Ads could become Grab’s $245m-plus cash cow

Grab could generate over US$245 million in annual ad-based revenue from its GrabAds business, including in-app advertising, in-car ads, and merchant marketing services, analysis by Tech in Asia shows.

That’s about 10% of Grab’s estimated 2019 revenue of US$2.3 billion last year. With the business growing, it isn’t surprising that the ride-hailing giant has increased its focus on advertising-related efforts over the past year, following the launch of the online-to-offline GrabAds platform in August 2018.

Grab hasn’t said exactly how much it expects to make from these efforts, so Tech in Asia has done the guesswork for you.

According to our back-of-the-envelope calculations, GrabAds could rake in annual revenues of just over US$245 million. That amount is based on 2019 figures from in-app and in-car advertising platforms, as well as marketing services sold to its merchant partners. And if Grab’s food delivery business grows at the same estimated pace as the wider market, then the company could be generating revenues of over US$700 million annually from ads by 2025.

Grab app

The Grab app is the first touchpoint for users on the platform, whether they’re hailing a ride, ordering food, or using their mobile phones for payments. It therefore provides an important mobile advertising opportunity for all of the company’s consumer-facing businesses.

Grab completed just under 928 million ride-hailing trips in the first half of 2019 according to data from ABI Research.

The company hasn’t yet shared how many orders GrabFood gets in total through the app, though it told CNBC in September last year that the food delivery service handled 300,000 orders per day in Vietnam and 4 million orders between January and April last year in Thailand.

Assuming each order counts as a single app session, we can annualize these figures to get the following:

Number of ride-hailing trips, annualized (ABI Research)	1.86 billion
Number of food orders (Thailand and Vietnam only), annualized	121 million
Accumulated app sessions	1.98 billion

There’s no data on how long the average Grab app session lasts, or how many ad impressions there could be in each one. Finding a ride can take seconds, while browsing and ordering food might take 10 minutes.

Let’s conservatively assume that each session generates at least one ad impression. If we multiply these impressions by the average cost per thousand impressions (CPM) of US$1.61 for advertising on Facebook in Southeast Asia (based on estimates by adtech firm Nanigans), we get this:

In-car

Merchant marketing services

Adding up