Building the grocery offer 

• Shu believes there are synergies in operating a dark grocery store alongside a food delivery platform. “I’m pretty sure I can do deliveries cheaper than standalone players. I’m pretty sure I have a bigger customer base. I’m pretty sure I can negotiate perhaps better deals with grocers. Put all that together, I definitely think about that as an advantage over the pureplay guys.”
• There are now 18,000 partner sites (end 2022), up 64% from a year earlier.
• An in-store price-match campaign with Morrisons produced a 20%-plus increase in order volume.

Key quote

“The food delivery industry has not yet cracked the problem [of] how we consistently deliver a great end-to-end delivery experience each time. It’s a giant opportunity and one we’re going after in 2023 to make sure we really up our game” – Will Shu, CEO, Deliveroo.

Sourced from Seeking Alpha, Deliveroo