Crunch overcooked? APAC marketing chief says no slowdown as Uber plots grocery surge, ads business ramps up with attention, Carshare bids to cull 1m cars by 2029 – and why flipping ‘crazy’ performance for brand pays
What you need to know:
- Uber was once a performance marketing maximalist in Australia with marketing KPI’d on how much money it could pour in to biddable environments that seemed to promise acquisition ROI gold. Then the powers that be realised it wasn’t actually working.
- So it flipped to brand, went hard, set a global template and powered to primacy in its new food delivery business, per APAC marketing chief Andy Morley.
- He’s now going hard on brand again – higher than Binet & Field’s 60:40 ratio – as Uber pushes into grocery, liquor, maybe even piano delivery and seeks to reposition Eats.
- Uber’s also aiming to take 1 million cars off the road in Australia by making car sharing easier – and maybe getting into buses, trains and planes too as it is in the UK.
- Meanwhile its own ad business is starting to move out of first gear. Morley says while every platform talks up scale, and Uber is no different, it’s ‘in the moment’ data, knowing where people are going, is gaining traction.
- Plus, as its Eats business expands into new categories, that data pool is only going to get wider.
- A big proponent of attention metrics, Morley says there is more going on under the hood this year with Amplified Intelligence.
- Which could influence both how Uber spends its $100m-plus local marketing budget – and its pitch to brands and agencies tapping its own ad business.
- Either way, Morley says both Eats and rideshare businesses are weathering the cost of living crunch. Both are up.
- There’s always more in the podcast. Get the full download here.
Performance marketing ads will naturally gravitate to the people who have a really high chance that they're actually going to convert into a product anyway. So therefore, it's not that incremental – you're really just accelerating the conversion of someone who's coming anyway. But that doesn't easily show up in the metrics.
The ROI lie
Like all good Silicon Valley businesses of its era, Uber was once a performance marketing maximalist. At one point “the performance marketing [team’s] main KPI was actually how much investment they could deploy,” says Apac marketing boss Andy Morley. “The mandate was spend, spend, spend … It was getting crazy.”
But then top brass realised much of it wasn’t working. It just looked like it did.
“It would constantly spit out a good cost per first trip, a good ROI. And so people said, ‘That’s great, I know I can get a new customer for $25, I know that over their lifetime, they are going to be worth more than that. So I’ll keep on putting more and more [money] in.”
Before long, Uber was hunting new receptacles to pump all of that money into, with then new and emerging channels seemingly delivering even cheaper acquisition.
“But in reality, the incrementality was really challenged, because the measurement of performance marketing is also really challenging,” says Morley.
“Performance marketing ads will naturally gravitate to the people who have a really high chance that they’re actually going to convert into a product anyway.
“So therefore, it’s not that incremental – you’re really just accelerating the conversion of someone who’s coming anyway. But that doesn’t easily show up in the metrics. You have to do some pretty sophisticated incrementality testing to truly understand how much you’re paying for the additional incremental person, versus actually just paying money for the people who were going to come anyway. And that wasn’t showing up in the numbers.”
Some of the GMs said let's double the amount that we're putting into demand. Let's see what actually happens next. They would do that… and there was not much change. Or they would turn it off for a month or two… and there was not that much of a change … And that’s when the questions started to arise.
New brand recipe
Around 2016 some of the business leaders started to question the growth economics. That was also when Morley joined Uber from Diageo, though he plays down his hand in reshaping its strategy.
They started experimenting.
“Some of the GMs said let’s double the amount that we’re putting into demand. Let’s see what actually happens next. They would do that… and there was not much change. Or they would turn it off for a month or two… and there was not that much of a change. There might be a variance of 10-15 per cent, but when you’re growing 200 per cent as a business, that’s not nearly what performance marketing was promising to be. And that’s when the questions started to arise.”
The upshot was not just a big pullback from performance marketing investment – but marketing full stop. Which meant “we had to build the case for marketing 101 and what true brand marketing is,” says Morley. It worked – with the subsequent brand campaign going global and powering Uber beyond mobility and into food delivery top dog.
“It wasn’t me alone,” says Morley. “In Australia we were very lucky – we had great business partners. We had a very, very smart guy called David Rohrsheim, who was the founder of Uber in Australia. He could see the big picture … he was supportive. We had Steve Brennen, one of the most brilliant CMOs. We had Georgie Jeffreys [now Uber’s US and Canada marketing chief] leading the Uber Eats business for brand … and I was in the background doing a little bit of strategy and planning,” he adds. “Together we built the case for doing the first big brand marketing campaign, probably for Uber globally, here in Australia.”
Special Group’s ‘Tonight I’ll be Eating’ campaign “saw immediate impact” says Morley. “It became the case study and the proof-point we could take to the rest of the world around the value that brand marketing can build – and we were able to scale that up.”
