Instacart was founded in 2012, but it shot to fame in 2020 when the pandemic pushed customers indoors, forcing them to shop for everything online. As coronavirus continued to chomp down on the world's economy, Instacart continued to grow exponentially.
Today, with the help of exceptional technological developments and customers' inclination towards online shopping, Instacart has managed to sustain and multiply the market share it gained during the pandemic.
Instacart offers many tools and products to its sellers, helping them reach over 10 million of the platform's active users. One of Instacart's products is its internal advertising system.
Instacart's advertising system is a powerful tool that can help brands maximize their reach and, eventually, sales.
This article will serve as a detailed guide on Instacart advertising.
Here's a breakdown of how we have divided this guide into different parts to make its use easier for you:
Part 1: Understanding the Instacart Advertising System
Part 2: Campaign Structure
Part 3: Keyword Targeting
Part 4: Instacart Bidding
Part 5: Instacart Ad Measurement and Reporting
We recommend reading all the parts, but if you are looking for any specific information, feel free to jump to the relevant part.
Instacart: Redefining the Way We Shop
Instacart is an online grocery and CPG delivery service that helps customers browse and shop for a wide variety of products across various stores and get them delivered to their doorstep.
The platform connects buyers with human shoppers through its web or mobile app. Customers can add products to their baskets, and the personal shoppers will pick each of these products from the respective stores and deliver them once the customer has checked out.
This is perhaps why the grocery delivery service saw 300% growth in just one year after the pandemic pushed people indoors.
Since then, it has retained its presence and increased its audience base through its commitment to customer satisfaction and technological growth.
This is why, despite the platform being relatively young, driving brand visibility organically on Instacart can be a challenge. And the platform realizes that.
Instacart Advertising: Helping Brands Connect with Their Prospects
Instacart launched its internal advertising system in 2020 to help sellers reach more customers effectively.
Since then, Instacart advertising has seen immense growth. Today, the platform offers various advertising products to its sellers and has some exciting new products in the pilot-testing phase at the time of writing this blog.
Instacart advertising works very similar to how Amazon or Walmart advertising works, though the products and capabilities are not as diverse.
Nonetheless, the platform empowers its brands with some excellent advertising products, which has led to the platform's ad revenue increasing from 0.3 billion USD in 2020 to 1 billion USD in 2022.
The sharp rise in Instacart's advertising revenue hints at the increased popularity of the platform's advertising system.
The following sections will discuss various aspects of Instacart's advertising system.
Part 1: Understanding the Instacart Advertising System – Ad Types
Instacart offers self-serve and managed advertising services, each with its own ad types. These ad types help advertisers create and run successful full-funnel advertising campaigns and drive the right metrics for various marketing goals, from awareness to conversion.
Instacart Self-serve Advertising
Self-serve advertising allows advertisers to determine and finetune various variables of their advertising campaigns. On Instacart, these variables may include budget, ad location, ad placement, and more.
Only sponsored or featured products are currently available under Instacart's self-serve advertising system. These ads appear in high-visibility areas and can be categorized into two types:
1- Search Ads
2- Non-search ads.
Instacart Search Ads
As the name gives away, Instacart search ads appear at the top of and within the organic search results. These ads are keyword targeted and are served based on your product's relevance with the search term.
Instacart Non-search Ads
Non-search ads appear in various places within the platform, including the product details page, Your Items section, the store home page, aisles or departments, and on the post-checkout page as a last-minute suggestion.
Product Details Page Ad
Store Home Page Ad
These ads help drive brand visibility as well as consideration.
Instacart Managed Ads
Instacart's managed ads are available to established Instacart sellers only. These ads give you access to coupons, hero banner ads, and delivery promotions, which help drive store traffic and sales.
Coupons appear below selected products and offer a deal or a discount to lure the shoppers into adding the products to the cart.
Hero banner ads appear at the top of digital aisles, driving brand awareness and consideration at the key moment along the customer journey.
24% of customers were willing to spend more to qualify for free shipping. And that's what delivery promotion ads capitalize on.
Using managed ad campaigns, you can offer free delivery to the customers after they have spent a certain amount on selected products and stores.
While sponsored product ads are keyword-targeted, managed ads are served based on the customers' past purchases and interactions and can be used for retargeting campaigns.
Part 2: Campaign Structure
Creating Ad Groups
Instacart lets you group your products in two ways, including:
1- Product Grouping: Product grouping enables you to put products with similar keywords in one group. We recommend grouping the products that share over 70-75% of their keywords.
This ad group will help you serve relevant ads to people looking for similar products, increasing your chances of conversion.
2- Grouping Similarly Priced Products: This entails putting the products that fall within the same price range into one group. Grouping similarly priced products helps you optimize the maximum CPC of the ad group more effectively because similarly priced products would return a similar profit per the price spent on the click. As opposed to that, products with substantial price differences won't be able to do justice to the CPC you would be bidding for the ad group.
Regarding ad groups, Instacart lets you include multiple ad groups within one campaign so you can run full-funnel campaigns and have better control over the results.
Instacart Budget Profile
After ad groups comes the budget profile or how you want to invest your ad spend.
Instacart lets you control your advertising budget by helping you decide how you want to spend it.
You can choose to maximize your ad impressions using your ad spend. In this case, the advertising system will push your ad, depending on your maximum CPC bid, and work to drive increased impressions, regardless of how soon the budget disappears.
Your ad campaign will stop once your budget has been exhausted. Going this route may entail the system spending all your budget in a few days and pausing your campaign until you recharge.
This is why this budget profile is less recommended.
When you go the paced spending route, you define a fixed budget and your campaign's start and end date. Instacart then divides your budget evenly throughout the timeframe that your campaign has to run.
