Marketplaces are Very Good…Ads Businesses?

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Amazon, Airbnb, and Uber are marketplaces with massive consumer adoption. It turns out they are excellent ads businesses, too.

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In his Q3 2023 earnings call, Dara Khosrowshahi, the CEO of Uber, shared that Uber is on track to surpass $1 billion in ad revenue in 2024. Uber's full-year 2023 results, which were released on Wednesday, further supported his comments as they showed active advertising merchants on Uber Eats exceeded 550K in Q4 2023, up 75% YoY.

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When we zoom out, ad revenue is becoming a more significant percentage of marketplace revenue, per The Information.

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Traditionally, marketplaces make money from their take rate – or how much they charge every time a transaction happens. Take rates are typically between 10% and 30%. Now, these businesses can potentially pass those savings to consumers because they have this significant and growing revenue stream from ads. In doing so, they can accelerate adoption and take a winner-take-all approach to reach economies of scale. For example, Meesho, an Indian online shopping marketplace last valued at $3.5 billion, is already charging a 0% take rate across all categories.