How to Win the Future of Advertising on Instacart

Instacart has become a major player in the online grocery industry, offering customers an effortless way to shop for desired products from home. However, for businesses looking to succeed on this platform, it’s important to move beyond a purely transactional relationship with Instacart and instead establish a stronger partnership.

To help more brands achieve this goal, we joined firstmovr’s JBPx Instacart ecommerce Growth Summit, where industry experts explored the most effective strategies and tactics for mastering their partnership with Instacart.

Our Instacart expert and Director of ecommerce Strategy and Advertising, Brandon Titmus, laid out his informed perspective of how brands can work with Instacart to develop their retail media strategies in a Q&A session with interviewer and CommerceIQ Director of Industry Insights, Tim Campbell.

Tim Campbell: Let’s start with something simple, who is the Instacart shopper?

Brandon Titmus: Instacart’s user base reflects the typical grocery shopper, with the majority being women aged 25-45. The platform is becoming increasingly popular, as 93% of the US population has access to a food delivery service, particularly in urban areas that have a higher population density and are more affluent. Instacart users are willing to pay for the service as it offers them convenience in their daily lives.

TC: How is shopping on Instacart different from shopping at other retailers such as Amazon or Walmart?

BT: Instacart users often use the “Buy It Again” feature to reorder previous purchases, while also shopping from a specific list of items. Search is used 40-50% of the time, with new users using it for 60-70% of their items. However, users are open to browsing suggestions, with 20-30% of the items in the basket coming from recommendations for new items. This presents opportunities for businesses to feature their products on the platform.

TC: How is the promotion of products different at Instacart compared to other retailers?

BT: Instacart search terms are heavily dominated by only a handful of terms, so it’s important for brands to align their strategies to ensure they are discoverable. Brands should use comprehensive search terms and other placements, such as buy-it-again and upsell or cross-sell opportunities, to increase their chances of being featured in the reordering and restocking of favorites.

TC: How should brands tailor their approach to Instacart’s retail media platform?

BT: Brands should ensure their campaigns and ad groups are organized in a way that quickly ties their KPIs to the campaign architecture. They should not be afraid of the default bid, as it is the path to placements that cannot be reached with keyword targeting alone. Brands should also monitor and adjust keyword bids to focus on converting search terms and avoid spending on irrelevant keywords.

TC: What are Instacart’s recent innovations and plans in terms of evolving their retail media platform?

BT: Instacart has been continually evolving its retail media platform with new features and capabilities. In the past year, brand pages and shoppable video and display have been enabled. Instacart has also engaged brands with incremental lift studies to prove the value of advertising on Instacart. Brands should pursue these opportunities as they can yield real value.

TC: What should brands do to grow their sales at Instacart?

BT: In order to grow sales on Instacart, brands should focus on aligning their campaign architecture to their strategy and capabilities. For new products in a niche market, a healthy budget can be used to push for reach, while established brands can focus on return on ad spend and bid more conservatively. Brands should lean into seasons that work for their products and pull back when budgets are tight.

TC: Does the decision of Amazon Fresh to eliminate fees for their deliveries for a higher price threshold affect Instacart at all?

BT: Amazon Fresh ramping up the price threshold for free delivery is not necessarily bad news for the future of online grocery or for Instacart. It presents an opportunity for Instacart’s aggressive expansion strategy as Amazon Fresh may be limited in its ability to expand. Brands may want to reallocate resources from Amazon Fresh to Instacart if they wish to grow.

TC: What are some of the obstacles that brands need to overcome on Instacart?

BT: Brands may encounter the challenge of auto-added keywords when running ads, leading to thousands of unwanted keywords and wasted spend. It is important to manage the longer tail of keywords and invest in the most important targets, while also being competitive in the default bids for head terms. Using an automated tool or ongoing manual management can help improve advertising performance by removing unwanted keywords and optimizing spend

TC: How do you optimize profitability for retail media on Instacart?

BT: To optimize for profitability on Instacart, brands should focus on tracking the right KPIs for their business, such as cost per click rates and conversion. It’s important to have a single source of truth for data and insights to avoid confusion among teams and executives. Brands can use market share data from Instacart reports to track performance, but they need to be aligned with their optimization strategy depending on whether they are focused on new-to-brand shoppers or returning shoppers to maximize their investment.

TC: What is the potential return on investment for brands advertising on Instacart, and how should they manage their investment on the platform?

BT: In the wake of the pandemic, the adoption of online grocery shopping accelerated significantly. Instacart, with its extensive reach among retailers and consumers, is an ideal investment channel, and it continues to invest in new features and tech partnerships. CPG brands should proactively manage their investment in Instacart and view it as an opportunity rather than as a passive platform that runs itself.

TC: How can brands make sure that they are not overspending on instacart?

BT: In the current environment of paying for insights, brands must find a way to balance their spending on Instacart with their need for data to manage their retailer presence effectively. We recommend using available data to benchmark and compare the performance of different channels, such as Walmart or Amazon, and identify shifts in customer behavior and adjust strategies accordingly. Looking at a single source of truth will help all stakeholders to minimize internal conflict and align everyone in the same direction.

TC: What roles does technology play in managing the complexities of Instacart?

BT: Automating routine tasks can be helpful when managing Instacart’s complexities, such as measuring in-stock availability for multiple retailers and running ads when competitors are out of stock. There are a dozen or so different automation strategies to consider. Finding the right tools and capabilities to use can make managing Instacart significantly easier.