I've never seen brand metrics jump at such a fast rate over a six-week period. Within about a year we'd gone from being the number four player to number one. And since then we've been able to run away with it.
Within months, the campaign was powering Uber Eats to the top of a congested delivery food chain.
“It was huge. When we entered online food delivery at the end of 2016 we were the number four player – Menulog, Deliveroo and Foodora at the time were already in market. We’d expected that we could just use the rides database and our product skills to quickly eclipse them. But that just didn’t happen. We were doing lots of tactical marketing activity, not big investments, but we were just… stagnating … it wasn’t as easy as we thought it was going to be.”
There was little category differentiation. Everybody was doing “boring category marketing; a couple bowls of food and a cheeky headline on a bus,” says Morley. “We had some hilarious presentation decks where we saw the exact same format, just with slightly different logos and different brand colours from three other competitors on the same surface… So we knew that if we wanted to surpass them and stand apart, we had to do something big and bold.”
So that’s exactly what they did, hiring in a bunch of local celebs, plus Boy George, and getting progressively larger – ultimately Kim Kardashian large.
“It had immediate traction. I’ve never seen brand metrics jump at such a fast rate over a six-week period than what we saw in that space,” says Morley. “Within about a year we’d gone from being the number four player to number one. And since then we’ve been able to run away with it.”
There is absolutely a role for performance marketing in any digitally-focused business. The question is just what's the balance? What we've learned over time is that any business that just invests in performance marketing ends up going into a negative spiral.
More 60, less 40
Morley underlines that performance versus brand is a straw man argument. It’s both, he says, with ratios highly category dependent. While Airbnb is held aloft as a Silicon Valley Damascene conversion and bastion of brand building – the firm largely ditched performance marketing spend a few years ago and hasn’t looked back since – Morley says the platform is an outlier.
“There is absolutely a role for performance marketing in any business, or at least any digitally-focused business, which is nearly every business these days. The question is just what’s the balance,” says Morley.
He won’t disclose Uber’s brand-demand investment ratio but says in Australia it’s “definitely higher on brand” than Binet & Field’s 60:40 heuristic (Binet & Field also make the case for different ratios depending on category). It’s likely to stay that way.
“What we’ve learned over time is that any business that just invests in performance marketing ends up going into a negative spiral, because they’re not building a broader audience, they’re just trying to win a high propensity conversion audience. That’s going to win them some short-term sales, but over time, it’s going to be much more narrow. And if they’re not building their brand at the same time, it’s going to be more expensive and harder for them to win at that point of conversion,” says Morley.
“Over time … as the performance space gets more competitive, the engines get more sophisticated, it actually gets harder to win in that space – and the importance of brand continues to grow.”
The Uber Eats business gets a little higher performance percentage of investment than the rideshare business, per Morley.
“People are eating three meals a day, so 21 opportunities [a week] to get into that point of conversion – you can be giving them offers that might help push them over the line,” he says. “But we know it’s not the heartbeat of actually what we need to be doing to build a broader audience and help us access new categories.”
Will we ever deliver a grand piano to someone within an hour? Probably not … Right now, we're heavily focused around grocery, and different retail products that people have an immediate need for. But that stretches quite heavily and over time, we're seeing behaviour for a lot categories change dramatically. Previously people were frustrated – but accepting – of having a five hour delivery window the next day that they'd have to hang around their house for. They're no longer accepting that.
To grocery – and beyond
Uber’s investment focus this year is squarely on liquor and grocery delivery – but it’s aiming a lot bigger.
“On the delivery side, we want to get to a point where people can get pretty much anything that they want on demand. Dara [Uber CEO Dara Khosrowshahi] has talked about the day that we’re done is the day that someone can get a piano delivered to them within an hour,” says Morley.
“Now, will we ever deliver a grand piano to someone within an hour? Probably not … Right now, we’re heavily focused around grocery, and different retail products that people have an immediate need for. But that stretches quite heavily and over time, we’re seeing behaviour for a lot categories change dramatically, where previously people were frustrated – but accepting – of having a five hour delivery window the next day that they’d have to hang around their house for,” says Morley. “They’re no longer accepting that.”
Morley points to Taiwan as a high watermark for Uber’s business model locally.
“The use of delivery in Taiwan is almost triple the market in Australia, it’s the highest frequency in the world. It’s very common for people to get bought absolutely anything – particularly food – on demand multiple times a day, because they have this convenience lifestyle and they’ve set up the ecosystem and normalised it. So we know what’s possible – and we’re building that future where it makes people’s lives a lot easier.”
