Among the companies emerging to challenge the duopoly, Amazon wins the most cited award. But what about Uber? We at Street Fight have a longstanding prediction that it will eventually blitz local advertising, built around your captive attention to the Trojan Horse that is “in-ride mode.”
Think about it: Not only does Uber have prime real estate during your idle ride time, but it knows where you’re coming from and where you’re going (think destination-based promotions). And in the aggregate, Uber has lots of behavioral data for a richer mosaic of audience-targeting gold.
Uber hasn’t really activated any of this advertising potential (hence the “sleeping” part), likely because it’s not a core business priority. It also wants to avoid data-collection scrutiny rampant in today’s climate (see Facebook), not to mention its penance for recent corporate sins, leading it to steer clear of PR landmines for a while.
But as the company matures—when a larger revenue base makes it inherently harder to maintain growth rates—it will be looking to diversify. Moreover, a diversification play is key to winning investors in its impending pre-IPO roadshow. Add all this up, and an advertising blitz could be coming soon.
Further evidence is stacking up. As my colleague Joe Zappa wrote last week, Uber is partnering with Starbucks for on-demand coffee delivery (via Uber Eats) at 2,000 locations. This adds to the overall Uber Eats picture that continues to materialize into a potential local commerce powerhouse.
In fact, that’s precisely where a prospective Uber advertising play could live—or at least germinate. Prior to the Starbucks announcement, TechCrunch uncovered evidence that Uber Eats will roll out a local-restaurant based ad engine. It will run a search-like bidding system for priority app placement.
Uber is already positioned to make this move given the restaurants it has in the Uber Eats system. That gets it a certain distance toward correct listings, menus, as well as payments and billing. From there, it’s just a matter of activating the ads-and-promotions option and making it easy for restaurants to add it.
Moreover, Uber’s ecosystem is an attribution goldmine. Given that it will fulfill the orders, it can easily track where promotions led to real transactions. And like it’s already done in India, Uber can link ads to orders by incentivizing companies to provide deals on food in return for ad premium ad placements.
Down the road (excuse the pun), it becomes a matter of optimizing logistics for delivery and routing—Uber’s bread and butter (sorry). It can achieve network effect by bundling orders for high-volume and geographically clustered customers. That improves margins and lets it compete aggressively on price.
But for all of that to happen, the ride-sharing giant requires a critical mass of order volume and geographic density. So, look for this to roll out in urban areas, at least at first. That same density also allows it to maximize revenue in an ad bidding system, assuming it would be a bid marketplace for nearby food delivery options.
Add it all up, and Uber’s move into advertising looks pretty inevitable. Of course it would have to gain internal competency as an ad company, so look for acquisitions or talent hires (or both) in 2019. And look for more rhetoric about the latest company to challenge the duopoly, this time in a very local way.
Mike Boland is Street Fight’s lead analyst, author of the Road Map column, and producer of the Heard on the Street podcast. He has been an analyst in the local space since 2005, covering mobile, social, and emerging tech. More biographical information can be seen here.