User research on advertising
Nightlife places advertise for hype whereas dark kitchens advertise to build a loyal customer base
January 2017

The Challenge

At the start of 2017, our CEO pitched us the question, “Why do restaurant owners advertise on Zomato?” He wanted to learn how we could make our ad platform more relevant and appealing to this customer base.

I worked with my colleague, Tanvi, for the next 2 months interviewing restaurant owners (i.e. merchants) who advertise with Zomato. We focused this study on two types of merchants - dark kitchens (delivery-only places) and nightlife (pubs, bars, clubs). We spoke to 5 merchants in each category.

The journey

If I were to highlight key points in the project, it would look like this.

Building our hypotheses

We used previous research to generate educated hypotheses on why merchants advertise. These are our 7 hypotheses. Merchants advertise to:

We did a huge sticky note exercise in the design space to layout our previous findings and generate hypotheses.

Interviewing merchants

We validated our hypotheses with merchants of dark kitchens and nightlife places. They are very different establishment types, and we noticed they have diverging ways in growing their business. We wanted to learn their motivations for advertising.

We divided the interview into 3 questions.

  1. Why do you advertise in general?
  2. Why do you advertise specifically on Zomato?
  3. What factors are important for you in an advertising platform and which ones do it well?

For each question, the merchant does a card sorting exercise. A card has one hypothesis written on it. Each card is treated as an answer to the question and placed in a column - “Very important”, “Somewhat important”, or “Not important." With each card sort, merchants gave us an assortment of explanations and stories for why certain cards worked better than others.

Results

Dark kitchens: Cautious and analytical

Dark kitchens operate in the dark - they don’t have a restaurant storefront, they only deliver food. Their invisible, loyal customers keep the business afloat, repeating customers accounting for about 60% of sales. In fact, customer retention is more important than customer acquisition.

Dark kitchens like to stabilize operations, get the food right, and deliver on time. When they adverise, they look for customers that like related cuisines. They look for strategies to convert new customers to loyal ones. They study food patterns to refine their menu. Advertising is a tactical choice, used for food analytics!

Some requests from dark kitchens:

Nightlife: The cheerleaders

Nightlife places thrive on “buzz” from the moment they launch. They fear of becoming irrelevant if they don’t keep up the buzz. Advertising keeps them relevant. Visibility (i.e. ad impressions) is more important than an ROI. They know food and drinks don’t really differentiate them from other nightlife places. Ambiance, atmosphere and crowd that make the difference and this needs to stand out in the ad.

Other findings

Different types of merchants have different strategies to advertising. Nightlife places start with a huge spend while dark kitchens scale-up gradually.

Another learning is that advertising is for the fickle minded. Ad spend is marketing spend, and it’s the first to get cut from a merchant’s budget when times are tough. Thus, it’s important that we allow advertisers flexible budgets and flexible time durations in ads.

Reflection

This was the first major project centered around user research at Zomato. We usually focus our merchant sessions on usability testing new features. In this project, we sat down to study them from an ethnological sense, which I really enjoyed.

Also, the card sorting method worked wonders in this project. We were able to have merchants rank their priorities (and our hypotheses) by relevance to their business. It helped all of us better visualize the purpose behind buying ads. Additionally, I was able to walk away from our results and very clearly differentiate a nightlife merchant’s priorities from a dark kitchen merchant’s priorities.

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