Getting on The Digital Shelf in Instacart

Propelled by the pandemic, Instacart has become one of the major players in grocery world. Online shoppers have become well-accustomed to using their phone to order up their weekly groceries then having an IRL shopper grab their milk, eggs, and ice cream and deliver them to their door. And there’s no turning back now.

Just today, Instacart announced a new round of financing to the tune of $265 million. Add this to other news about partnerships with Wal-Mart, Sephora, Best Buy and even Family Dollar along with the rumors that an IPO is on the horizon, and you’ll see how Instacart has really moved up in the Covid world.

And with all these advancements, a new important marketing channel for food and beverage brands has emerged.

According to Instacart, more than 1,000 brands advertise on its platform, including the top 25 CPGs, in 350+ retailers and 25,000+ stores across the U.S. and Canada. Most of these are big food brands, but there is shelf space for smaller challenger brands.

HOW INSTACART ADS WORK

For anyone seeking to learn the intricacies of Instacart ads, the good news is that they have an entire Medium channel devoted to it. (Hat tip to Matt Newberg at HNGRY for pointing this out.) Here you can learn exactly what your ad opportunities are, how they work, and how to make them most effective.

The most popular option is a Featured Product which is a paid search placement. It’s a cost-per-click (CPC) so if someone clicks on your featured product ad, whether it be while shopping or whether it be a last-minute additions list at check-out, you are charged a fee.

But Instacart also utilizes 2nd-price auctions where brands bid on the highest amount they would pay for an ad, but ultimately only end up paying over a little bit more than what they would need to win. You can read all about how this works here.

While hiring a savvy marketer or an experienced agency could help you maximize your bids and keywords and all that marketing jazz, Instacart is relatively easy for a maker to handle on their own. It just requires constant check-ins to evaluate data and read your analytics to make sure what you’re throwing your money at is yielding some good ROIs. So how to yield good ROIs?

WHAT YOU NEED TO MAKE IT SUCCESSFUL

Beyond being extremely precise with keywords, a brand needs to get into the top 3 paid search spots to really be effective. And Instacart does admit that these ads do cost money.

Ads in these top 3 spots generate 90% of all clicks in paid placement, and the click through rate is 20% higher than organic search results. Getting into these spots requires strong bids and big budgets, which is perhaps why when you shop in Instacart, you’ll see far more promotions from big food companies than smaller brands. That said, Instacart’s platform does begin to suggest keywords for you and will also “judge” the strength of your bids, allowing you to make the decision on whether to put more money behind it or not.

And once you crack into these spots and earn a space in the shopper’s digital cart, you’ll be in their “Buy It Again” recommendations, meaning your paid search placement will live on much longer.

HOW SKINNY SOUPING DID IT

For Alison Velazquez, founder of Skinny Souping, Instacart has been a great cost-effective marketing tool for her line of fresh, plant-based soups. “I'm actually a huge fan of the Instacart marketing,” Alison said. “Their self-service ad platform allows brands to target customers shopping on Instacart through various campaigns.”

Skinny Souping has done both Featured Product Placements and coupons with Instacart (a third option is a banner ad.) Since each Instacart campaign you create is associated with a specific product SKU, and not the retail store it’s sold in, you’ll be putting money towards selling your SKU in multiple retailers (if you have more than one.)

"How the platform works is that you are asked to create a campaign and each campaign is associated with specific product SKUs not the retailer," Alison said. "After choosing the SKUs to associate with your campaign, you create a budget and that lump spend is then spent across all retailers who carry that particular SKU on Instacart. So if your SKU X is in 5 retailers and you put dollars towards that, those marketing dollars will be spent across all retailers on Instacart that carry that SKU. The products shown are based on geographical and stock level availability specific to the customer. "This is the only downside to Instacart marketing, says Alison, because you can’t specifically target a certain retailer or location and see how your product is performing in that store. However, if you’re launching an exclusive SKU with a retailer, you’ll be able to see the results better.

“We recently launched into a large retailer with an exclusive SKU,” Alison explained. “To support the launch, we created an Instacart Featured Products campaign and associated this new SKU with the campaign. Due to the exclusivity of the SKU, we know that all of the dollars allocated to that particular campaign went towards driving sales in this new retail chain.”

BREAKING DOWN THE OPTIONS

Alison broke down the three options that Instacart offers brands and explained what is needed, how each option works and who it is best for.

