DoorDash’s Long-Term Play With The NBA

BY ADAM GROSSMAN

In past posts, we have highlighted the importance of data-driven decision making given the impact of COVID-19 on businesses in multiple industries. One of the few exceptions to this phenomenon, however, is the food-delivery category where revenues have soared.

That could make DoorDash’s new partnership with the NBA announced earlier this week seem counterintuitive. Not only is the food-delivery industry performing well generally but DoorDash appears to doing even better than the category as a whole. The company “grabbed 45% of third-party delivery orders, followed by rivals Uber Eats at 28%, Grubhub at 17% and Postmates at 7%” according to data reported by Edison Trends in June.

Why would DoorDash be looking to increase partnership spending given this recent sales surge? A closer examination shows that DoorDash's partnership with the NBA is likely a long-term play given the league’s disproportionate ability to reach younger demographics.

We used our Audience Inference Platform (AIP) to determine this insight. AIP uses natural language processing to in part determine the demographic profile of any account on Twitter based on what followers organically state in posts with a statistically rigorous level of certainty. Partial results of our analysis of the NBA account are below.    

One of the clearly stated goals for this partnership is for the NBA and DoorDash to “to unite communities and encourage fans to support Black-owned restaurants.” AIP shows that the NBA disproportionately reaches a diverse community in general and the African American audience specifically as compared to the base population.

One of the less clearly stated goals of this partnership, however, is that this partnership will enable DoorDash to target younger demographics. AIP shows that the NBA disproportionately targets younger demographics as compared to the base population and particularly those under 24 years old.

Why is that important? Research conducted by Zion & Zion in early 2019 showed that younger people were the most likely to use “a multi-restaurant delivery website or app service” with 63% of people aged 18-29 years old using these platforms within the last 90 days. At the time this research was conducted, however, DoorDash lagged behind both Grubhub and Uber Eats in market share.

While the Edison Trends market share dynamics appeared to have changed recently, it does not mean that this will continue long term. In fact, the Zion & Zion research suggests that DoorDash may have increased orders from older demographics given that it was in third place in market share in early 2019 and is first place now. It is also unclear whether older consumers will continue to have similar usage of food-delivery services after the COVID-19.

Therefore, DoorDash is likely preparing for the post-COVID-19 world where the younger demographics makeup the largest portion of its potential customer base as they did before the virus. Leveraging the NBA and its players to accomplish this goal makes sense given that they can disproportionately engage with this age group.

The new partnership between DoorDash and the NBA also provides a critical insight for the sponsorship industry even for those companies experiencing significant challenges form COVID-19. More specifically, this partnership provides a blueprint for how companies and properties can take a long-term approach to examining partnerships even within the current environment.

The COVID-19 “winners” from a partner perspective will be companies that can determine how to leverage assets now to solidify revenue and customer growth in the future. The “winners” from a property prospective will be those leagues, teams, athletes, and events that understand and communicate how they will create benefits similar to the ones the NBA will likely generate for DoorDash.