As an independent ad tech advisor, Ivan provides professional advice to the CEO and C-level management of the company SmartyAds Inc.
Everyone knows that Uber was the first to capture transportation business markets in major cities worldwide. We also know that Uber has grown exponentially over the last decade, turning from a global taxi app to a multibillion-dollar technological giant whose revenues are seeing 37% growth year-over-year ($35 billion in June 2023).
What you might not know is that Uber generates some of these revenues in ways other than service commissions. Currently, in addition to mobility, Uber’s business revenue model also includes delivery, freight, other technology and advertising. This final category is now generating over $600 million, according to Uber CEO Dara Khosrowshahi.
How did advertising become a profit engine for the company, and what lessons can other businesses learn from this development?
How Data Fuels Uber Advertising
On average, Americans spent about $70 annually on local taxi rides, including Uber and Lyft, as of 2019. Uber pinpointed that this time is valuable and should also be put to use, so the company decided to create an advertising platform, Journey Ads, by 2024.
General manager of Uber advertising, Mark Grether, said they are already close to that goal. This agreement was recently signed with U.S. holding company Omnicto to provide its agencies access to Uber data. This data will then facilitate planning and running highly targeted advertising campaigns via Uber apps, such as Uber Eats and Rider apps.
Ads will accompany the customer before, during and after the trip. Because of this, Uber plans to increase its advertising revenue to $1 billion by 2024. The ads will also be seen on tablets installed in Uber cars.
Starting in 2022, Uber passengers began seeing static advertisements in the Uber app. Those will be supplemented with interactive videos, such as movie trailers and restaurant menus. Later, the company plans to activate video advertising in Australia, Great Britain, France and other markets.
Other Brands Embracing The Same Approach
The significance of new data-driven and interactive approaches in advertising cannot be underestimated, and Uber is not the only brand that understands it. The Wall Street Journal notes that companies like Walmart, DoorDash, Kroger and CVS Health Corp “have also been giving advertisers more ways to reach consumers using retailer data.”
In recent years, companies relied on third-party data to target advertising. Today, in the age of GDPR, CCPA, the cookie shutdown and other privacy restrictions, brand-owned data (first-party data) has become a gold mine for yielding additional to target advertising.
Additionally, measurability and the right context for advertising can become instrumental in building strong advertising business models.
Setting Up Media Model For Revenues: Four Lessons
While we can see how Uber and other brands are capitalizing on the new data and opening advertising connectivity opportunities, it is important to understand how to apply the same principles to your own business.
Of course, not every company can build a full-scale ad platform like Uber, but there are strategies you can take to recalibrate your advertising model in the wake of this trend:
1. Leveraging Your Own Data
So many words have already been said about the importance of first-party data in the new cookieless world, but business owners should heed these words carefully. To do so, they should assess if they are utilizing the data they accumulate, as first-party data is a fuel that can help make ad messages relevant.
Uber’s ability to align ad delivery to location (enabled by data) is an exemplary example of how businesses can think about leveraging their data to make advertising more relevant and, thus, effective. App data (for location-based campaigns), customer surveys and feedback collection forms, all of these techniques can become useful sources for gathering data suitable for ad targeting.
2. Measuring Impact Across Platforms
An interconnected ecosystem like Uber’s and other brands can also enable performance tracking.
As I’ve written about previously, digital identity is at a breaking point. Business owners should ask themselves whether addressing audiences across multiple channels is a cost-effective decision. If so, how can they use cross-channel measurement to ensure that they are harnessing strong, yet privacy-first tracking mechanisms?
3. Studying The Customer Journey
Cross-channel advertising requires knowing your customers and selecting the right time and context for addressing them.
Brands like Uber don’t just randomly spread their ad messages across all available screens when possible. They choose contextually relevant environments and timing for driving impactful ad campaigns. Achieving such precision is almost impossible without studying your customer’s journey and without an automated ad platform.
4. Employing Targeting
For businesses running international ad campaigns, it is important to know how to engage audiences in different regions meaningfully.
To do this, you can launch geo-marketing campaigns for local audiences to drive them to brick-and-mortar stores. Meanwhile, AI-based ad platforms can execute complex international ad campaigns to deliver each ad to each audience segment at the most appropriate moment.
Conclusion
The significance of an adaptable business model like Uber’s shows how businesses can readjust their advertising approach. Advertising has become an integrative part of your entire business model that works together with your product to enhance user experience across many channels.
No matter the size of your business, there’s always a way to build a strong advertising model as long as you leverage first-party data, measure cross-platform performance, understand the customer journey and employ targeting to enhance the relevance of ads.
And there’s always a way to unlock new avenues for growth, even in a complex and ever-changing landscape.
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