Instacart Coupon

• What: Ability to offer coupons via Instacart

• Creation: Need to create this through your Instacart account manager

• Length: You can run a coupon for a certain amt of time or until your budget runs out

• Format: The format of the coupon is Save X dollars on Y quantities of Z product - for example we've done Save $1 on 1 unit of Broccoli Lemon Arugula Soup

• Cost structure : amount of the coupon offered + 55 cents per redemption (i.e. if I offer $1 off coupon and a customer buyers 1 unit, then I pay $1.55 to Instacart)

• What to know: You can restrict coupon redemptions per person + you only pay for redemptions

• Ideal for: Companies looking to run longer campaigns with bigger budgets and have significant distribution

• Minimum spend : originally there wasn't one however recently they changed this and the minimum spend is $10,000

Instacart Featured Products

• What: This is the primary ad format on the marketplace - featured products are boosted to top of page through SEO

• Creation: You can create these any time through the self-service platform

• Length: Flexible - you can do set it up to run for a certain period of time or until your product runs out Products are selected into campaigns

• Format: Products are selected into campaigns and then you add keywords to bid on

• Cost Structure: Cost-per-click model

• What to know: Once your campaign starts running, the platform will automatically suggest relevant keywords

• Ideal for: Companies with small marketing budgets or those new to the platform to experiment with little commitment

• Minimum spend: none

Instacart Hero Banner Ads

• What: Targeted banner ads featured on site

• Creation: Need to create this through your Instacart account manager

• Length: Required length

• Cost Structure: Varies

• What to know: This campaign has inventory and distribution reach requirements

• Ideal for: Companies with larger budgets with substantial distribution

• Minimum spend: N/A

READING THE RESULTS

For Skinny Souping, reading the results of their campaigns is easy to do thanks to Instacart, especially for coupons. Alison said for a recent coupon campaign she did she was shown the following data from Instacart:

• Promo period total sales

• Promo period weekly sales

• Prior weekly average sales

• Promo period coupon sales

• Sales lift from coupon

• Quantity of redemptions

• Percentage of First time customers

“What was exciting for us when looking at the data, was that 90% of our coupon redemptions were first time customers which meant the campaign successfully was driving trial,” she said. For featured products, the data wasn’t as comprehensive but still gave her a good idea of what the return was on an ad spend.

“With traditional in-store marketing opportunities like sampling and promotions put on hold during the pandemic, we've found Instacart marketing to be a great alternative that allows us to both carefully manage our budget and understand our return on that spend,” she said.

WHEN YOU NEED A LITTLE HELP

Cartograph, a team of e-commerce experts based in Austin, have seen more and more clients opting into Instacart ad campaigns.

"The big takeaway is that a large percentage of all purchases on Instacart (something like 40%) come from Sponsored Product slots," said Cameron Benton, brand specialist at Cartograph. "By advertising, brands are able to generate turns on their products, essentially becoming a digital form of an in-store demo."

Cameron said they are generally seeing a ROAs of around $3, which is down from last summer when the platform was really taking off but he still considers that a "fairly efficient" number.

Another advantage to advertising on Instacart is that once a customer makes a purchase of a featured product, the item moves to the list of their recent purchases. "Customers are then more likely to order straight from their recent purchases, thus the ad attributed sales become organic sales from repeat purchasers," he explained. "So for new to brand customer acquisition, Instacart Advertising is a great way to been seen and grow your client base.

Cartograph also specialized in Amazon e-commerce and has been able to integrate their methods for advertising here into launching and managing Instacart campaigns, specifically in regards to keywords. So if you need help in both Instacart and Amazon, Cartograph can make it easier for you to get started on both.

NOT ALL THAT GLITTERS IS INSTA-GOLD THOUGH

While Instacart has been on an expansion tear with new partnerships, some retailers are starting to reconsider their positions with Instacart. Instacart typically charges a retailer 10% of each order and has direct interactions with consumers that makes retailers nervous. This means more retailers could drop Instacart, or else, create their own online grocery delivery platform.

Kabir Jain, chief of staff at Erewhon, said Instacart has delivered big volume and has driven sales for Erewhon stores but there is an inherent risk to hitching their wagon solely to the platform. Which is why Erewhon created their own digital grocery app, Erewhon Native. Jain said the Erewhon Native app is more geared towards the loyal and consistent Erewhon shopper and instead of a sophisticated ad system, the app’s algorithm is weighted using a number of inputs including sales velocity—meaning items that do well in stores will likely get top positioning in the app. (Another testament to having a great product first, then doing the smart marketing work.)

But even still, Erewhon has no plans to turn off Instacart.

So whether retailers keep or ditch or work along side Instacart with their own platform, this new wave of digital marketing within grocery apps is clearly the way forward.

