Deliveroo cuts marketing spend, sees ad income grow | WARC | The Feed
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Deliveroo cuts marketing spend, sees ad income grow
Websites, online services, apps Supermarkets & grocery stores Marketing budgets
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.
“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
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