Deliveroo’s ROI on a pre-IPO PR drive

I put this on Twitter as a thread and on my LinkedIn, I thought it was worth to repost it on here.

I was writing in reply to a headline article on the BBC webpage titled: Deliveroo to hand riders up to £10,000 in UK float.

This is a great bit of PR by Deliveroo, not only for the coverage but their ROI on the campaign.

In short, riders who have worked with the firm for at least a year will be paid a bonus of either £10,000, £1,000, £500 and £200.

You would expect those in the top catchment to be roughly earning around £20k pa. That means a 50% bonus. I suspect only a small number of riders will be hitting that top tier.

The total fund available to be used is £16m, which is about 1.2% of Deliveroo value. This news is good, not just for the riders but for the firm itself. Ultimately, it’s a positive news headline on the BBC — just before their floatation.

Even if they are spending £16m on this bonus, there is a clear ROI on the announcements — which could be worth at least three times more than they spend.

Deliveroo also announced they are selling £50m pre-IPO shares to individual investors. So, in many ways, they could be close to break-even on the bonus pot, even before floatation.

This, I expect will have a better ROI and cheaper than a conventional integrated advertising/ PR campaign. This could contribute to their popularity (particularly with individual investors on trading apps) and for their post-IPO share price to skyrocket.

If you see it just as a pure marketing ploy to advertise the pre-IPO shares sell-off — this would make £32% of the spend on the bonus straight off (obv. this is oversimplifying it).

Liam More, a friend of mine pointed out in the comments of my LinkedIn: “Giving £16m against a £5bn valuation to the “contractors” who built your business is hardly generous though, especially considering company “employees” were likely given 10%+ of the company through share options”.