Dive Brief:

• DoorDash has launched a suite of advertising offerings to help CPG brands and restaurants reach consumers on the delivery platform, per a company blog post on Tuesday.
• DoorDash is rolling out ad opportunities for CPG brands of all sizes to capitalize on its expansion into grocery, convenience, alcohol, pets and other categories. Brands 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 and competitors ramp up their advertising capabilities for brands.

Dive Insight:

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 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 the new capabilities for CPG brands, 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. In addition to preexisting banner placements and special offers, Sponsored Listings will allow restaurants to appear at the top of search results. 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 the efficiency of their ad dollars.

As it looks to remain competitive in the delivery app space, DoorDash must also be careful to not bog 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 reported.

DoorDash's move comes more than a year after rival Uber Eats launched cost-per-click sponsored listings on its app. Last year, Instacart launched a self-serve advertising platform to connect brands with shoppers by letting them choose products they want to promote, set a budget and pay when users engage with those items. 

Instacart, which works with more than 2,500 CPG brands, is ramping up its advertising arm as the e-commerce provider looks to looks to become one of the largest online grocery advertising platforms globally. The company has added two vice presidents with former experience at Google and Amazon to its Ads business, and its new president, Carolyn Everson, has advertising expertise from her time at top tech companies including Facebook and Microsoft.

Competitors in the grocery and convenience areas of DoorDash's business — like Walmart and CVS — have also beefed up ad capabilities that tap into their large pools of consumer data.