Not long ago, online grocery was seen as the final frontier of the ecommerce industry.
Today, grocery stands as one of the fastest-growing segments in ecommerce. Increased consumer demand brought on by COVID-19, advances in same-day shipping, and grocery delivery marketplaces like Instacart have effectively closed the loop between consumers sheltering at home and the aisles of tens of thousands of grocers across the U.S.
Instacart users have high average order values, frequently make repeat purchases, with brands also benefiting from cheaper CPCs, according to studies.
According to Instacart, there is an average of 20 searches per customer order and more than half of all cart additions come from search – which means it’s going to be critical to engage often and first.
Here’s a breakdown of Instacart ads, how they work, and the different Instacart ad campaigns you can launch to reach grocery shoppers.
“Instacart’s marketplace is becoming an enormous opportunity for brands that can get on the platform early. High conversion rates, average order values, repeat purchases, and lower CPCs are all positive signals for brands, in addition to reaching shopper households all across the US.”
— Elizabeth Marsten, Senior Director of Strategic Marketplace Services
“Customers are also moving rapidly from thinking just perishable staples to adding shelf-stables and other CPG products like cosmetics, health, and of course, alcohol. If you are in store at a participating retailer, then an Instacart ads program should be part of your media strategy.”
1. What is Instacart Advertising?
Instacart’s self-service ad platform allows brands to reach customers with advertising campaigns using featured products. There are also additional full service display options booked directly with Instacart.
Instacart self service advertising was launched in May 2020, allowing brands and agencies to create and manage featured product campaigns that appear on the Instacart marketplace.
How Instacart Advertising Works
Instacart advertising shares a lot of similarities with other marketplace advertising platforms in terms of structure and bidding.
Here are some of the basics of Instacart’s advertising platform:
- Dashboard that includes reporting, creation and campaign management features
- Ad inventory is based on a second-price auction system (winner pays $.01 more than the second-highest bidder)
- The flagship ad format is Featured Products which are keyword-based and currently exact-match only
- Ad campaigns are organized at the campaign and product group levels
2. Instacart Ad Types and Promotions
There is currently one self service ad type for Instacart known as Featured Products (similar to Sponsored Products on Amazon) in addition to Coupons, Delivery Promotions, and a Hero Banner.
Instacart Featured Products
Instacart Featured Products is the primary ad format on the marketplace.
More details on Instacart Featured Products:
- Products are selected into campaigns
- No minimum budget, cost-per-click model
- Products show based on geographic availability and stock levels to the signed-in customer
“With Featured Products, you can bid on different child SKUs such as sizes, flavors, or other variants. It’s a 14-day attribution tied to the customer’s last-clicked UPC,” explains Marsten.
“What’s great is that all UPCs have a history across Instacart’s network, meaning that 24 to 48 hours after campaign creation you should see organic search terms auto-populate in your account, cutting down on the initial test and learn time.”
Coupons are another popular way brands are bringing attention to products.
Instacart Coupon details:
- Booked with Instacart
- Once redeemed, no longer available for the next 30 days
- Format supported is “Save $X on Y quantities of Z” at this time
- Pay for redemptions only
Instacart Delivery Promotions and Hero Banner
Last but not least, brands can also pay to run delivery promotions in addition to hero banners (à la Sponsored Brands on Amazon).
- Enterprise level investment that has inventory and distribution requirements – booked directly with Instacart
- Minimum flight date
- Booked with Instacart
3. Why Instacart Should Be Part of Your Marketing Strategy
Instacart is fast becoming a household name across the U.S. as consumers look for a solution to buy groceries and goods from their local retailers.
Brands that already sell grocery and CPG products in major retailers are leveraging Instacart to get ahead of the competition by capitalizing on the convenience that Instacart offers.
“Industry reports are that online grocery transactions have risen from 3% to 10% of all grocery sales in a short period of time. Consumers are becoming comfortable with online grocery and it’s a trend that isn’t going to reverse, even after lockdown restrictions are lifted in the future,” says Marsten.
“There’s also the fact that average basket values in grocery ecommerce have increased from an AOV of $72 a year ago to a high of $90 during the COVID crisis. Meaning there’s a huge opportunity for early adopters, much like Amazon in 2014.”
If you want to learn more or are interested in Instacart Ads, reach out to our Marketplaces team here!