Instacart has been one of the biggest beneficiaries of the growth of online grocery category. It accounted for almost 45% of all US online grocery sales in 2021, generating 26 billion USD in sales.
With the sustained popularity of online groceries, Instacart is expected to grow further, with its sales exceeding the 40 billion USD mark by 2024.
But it is not just the sales that are growing.
Instacart has also secured a spot in the list of popular digital retail media outlets and is offering its own suite of ad products. The platform accounted for 1.4% of US digital retail media ad spend, which is huge considering Instacart is up against the likes of Amazon and Walmart. The online grocery app’s share in digital retail media ad spend is expected to grow 2% this year.
We covered Instacart’s advertising platform in detail in one of our earlier blogs. In this blog, we will talk about Instacart’s Featured Product ads, their potential, and best practices for success.
What Are Instacart’s Feature Product Ads?
Instacart’s Featured Product ads are similar to Amazon and Walmart’s Sponsored Product ads. They help brands get premium digital shelf space for their products through ads that appear in high visibility spots such as search results, department and aisles pages, and checkout pages.
These ads work on a cost-per-click or CPC model and are keyword targeted. You can bid on a keyword and secure a premium ad placement based on how high you have bid on a relevant and top-performing keyword.
Why Consider Instacart Featured Product Ads
Instacart is ramping up platform competition. Brands can no longer gain visibility with a relevant audience, drive sales, and win on the platform simply by existing on it.
Instacart Featured Product ads offer brands a shorter way to premium digital shelf spaces and high visibility areas where your brand is more likely to get attention from the right audience.
This brings lots of benefits for sellers, some of which we outline below:
Increased Exposure
Instacart Featured Product ads appear at the top of the search results page and throughout the search results. According to Instacart, the top three products in the search results get the most – 40% - of all clicks.
When you run a Featured Product ad campaign, you maximize your chances of appearing in the coveted, high-traffic spots in the search results and driving more clicks.
Once your product ads get more clicks, the detail page it links to automatically gets more exposure. And if your page is optimized your products may end up in more baskets, increasing basket penetration.
Increased Conversions
Instacart’s Featured Product ads take your products to customers who are already looking for what you sell. For example, when you run ads for your frozen goods, your products will be displayed as Sponsored Products to searchers who are searching for frozen goods or are browsing the category.
Once your ad reaches a shopper already in the conversion phase, it would serve as a nudge to the customer to come through the funnel and convert from a prospect to a customer.
Bid As High As You Want
Instacart ads run on a second-price auction model. This means, if your ad wins the auction, you have to pay $0.01 more than the second-highest bid and not your actual bid amount.
This means you can bid as high as you want to maximize your chances of winning the auction and ad placement, without having to pay too high for the clicks you get.
Additionally, since Instacart Featured Product ads run on a CPC model, and CPC ads are inherently affordable, especially when compared to other advertisement models, you can easily drive exposure for your products, even with a limited advertising budget.
Increase Market Share
When you invest in Featured Product ads, your ads show up in places that get the most exposure with a relevant audience. If you build smart campaigns (we will share tips on how), you can block your competitors from showing up in similar spaces, dominate the ad placements, and eventually increase your share of voice and market share.
Instacart Advertising Best Practices
Instacart advertising is still largely unexplored. But if you sell grocery products, there is no reason why you shouldn’t be on the platform.
Instacart Featured Product ads can help you kick-start your journey on the platform, without having to spend months working your way up organically.
81% of all Featured Product Sales on Instacart come from the top three ads. So you need to build a campaign that can help you win placements in high-revenue areas.
Here are a few best practices you need to keep in mind as you build an Instacart advertising campaign:
Start with Products that Do Well On Other Platforms
If you are expanding to Instacart after building a strong presence on any other retail media platform like Amazon or Walmart, you may have a list of products that perform well on these platforms.
It might help to start advertising your best-performing products. If customers have liked these products on Amazon and Walmart (or any other platform) they may like them on Instacart as well. In this way, advertising this product may lead to more sales and it may be easier for you to generate a strong ROI on your Featured Product campaigns.
Go In with a Smaller Budget
Since you are testing the waters at this point and not entirely sure how Instacart’s advertising ecosystem works, consider starting with a small budget.
Bring your best-performing search terms from Amazon and Walmart, and look for exact-match keywords that align with these search terms. Then bid carefully on these keywords, and track and optimize keyword performance.
A good rule of thumb is to go with 10% of the ad budget you have allocated to your best-performing platform.
Use this budget carefully, and see how much you have to bid to drive sales for given keywords and then increase accordingly.
Go the Paced Spending Route
Instacart gives you control over how you want to spend your advertising budget. You can either go for maximum impressions, in which case Instacart will push your ad to gain as many impressions for your choice of keywords, disregarding how the budget is spent. Your campaign will be paused once the budget is exhausted, potentially leading missed conversion opportunities.
Or you can choose paced spending, where you can define a fixed budget and the number of days you want your campaign to run. Instacart then divides the budget equally across campaign flight time. Your ads run every day as long as the daily budget lasts. Instacart pauses the campaign once your daily budget is exhausted, resuming it the next day.
This helps you run your ads consistently, as long as you want, without exhausting or exceeding your total ad spend too soon.
Consider Advertising a Good Number of UPCs for High Product Coverage
Instacart Featured Product ads often feature multiple products, side-by-side. When you target only one UPC per keyword, your competitor may likely pop up right next to your ad, competing for customer attention and other KPIs.
So, it might help if you advertise multiple products for the same keywords. For example, you can run ads for 10 oz and 32 oz. bag of your frozen fruit product for the keyword “frozen fruit” to maximize product coverage and block the competitors from occupying placements close to you.
Conclusion
After seeing a sharp rise in popularity over the pandemic years, Instacart’s growth has slowed down a bit. But the online grocery category is growing nonetheless and Instacart is growing with it.
The platform has launched several new ad products and offers numerous facilities to advertisers to help them launch successfully and build a strong and stable presence on what could be the next big thing in online grocery.
Team Accrue helps brands identify the best opportunities for expanding their business and helps scale their business on all platforms that promise value.
Think Instacart is right for your business? Discuss your expansion options with our ecommerce strategists and get a blueprint to craft Instacart success.
Ready? Let’s talk.