Have an experience with Instacart that you want to share? Send it to us! Makers@Foodboro.com

Propelled by the pandemic, Instacart has become one of the major players in grocery world. Online shoppers have become well-accustomed to using their phone to order up their weekly groceries then having an IRL shopper grab their milk, eggs, and ice cream and deliver them to their door. And there’s no turning back now.

Just today, Instacart announced a new round of financing to the tune of $265 million. Add this to other news about partnerships with Wal-Mart, Sephora, Best Buy and even Family Dollar along with the rumors that an IPO is on the horizon, and you’ll see how Instacart has really moved up in the Covid world.

And with all these advancements, a new important marketing channel for food and beverage brands has emerged.

According to Instacart, more than 1,000 brands advertise on its platform, including the top 25 CPGs, in 350+ retailers and 25,000+ stores across the U.S. and Canada. Most of these are big food brands, but there is shelf space for smaller challenger brands.

HOW INSTACART ADS WORK

For anyone seeking to learn the intricacies of Instacart ads, the good news is that they have an entire Medium channel devoted to it. (Hat tip to Matt Newberg at HNGRY for pointing this out.) Here you can learn exactly what your ad opportunities are, how they work, and how to make them most effective.

The most popular option is a Featured Product which is a paid search placement. It’s a cost-per-click (CPC) so if someone clicks on your featured product ad, whether it be while shopping or whether it be a last-minute additions list at check-out, you are charged a fee.

But Instacart also utilizes 2nd-price auctions where brands bid on the highest amount they would pay for an ad, but ultimately only end up paying over a little bit more than what they would need to win. You can read all about how this works here.

While hiring a savvy marketer or an experienced agency could help you maximize your bids and keywords and all that marketing jazz, Instacart is relatively easy for a maker to handle on their own. It just requires constant check-ins to evaluate data and read your analytics to make sure what you’re throwing your money at is yielding some good ROIs. So how to yield good ROIs?

WHAT YOU NEED TO MAKE IT SUCCESSFUL

Beyond being extremely precise with keywords, a brand needs to get into the top 3 paid search spots to really be effective. And Instacart does admit that these ads do cost money.

Ads in these top 3 spots generate 90% of all clicks in paid placement, and the click through rate is 20% higher than organic search results. Getting into these spots requires strong bids and big budgets, which is perhaps why when you shop in Instacart, you’ll see far more promotions from big food companies than smaller brands. That said, Instacart’s platform does begin to suggest keywords for you and will also “judge” the strength of your bids, allowing you to make the decision on whether to put more money behind it or not.

And once you crack into these spots and earn a space in the shopper’s digital cart, you’ll be in their “Buy It Again” recommendations, meaning your paid search placement will live on much longer.

HOW SKINNY SOUPING DID IT

For Alison Velazquez, founder of Skinny Souping, Instacart has been a great cost-effective marketing tool for her line of fresh, plant-based soups. “I'm actually a huge fan of the Instacart marketing,” Alison said. “Their self-service ad platform allows brands to target customers shopping on Instacart through various campaigns.”

Skinny Souping has done both Featured Product Placements and coupons with Instacart (a third option is a banner ad.) Since each Instacart campaign you create is associated with a specific product SKU, and not the retail store it’s sold in, you’ll be putting money towards selling your SKU in multiple retailers (if you have more than one.)

"How the platform works is that you are asked to create a campaign and each campaign is associated with specific product SKUs not the retailer," Alison said. "After choosing the SKUs to associate with your campaign, you create a budget and that lump spend is then spent across all retailers who carry that particular SKU on Instacart. So if your SKU X is in 5 retailers and you put dollars towards that, those marketing dollars will be spent across all retailers on Instacart that carry that SKU. The products shown are based on geographical and stock level availability specific to the customer. "This is the only downside to Instacart marketing, says Alison, because you can’t specifically target a certain retailer or location and see how your product is performing in that store. However, if you’re launching an exclusive SKU with a retailer, you’ll be able to see the results better.

“We recently launched into a large retailer with an exclusive SKU,” Alison explained. “To support the launch, we created an Instacart Featured Products campaign and associated this new SKU with the campaign. Due to the exclusivity of the SKU, we know that all of the dollars allocated to that particular campaign went towards driving sales in this new retail chain.”

BREAKING DOWN THE OPTIONS

Alison broke down the three options that Instacart offers brands and explained what is needed, how each option works and who it is best for.

