Thinking About Cutting Your Instacart Budget? Not So Fast.

“We won’t need to advertise on Instacart at the same budget level in 2022 ... will we?” Instacart is not going away even once the pandemic finally does. Online grocery shopping is now a behavior. It’s not too late for brands and marketers to get in on the action, either. If anything, it’s just beginning. It makes sense that marketers are recalibrating as consumers begin to resume their new normal lives. However, data and consumer surveys indicate shoppers have seen the future of grocery shopping—and it looks a lot like Instacart. The beauty of Instacart—now America’s second-largest grocery delivery and pickup service after Walmart, according to Bloomberg—is that it’s mature. Its power is the tech of sourcing (shoppers, orders, inventory, advertising) as well acting as the ecommerce platform for smaller local stores that simply don’t have the capital or time to build out an ecommerce offering. Instacart Bags $265 Million in Consumers’ Love Affair With Online Grocery Beyond groceries, Instacart has expanded into serving big-name non-CPG specialty retailers such as Sephora, Staples and Petco. So it's got the retail bases covered. In fact, Instacart has had a managed service business for ad sales for several years. And last May, Instacart introduced a self-serve platform where marketers can buy featured products in search results. So, abandon your Instacart investment? Quite the opposite. Reason 1: Consumers love it According to a July Kantar survey, 63% of Instacart users plan to use the service more in the future. Instacart’s reach is bigger than ever with over 600 retail partners and 45,000 stores in 5,500 cities with 500,000 dedicated shoppers, and available to 85% of U.S. households. And it’s not just Instacart that’s winning. Turns out consumers really love this whole ecommerce/same-day delivery thing. GoPuff with its 20-minute delivery windows, micro-fulfillment centers, more than 32 liquor licenses and $15 billion valuation seems to indicate that they’re also just getting started. Reason 2: A worthwhile trade-off Retailers may continue to hem and haw at the trade-off between Instacart’s control of their customer data and the business Instacart brings (sometimes at a loss per order). But what Instacart offers is “the only last-mile viable solution for food retailers,” according to Barclays Investment Bank's Karen Short on the Ecommerce Braintrust podcast. “Instacart has a leg up on a lot of the food retailers because they just have a much more diverse breadth of retailers in general and/or eyeballs.” Instacart is bringing the historically slow day-to-day brick-and-mortar retail insights up to the speed of digital. Brands face this same dilemma, which primarily stems from the disconnect when all retailer sales are aggregated across Instacart. They lose visibility and, therefore, leverage with the retailer when it comes to demonstrating performance, popularity and expanding (or retaining) that precious physical shelf space. But according to Barclays Investment Bank, which published a 2019 report titled Dissecting the Instacart Addiction, many consumers on Instacart don’t care who they buy from as long as they get what they want when they want it. People are still going to buy via Instacart. Repeatedly. So the trade-off could be worth it. Reason 3: Data, data and more data Advertising is just one option Instacart offers brands. Its sheer size means it can provide insights above and beyond the brand’s own data sets. This includes aisle (category) share, basket penetration, new vs. repeat buyers, out-of-stock rates and regional breakouts. While some of these metrics are provided on a quarterly(ish) and spend basis today, the day-to-day data to drive performance and decisions faster is—dare I say—Amazon-like. Instacart is bringing the historically slow day-to-day brick-and-mortar retail insights up to the speed of digital. Reason 4: You’re not paying for a sale you would’ve gotten for 'free' As I wrote in “How to Budget for Retail Media Advertising in 2021,” you aren’t paying twice to advertise the same product sitting on a shelf at an Aldi in Wisconsin if you are also advertising that same SKU on Instacart. And even if you were, the percentage of overlap is infinitesimally small relative to what you get incrementally. A user may go from Instacart directly to a retailer on Instacart due to marked-up prices from the retailer to cover their cost of being on Instacart. That is the retailer’s way of being in two places. If you’re already experiencing great organic sales via Instacart without advertising—wonderful. But you should know that 81% of Featured Product sales come from the top three placements, which are 40% of the clicks in search results. Are the search results set up to show you Featured Products ads first, before organic results? Yep. Same goes for Google. And Amazon. You can try to stay on the first page organically. Or, as you do with Google and Amazon, you can develop a strategy for what to pay for—what to grow and what to defend. Reason 5: Buy it again (and again) The Instacart shopping journey is not linear. They’ve been watching us shop and found that users like to wander, developing three different paths to cart: search results; browsing departments; or a list of previous purchases (aka Buy It Again). What’s interesting is that while you would normally consider category or browse-type behaviors as awareness or consideration, it’s actually also this discovery behavior that ends up being a conversion 20% to 35% of the time. Not something I’ve seen on many other platforms. The remainder of the path to cart is 40% to 50% from search and 20% to 30% from Buy It Again lists. And of course, you can place featured products at all three of these journey intersections. I’m not here to sell you Instacart advertising. A lot of the questions I get about retail media pertain to next best dollar-type approaches after the obvious big three of Google, Amazon and Facebook. Brands are looking to diversify their spend and find new customers. But at the same time, they have to reconcile return and revenue growth, while being asked to invest in retail media platforms left and right. It’s hard. All the retail media platforms are in different stages of their maturity compared to the big three. Explaining the nuances is tough; connecting the dots, even tougher. But if you’re looking for scale and growth this holiday season, I’d definitely check out the options on Instacart. And if you’re on there already—don’t abandon that cart just yet. Instacart Is Sharing Data With CPG Manufacturers to Prevent Supply Chain Issues