Branching out into almost everything on demand means “we have a big brand repositioning job to do”, acknowledges Morley, hence launching ‘Get almost, almost anything’ via Special Group earlier this year. “So far,” he says, “all the signals seem to be great”, especially for grocery.
“This is a big investment area for us and our biggest focus for how we grow the category in the future. And we’re seeing that play out – we’re seeing the on-demand grocery category accelerating really, really quickly.”
We've set a goal of taking a million cars off the road over the next five years in Australia … Yes it's a bold ambition … But we are starting to see lots of families work out that they don't need that second car, which is very expensive. And as people look at their costs, it's probably one of the biggest things that they can do to actually save money.
Culling 1 million second cars
As the delivery business becomes ‘get almost anything’, the mobility unit becomes ‘ride almost anything’. Morley says Uber is aiming to take second cars out of the picture – and a million cars off the road in Australia by 2029 – and suggests the market is rapidly starting to move.
“Australia is one of the most car hungry markets in the world. With over 15 million cars, we’re right up there with the US in terms of the highest car ownership per capita,” says Morley. “We know that a huge amount of those cars – I think it’s 96 per cent – are just sitting in a garage, heavily underutilised.”
That carries both a high carbon and financial cost to consumers. “Creating a car, even before it is filled with petrol and goes on the road, uses up a whole year of someone’s carbon allocation,” he adds. “Car insurance, petrol, rego costs – all of them are skyrocketing.”
Meanwhile, says Morley, “53 per cent of Australian households have a second car, and a second car is even more useless than the first one … We know we can create a better future for them.” Provided it can be made “effortless”.
Hence spending north of $100m last year on peer-to-peer carsharing platform Car Next Door, rebranding it Uber Carshare and launching a campaign before Christmas in a bid to position the business as ‘Australia’s second car’.
“If we can make it easy for people to walk down the end of their street, press a button on an app and be able to drive a car for an hour, or take it away for the weekend just as easily as they’re able to get a rideshare today, then all of a sudden, the actual use cases to have a private car start to diminish,” suggests Morley.
He says Uber Carshare has “over 10,000” vehicles on the platform, which started out 10 years ago in Bondi where there are “multiple [Carshare] cars on each street”. The aim is to replicate that kind of coverage across all the major metro areas – and Morley claims behaviour change is ramping up.
“We are seeing huge traction, huge amounts of people saying it is a no brainer to take the car that’s just sitting in the garage doing absolutely nothing and put it on Carshare. And then there’s a chance to make a hundred bucks for doing absolutely nothing.”
He claims the same applies for demand-side growth in the number of people paying to use those rentals. Pushed for a figure Morley says he “could agree with you that it is definitely more” than 25 per cent year on year.
“I can’t share exact numbers, but we’re seeing huge, huge growth in terms of people adopting this behaviour, and trying it for the first time and turning it into a regular piece for them.”
Planes, trains and automobiles?
Morley is one of those recent converts, getting rid of his second car 10 months ago. He’s now running to work more, and taking the odd Uber, “but overall we’re saving $10,000 a year from not having that second car,” says Morley.
‘So yes, it’s a bold ambition. But we really believe that there’s a use case here and the more people are experiencing it, the better. So we’ve set a goal of taking a million cars off the road over the next five years in Australia, and we are trying to build up this use case as much as possible. But then actually, how do we use the full ecosystem of transport to make it easy for people to have an alternative?” he says, pointing to Uber’s recent UK expansion to trains, buses and even plane bookings as the shape of things to come.
To date it’s been the early adopters, young city-dwellers, driving the carshare growth.
“But we are starting to see lots of families work out that they don’t need that second car, which is very expensive. And as people look at their costs, it’s probably one of the biggest things that they can do to actually save money, which they obviously want to do an important time like this,” says Morley.
[Eats was] where we probably had more concerns – getting people to places plays a functional role that in many ways can’t be replaced. With the delivery side, that’s a little bit more of a flexible transaction. With people cutting back costs, would they be seeing this as a luxury? But what we’ve actually seen is positive growth continuing … because we are seen as an affordable luxury.
Australia still eating, riding
While families might be tempted by $10,000 savings, Australia is not cutting back on food deliveries or ride shares despite sustained pressure on household budgets and consumer spending – at least not as far as Uber is concerned. Morley says both parts of the business are growing.
“People are still using rideshare and people are still using online food delivery … we’re only seeing minor variations in behaviour,” he says, with a dip in weekend rideshare offset by increase in commute use. “But at the top line level, rideshare is still playing as big a role – a slightly bigger role – than it has historically.”
Fears about a fall off in food delivery so far haven’t materialised, says Morley.
“That’s where we probably had more concerns – getting people to places plays a functional role that in many ways can’t be replaced. With the delivery side, that’s a little bit more of a flexible transaction. With people cutting back costs, would they be seeing this as a luxury? But what we’ve actually seen is positive growth continuing for the delivery side,” says Morley.