Instacart Coupon

• What: Ability to offer coupons via Instacart

• Creation: Need to create this through your Instacart account manager

• Length: You can run a coupon for a certain amt of time or until your budget runs out

• Format: The format of the coupon is Save X dollars on Y quantities of Z product - for example we've done Save $1 on 1 unit of Broccoli Lemon Arugula Soup

• Cost structure : amount of the coupon offered + 55 cents per redemption (i.e. if I offer $1 off coupon and a customer buyers 1 unit, then I pay $1.55 to Instacart)

• What to know: You can restrict coupon redemptions per person + you only pay for redemptions

• Ideal for: Companies looking to run longer campaigns with bigger budgets and have significant distribution

• Minimum spend : originally there wasn't one however recently they changed this and the minimum spend is $10,000

Instacart Featured Products

• What: This is the primary ad format on the marketplace - featured products are boosted to top of page through SEO

• Creation: You can create these any time through the self-service platform

• Length: Flexible - you can do set it up to run for a certain period of time or until your product runs out Products are selected into campaigns

• Format: Products are selected into campaigns and then you add keywords to bid on

• Cost Structure: Cost-per-click model

• What to know: Once your campaign starts running, the platform will automatically suggest relevant keywords

• Ideal for: Companies with small marketing budgets or those new to the platform to experiment with little commitment

• Minimum spend: none

Instacart Hero Banner Ads

• What: Targeted banner ads featured on site

• Creation: Need to create this through your Instacart account manager

• Length: Required length

• Cost Structure: Varies

• What to know: This campaign has inventory and distribution reach requirements

• Ideal for: Companies with larger budgets with substantial distribution

• Minimum spend: N/A

READING THE RESULTS

For Skinny Souping, reading the results of their campaigns is easy to do thanks to Instacart, especially for coupons. Alison said for a recent coupon campaign she did she was shown the following data from Instacart:

• Promo period total sales

• Promo period weekly sales

• Prior weekly average sales

• Promo period coupon sales

• Sales lift from coupon

• Quantity of redemptions

• Percentage of First time customers

“What was exciting for us when looking at the data, was that 90% of our coupon redemptions were first time customers which meant the campaign successfully was driving trial,” she said. For featured products, the data wasn’t as comprehensive but still gave her a good idea of what the return was on an ad spend.

“With traditional in-store marketing opportunities like sampling and promotions put on hold during the pandemic, we've found Instacart marketing to be a great alternative that allows us to both carefully manage our budget and understand our return on that spend,” she said.

WHEN YOU NEED A LITTLE HELP

Cartograph, a team of e-commerce experts based in Austin, have seen more and more clients opting into Instacart ad campaigns.

"The big takeaway is that a large percentage of all purchases on Instacart (something like 40%) come from Sponsored Product slots," said Cameron Benton, brand specialist at Cartograph. "By advertising, brands are able to generate turns on their products, essentially becoming a digital form of an in-store demo."

Cameron said they are generally seeing a ROAs of around $3, which is down from last summer when the platform was really taking off but he still considers that a "fairly efficient" number.

Another advantage to advertising on Instacart is that once a customer makes a purchase of a featured product, the item moves to the list of their recent purchases. "Customers are then more likely to order straight from their recent purchases, thus the ad attributed sales become organic sales from repeat purchasers," he explained. "So for new to brand customer acquisition, Instacart Advertising is a great way to been seen and grow your client base.

Cartograph also specialized in Amazon e-commerce and has been able to integrate their methods for advertising here into launching and managing Instacart campaigns, specifically in regards to keywords. So if you need help in both Instacart and Amazon, Cartograph can make it easier for you to get started on both.

NOT ALL THAT GLITTERS IS INSTA-GOLD THOUGH

While Instacart has been on an expansion tear with new partnerships, some retailers are starting to reconsider their positions with Instacart. Instacart typically charges a retailer 10% of each order and has direct interactions with consumers that makes retailers nervous. This means more retailers could drop Instacart, or else, create their own online grocery delivery platform.

Kabir Jain, chief of staff at Erewhon, said Instacart has delivered big volume and has driven sales for Erewhon stores but there is an inherent risk to hitching their wagon solely to the platform. Which is why Erewhon created their own digital grocery app, Erewhon Native. Jain said the Erewhon Native app is more geared towards the loyal and consistent Erewhon shopper and instead of a sophisticated ad system, the app’s algorithm is weighted using a number of inputs including sales velocity—meaning items that do well in stores will likely get top positioning in the app. (Another testament to having a great product first, then doing the smart marketing work.)

But even still, Erewhon has no plans to turn off Instacart.

So whether retailers keep or ditch or work along side Instacart with their own platform, this new wave of digital marketing within grocery apps is clearly the way forward.

Have an experience with Instacart that you want to share? Send it to us! Makers@Foodboro.com