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- Ride-hailing giant Uber went public today in one of the largest US IPOs on record.
- Uber’s path to an IPO has come at a cost. Uber has increased spending on sales and marketing over the past two years to attract riders and drivers.
- Uber shelled out $3.2 billion on sales and marketing in 2018, up 25% from 2017, the company reported. In 2017, Uber spent more than $2.5 billion — 58% over 2016.
- Recent campaigns have promoted the company’s diversity efforts after a spate of PR crises in 2017.
- Visit Business Insider’s homepage for more stories.
Ride-hailing giant Uber went public today, in what is one of the largest US IPOs on record. The company priced its shares at $45, amounting to a valuation of $75.5 billion.
But Uber’s path to an IPO hasn’t come cheap. Uber has increased spending on sales and marketing over the past two years to attract riders and drivers, according to its registration statement.
Uber has steadily pumped more money into advertising
Uber shelled out $3.2 billion on sales and marketing in 2018, 25% more than in 2017, the company reported in its filing. Competitor Lyft, which also recently went public, spent $800 million on sales and marketing in 2018.
In 2017, when Uber faced crises that resulted in the ouster of its founder and former CEO Travis Kalanick, it spent more than $2.5 billion on sales and marketing, a 58% increase year-over-year. In contrast, Lyft spent more than $567 million.
Yutong Yuan/Business Insider
Sales and marketing spending has declined as a share of Uber’s revenue as it has grown, the company stated in the filing. In 2018, sales and marketing accounted for 28% of revenue, from 32% the year before.
Uber’s recent marketing has focused on improving its image
Uber significantly ramped up its TV spending following a spate of bad publicity in 2017.
In January 2017, it appeared to try to profit off a taxi strike in New York City in January 2017. The following month, former employee Susan Fowler alleged sexual harassment and discrimination at the company.
The company shook up its executive ranks after a months-long investigation and showed Kalanick the door. Uber installed Dara Khosrowshahi as its chief executive and hired Bozoma Saint John to stage a comeback. It also appointed Rebecca Messina as its first marketing chief and brought its media-buying in-house as went from acquiring new consumers to re-engaging with existing ones.
Uber’s recent TV campaigns have focused on how the company is prioritizing diversity, according to iSpot. One campaign, for example, titled "Moving Forward," featured Khosrowshahi vowing to make Uber a "much, much better service."
Uber doubled its TV ad dollars in 2018, according to MediaRadar. Two campaigns in particular, "Doors Are Always Opening" and "Get Your Side Hustle On," had more ad dollars spent on them than all other advertising efforts in 2017.
As the company grows, it’s diversifying its media spending, recently putting $11.2 million toward Uber Eats on the NCAA tournament, for instance, per iSpot.
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Source: Business Insider – tdua@businessinsider.com (Tanya Dua)