When Toby Espinosa, the VP of ads at DoorDash, was in middle school, he and his friends started a car-washing business in their neighborhood – and they charged based on outcomes.
Espinosa would only accept what he called a “donation” after the wash was done. He and his preteen co-founders would also travel to the cars to wash them instead of having the cars come to them at a central location, like a typical car wash.
Their customers appreciated the convenience, but they also really appreciated the business model, and a similar dynamic is at play with DoorDash’s ads business, Espinosa says on this week’s episode of AdExchanger Talks.
DoorDash, which launched its ads business two years ago, only charges its restaurants and merchants for ads that lead to conversions.
Generating awareness is great, Espinosa says, but a cost-per-acquisition pricing mechanism allows small businesses to invest in growth without having to worry about cash flow.
“Our notion was, why don’t we build an ad business where you don’t need to put any capital at risk?” Espinosa says. “Why don’t we put the risk on our shoulders to help you find consumers that are relevant to you?”
A CPA model also helps DoorDash learn which ads perform best, which is valuable information it can feed back into its own ad platform.
“Driving demand gives us more of an ability to learn what our customers need,” Espinosa says.
Also in this episode: Launching self-serve ads, salad-making robots, the best burrito in New York City and Espinosa’s unique take on culinary fusion.