This gives you a daily limit, which, if exhausted, results in your ads pausing just for the remainder of the day. Your campaign can restart the next day.
Paced spending helps you run ads more consistently for as long as the campaign lasts.
You can also choose to generate a report through Instacart, telling you about the impressions you missed because your budget maxed out. This will help you optimize your spending according to the impressions you want to generate.
Part 3: Keyword Targeting
Keywords are a critical component of all advertising campaigns, and Instacart ads are no different. If you have had a close encounter with Amazon or Walmart ads, you would be aware of how keywords work in ad campaigns.
Instacart keyword targeting is slightly different, though. Since it is still relatively new, Instacart advertising only supports exact-match keywords. Moreover, the platform does not allow negative keywords, nor does it let you pause or delete them once they have been added to the campaign.
Check out how a regular ice cream appears as a sponsored product for the keyword "low-fat ice cream." If Instacart were allowing negative keywords, the advertisers could include "low-fat ice cream" as a negative keyword to ensure their product doesn't rank for an irrelevant audience.
This was about what Instacart doesn't do. Let's talk about what the platform does in terms of keywords.
Instacart supports various types of keywords, including default, branded, and category keywords.
Default keywords are search terms relevant to your product. When someone searches for a default keyword, your ad campaign kicks in to serve your UPC as a sponsored/featured product.
A search term is added to your list of default keywords every time your campaign kicks in in response to this search term.
Instacart also lets you serve ads based on branded keywords. These keywords may have low CPC since very few advertisers would be bidding on your branded search terms and high conversions because people searching with the brand name might already be halfway through the conversion funnel. However, you can only use branded keywords when you have built a renowned brand name and are confident people will be searching for your products using your brand name.
Check out how Peet’s is serving ads for Kirkland branded keywords:
You can also target category keywords like "ice cream" and "jam" to serve your ads on category-specific pages. Such keywords tend to promise the best results because they have higher search volumes and can generate great impressions.
Part 4: Understanding Instacart Bidding
Where there's advertising, there has to be an auction and some bidding, right? Definitely!
Instacart advertising works on a 2nd price auction system. This means that the highest bidder wins the ad placement but pays the price equal to the second highest bid plus one cent.
This system is excellent for advertisers because it gives them room to bid as high as they want to so they can increase their chances of winning without making them pay a higher-than-market value price for the ad.
Instacart bidding starts at $0.15, and there are two ways you can bid for Instacart ads, including:
1- Default Maximum CPC
Default maximum CPC determines the maximum amount you are willing to pay for a click on your ad. You may not necessarily have to pay the maximum amount, but optimizing this value can help you win better ad placements.
Instacart uses the default maximum CPC for all non-keyword targeted ads, such as product detail page ads, home page ads, aisle ads, and Your Items ads. The platform also uses this bidding approach for any new keywords it has harvested that are relevant to your product.
2- Keyword Override Bids
Keyword overrides are search terms similar to default keywords, but they have specific bids on them that are other than the default maximum CPC.
Advertisers can choose certain high-performance search terms and use them as keyword overrides to bid a higher amount and multiply their chances of succeeding on these keywords.
For example, anyone selling low-fat ice cream would want to bid higher on search terms like "low fat ice cream" than "ice cream."
Part 5: Instacart Ad Measurement and Reporting
Performance tracking and reporting are critical to the success of all advertising campaigns. This is why Instacart provides its advertisers access to a dedicated Ad Manager through which they can track various metrics to determine the performance of their ad campaigns.
The platform claims to empower 5500 CPG brands with measurement metrics they need to determine the profitability of their ad investments.
Here's what you can do using Instacart's ad-tracking capabilities:
Instacart used to work on a last-touch attribution model before recently upgrading to a more profound multi-touch attribution model.
Multi-touch attribution helps identify the ads that the customers interacted with on their path to purchase and assign sales credit for the purchase to each of these customer touch points.
Using Instacart Ad Attribution, you can determine which of your ads have contributed the most to your revenue and streamline your campaign accordingly.
Since customers usually shop from Instacart throughout the week and checkout at the end of the week, the platform has a 14-day attribution window.
All the ads a customer came across within 14 days of the purchase will be counted as creditable touchpoints.
All self-serve ad formats can use the multi-touch attribution methodology.
Instacart Ad Manager also lets you determine the number of impressions your ads have generated to determine the success of your campaigns with respect to brand awareness and exposure.
Total and Organic Sales
You can measure your brand's organic and total (organic + ad-attributed sales) through Instacart to determine how your brand is performing on the platform.
Your brand could be getting more customers. But is it due to your brand's growth or Instacart's own expansion? Basket Penetration metric helps you answer that to determine how your brand is growing on the platform.
Basket penetration represents a percentage of all the Instacart baskets that contain at least one of your products. This helps you see how many customers your brand has managed to convert.
Average CTR or click-through rate represents the number of times consumers clicked on your ad when it was served. This metric can give a sense of how engaging your ads are to the customers and highlight key areas of improvement.
Return on Ad Spend (ROAS)
ROAS helps advertisers estimate the monetary value of their ad investments and is perhaps the single most important metric that brands look for. Instacart Ad manager enables you to track ROAS as well to understand how your investments are generating results.
Instacart Advertising is a growing system, with the platform looking to expand its technological reach. Instacart is actively working with its brand partners to develop new ad products and facilitate its sellers with better advertising products.
But before you can leverage Instacart's increased ad capabilities, it is important to get a grip on the platform's current advertising system so your brand can grow with the company and enjoy the early-bird advantage of adopting the new ad products as soon as they roll out.
Working with Accrue, you join forces with a team of ecommerce strategists and marketplace experts to develop the right selling and advertising strategy for your brand.
Interested in Instacart advertising? Let's talk.