He admits the company “don’t fully know how to explain this”, but senses it’s the “lipstick effect” at play, i.e. people cutting back on some expenses but still needing a little something that makes them feel good.
“People might not be going out for that expensive meal on the weekend anymore. But when it gets to Friday night, they don’t want to cook the same way that they’ve done the entire week, either. They still need some kind of moments to be able to treat themselves,” he says. “And it looks like we’re playing that role for them really well on Friday nights, Thursday nights, Saturday nights… So we are still seeing growth … People are … maintaining us because we are seen as an affordable luxury.”
We know probably a lot about that person, where they've been historically. So we know what kind of person they probably are and we know where they are going. So we can serve them an ad for the place that they're exactly going to or near where they're going to. And that's quite attractive to a lot of people.
Ads business starts to motor
Uber launched an ads unit in late 2022 – aiming to build it to a $1bn business by this year.
It’s early, says Morley, “but so far, it’s going very, very well. I think what people are valuing about our ads business is the attention we have compared to other formats that they can buy”.
Morley’s a big fan of attention metrics. “We’ve been doing media planning and talking about reach and frequency in such a fragmented way. Thank god for Karen Nelson-Field [Amplified Intelligence founder] and thank god for everyone who’s leaning into this now,” he told SXSW Sydney back in October. “We can have a much more scientific metric … It’s not perfect but it’s much better than what we’ve been working with.”
That view applies both to its own media investments as well as the media Uber is now selling.
“We do have these unique moments where someone has ordered a rideshare. They’re waiting three, four minutes for that rideshare to turn up. They’re looking at their phone, constantly going back into the app to check where their car is. And that’s a much more high attention moment for us to be able to put a message that’s highly relevant in front of someone,” says Morley.
Plus it’s sitting on a tonne of data. Crucially, useful data.
“We know probably a lot about that person, where they’ve been historically. So we know what kind of person they probably are and we know where they are going.
“So we can serve them an ad for the place that they’re exactly going to or near where they’re going to. And that’s quite attractive to a lot of people,” says Morley.
While the platform has scale – reaching circa 8 million people quarterly in Australia – “nearly every platform has a big number they can reach,” says Morley. “What uniquely can you tell me about that audience and how can I reach them in the moment with guarantee? That’s a unique role we can play versus just a mass buy with some of the other digital channels. So yes, we have the mass audience, but actually the targeting opportunities and the ‘in the moment’ marketing is what is really attractive for a lot of players.”
Plus, as its Eats business expands into new categories, that data pool is only going to get wider. Hence brands starting to pile in.
“Alcohol brands love advertising here when they know that someone’s going to a bar and they can get in front of them. Paramount has been a really good partner – it’s a really good opportunity to talk about some of the content that’s coming up, because they know that people are on their way home.”
The reality is, we know that that half a second on that [digital platform] is not worth the same as the 30-second [TV] ad. So we need some kind of commonality metric to account for that so we can adjust our media accordingly.
Attention is the first metric that's given us hope that we can get to something that helps us with that journey.
Attention metrics moving
Hence attention metrics and attention planning being closely tied to both sides of Uber’s media operation.
“The hardest thing for marketers is we’ve got a finite budget to spend on media. The world is changing; consumer behaviour is changing. How much of our media dollars do we need to change to best fit with actually how to best engage with customers in this new world?
“The metric that historically has been used for planning out your media campaigns has been reach and frequency. And when the majority of your media was TV and a couple of other things, that was easy to do.”
But then digital channels promised a truckload of reach and frequency at a much, much cheaper rate and the reach and frequency methodology becomes flawed if all ads are seen as equal, “you just push everything in there”, says Morley. “The reality is, we know that that half a second on that [digital platform] is not worth the same as the 30-second [TV] ad. So we need some kind of commonality metric to account for that so we can adjust our media accordingly.
“Attention is the first metric that’s given us hope that we can get to something that helps us with that journey.”
“We have organically had an attention-focused strategy for a long time. We’ve always bought big channels and we’ve been resistant to moving too quickly into the low engagement digital channels. We have transitioned over time as the markets moved, but we’ve just had a natural hold on to the big channels. I still do believe in them. But over time we want to use these metrics to get to a more sophisticated point where we use less gut feel and more science in how we model it. And it feels like we’re on the verge of this now.”
Which means there is likely to be more coming from Uber on attention as 2024 goes through the gears.
“We are working with Karen [Nelson Field] and the [Amplified Intelligence] team at the moment – and we’re starting to roll-in some tests throughout the year,” says Morley.
There’s always more in the podcast. Get the full download here.