Rideshare App Ad Strategies: Is Uber or Lyft the Right Fit for Your Ad Dollars?

Key takeaways:

• While Uber and Lyft experienced flat or declining downloads in Q2 YoY,, both platforms demonstrated healthy weekly active user (WAU) growth driven by slightly increased user retention.

• Uber Eats emerges as a particularly attractive channel for advertisers due to its larger, engaged, and younger user base.

• Advertisers should consider the demographic differences between Uber and Lyft users, such as app engagement time, to tailor their marketing strategies effectively.

In 2022, Uber launched its advertising division and unveiled Uber Journey Ads, and in June 2023 announced that video ads would be rolling out in the U.S., with plans to do so in other markets later this year. In August, Lyft announced that they, too, would begin displaying ads to customers. Using Sensor Tower data, we can evaluate what these new channels may afford prospective advertisers as they ramp up their offerings. 

In Q2 2023, Uber’s ridesharing app averaged 13.5M weekly active users (WAU) in the U.S., nearly double that of Lyft, and nearly 8 times that of Instacart. While, for Uber, downloads did not grow in Q2 2023, year over year, Lyft saw a 5.5% decline, pointing at potential headwinds to new user acquisition and a threat to the growth of their app as an advertising channel. Overall, Uber weekly active users have grown by 34% since January 2022, while Lyft’s have grown by 36%, a remarkable increase in such a short period. 

To get a better idea of how this growth was possible in the face of flat and declining downloads, we can use Sensor Tower’s Consumer Intelligence to segment users into New, Retained, Resurrected and Churned so that we can better identify how user growth occurred.

For Uber, we see that the percentage of Retained users rose from 60.6% to 61.2%, whereas for Lyft, Retained users rose slightly from 59.4% to 60.1%. These small shifts in retention can build up to significant differences in active users over time. If Uber and Lyft stay on this trajectory, they are likely to continue to be promising advertising channels for some time. 

Advertisers may want to consider the differences in users of these apps, as well. While Uber users spend just over 12 minutes per week in the app, Lyft users spend just under 10. Given the overall lower amount of time users spend on the Lyft app, for brand awareness campaigns advertisers may not be able to target these users with enough frequency to generate effective brand recall. 

Uber has also announced that they will be putting ads on their other apps, Uber Eats and Drizly. As Uber Eats has an even larger user base of 13.8M in the U.S., and users who spend even more time on the app, at 14 minutes per week, there may be even more opportunity for advertisers here. Uber Eats users skew younger than Uber and Lyft, with just 34% of users over the age of 35, compared to Uber and Lyft’s 37% and 38%, respectively. Drizly, with 96K users in the U.S. has much less engaged users, who spend only 5 minutes per week on the app. Drizly users are also much older, with a whopping 58% over age 35, making the channel a more suitable target for advertisers looking for an audience that likely has more disposable income. 

In the dynamic landscape of ride-hailing and food delivery apps, the foray into advertising by Uber and Lyft presents a compelling opportunity for marketers seeking impactful outreach. Uber's expansive user base and consistent growth are suggestive of a promising channel for various ad campaigns. The emergence of Uber Eats as a robust advertising platform will facilitate reaching younger, more engaged audiences, however, its future is unclear due to its poor user growth rate.

As these platforms evolve, understanding the interplay of user demographics, retention, and engagement becomes pivotal for advertisers aiming to make the most of emergent ad channels. In the end, selecting the optimal platform hinges on aligning marketing goals with the characteristics of each app's user base, ensuring a strategic approach to successful ad placements. You can find out more about how you can use Sensor Tower's Consumer Intelligence to accomplish this, here.