Instacart starts self-serve ad platform to connect brands with shoppers

Dive Brief:

Online grocery company Instacart launched a self-serve advertising platform that lets marketers promote products in search results. Brands can choose the products they want to promote, set a budget and pay when users engage with those products, per the Instacart Ads website.
Procter & Gamble, Unilever and PepsiCo are among the brands that have tested the ad platform in the past two months, MediaPost reported. Instacart delivery is available from about 350 retailers including Costco, Kroger and Gelsons, covering about 250,000 stores in North America.
Instacart's personalized search results show featured products, while its marketplace ads include banners, coupons and delivery promotions. To start advertising on Instacart, advertisers and agencies need to set up an account on Instacart, which also offers measurement tools to track campaigns on its grocery ordering platform, per its website.

Dive Insight:

Instacart's self-serve advertising platform can help marketers reach shoppers when they're most ready to buy groceries and other household goods. With many consumers ordering products for delivery during the coronavirus pandemic, marketers have the chance to highlight their brands as shoppers seek products and put them into their online shopping carts. The number of surveyed U.S. adults who reported increasing their online grocery shopping jumped from 11% to 37% between March 1-22, per CivicScience data cited by eMarketer, opening up the possibility for more online ad sales on Instacart's platform.

Instacart reported a 74% surge in customers to 350,000 in early April from 200,000 a year earlier, even as grocery stores remained open to in-store shoppers during pandemic lockdowns. Customer demand quadrupled in that time, leading Instacart to hire 300,000 workers while planning to hire an additional 250,000, per a blog post. That commitment to an expanded workforce indicates the company is confident of its growth. With many shoppers seeking greater convenience or avoiding trips to grocery stores, Instacart can maintain those new accounts as long-term customers.

Instacart's self-serve advertising platform aligns the company, which was started in 2012, to compete with other media outlets and the growing digital advertising businesses of retailers like Amazon, CVS Pharmacy, Kroger, Target and Walmart. It's not clear how much advertisers are spending on retailers' ad networks, but the coronavirus pandemic has forced researchers to revise their estimates of media-buying activity amid major disruptions like the suspension of live sporting events and lockdowns on business activity. Amazon for the past few years has provided some indication of how quickly its ad sales have grown. The company reported "other revenue" that mostly consists of advertising jumped 44% to $3.9 billion in Q1 from a year earlier.

The key test for retailers' ad networks will be the current quarter as many advertisers cut media spending during pandemic lockdowns. Grocery stores bucked the record slump in retail sales with a 13% gain in April from a year earlier, while non-store retailers including e-commerce sites boosted sales by 14%, per the Commerce Department. With many cities and states lifting lockdowns on a broader group of businesses, more categories of retail sales have a chance to recover. Many analysts forecast that online shopping habits will last after the pandemic subsides, compelling businesses to build out their e-commerce infrastructure now. Retailers that sell online advertising will seek to maintain their recent momentum as consumers shift some of their spending back to reopened brick-and-mortar stores.