In an effort to improve its business, Uber on Tuesday began displaying ads to its users in the app. An Uber spokesperson stated that the company is showing ads as a test to a small number of users in the U.S. and described this innovation as a pilot project that will reach 25 percent of users.
This is the first time Uber has introduced ads in the app, and former CEO Travis Kalanick long opposed the idea, fearing that ads would ruin the user experience, confirmed a former employee familiar with advertising decision-making. Due to the overall pandemic situation, Uber’s stock has fallen in recent months as drivers have returned to using Uber more slowly than expected. This prompted the company to spend a quarter of a billion dollars on incentives to encourage users to start using Uber again as soon as possible.
However, companies in which Uber holds a majority stake that are not related to driving, such as delivery companies Postmates and Cornershop, display ads for restaurants and other products. CEO Dara Khosrowshahi claims that Uber expects to achieve an advertising revenue rate of at least $300 million next year.
In addition to Uber, other companies also see ads as an additional source of revenue. For example, the grocery delivery and pickup app Instacart generated about $300 million in ad revenue last year. Some industry experts predict that Instacart will achieve up to a billion dollars in advertising revenue next year. Compared to Uber, Instacart has an advantage with ads because people browse items they add to their cart, making it unlikely that Uber will surpass Instacart in revenue.
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