- Online grocery startup Instacart has a new self-serve advertising tool aimed at brands and agencies.
- Advertising is a way for retailers to supplement their e-commerce revenue that is known for being low-margin.
- The coronavirus has increased Instacart's popularity, since more people are buying groceries online, but its ad sales effort puts it in competition with retailers like Walmart and Amazon that are trying to build their own advertising businesses.
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2020欧洲杯小组赛The grocery-delivery service Instacart is looking to take a page from Amazon's and Walmart's advertising businesses.
The company has launched a self-service ad platform that grocery brands can use to promote their products on Instacart's website and app. Brands like Procter & Gamble, PepsiCo, and Kraft Heinz have tested it in recent months to buy and manage ad campaigns, and the tool is now available to all advertisers.
Instacart's user base has soared during the coronavirus pandemic as more people shop for groceries online. In April, Instacart reported that customer orders were up 300% year over year, hired hundreds of thousands of new workers, and rolled out new features to keep up with demand. The workers shop for groceries at 25,000 stores across 350 retailers in North America, like Kroger and local stores.
Instacart sees an opportunity to compete for shopper marketing budgets that typically go to Amazon and Walmart, which rolled out a self-service advertising platform earlier this year. Instacart hired Seth Dallaire, Amazon Advertising's former head exec, last year as its chief revenue officer to build out its advertising business and has also beefed up its advertising hires.
Jason Goldberg, the chief commerce-strategy officer at Publicis, said Instacart has benefited from the sudden increase in online grocery shopping because retailers cannot handle the new demand on their own.
However, the margins for e-commerce are thinner than those for brick-and-mortar commerce, which led Instacart and others to build out advertising businesses.
"If you're Walmart, you would rather people walk into the store," he said. "The e-commerce sales are wildly unprofitable, and you have to find new ways to make money through sales."
The self-service tool is for promoted products in search results
Instacart has run a managed-service advertising business for several years in which its sales reps work with more than 1,000 brands to buy ads. The new self-service tool affects Instacart's ad format called "featured products," which allows brands to promote products in search results. Brands can set their own goals and ad budgets and manage bid prices.
2020欧洲杯小组赛Instacart's other ad formats, including coupons, promotions for free delivery, and banner ads (called marketplace ads), will remain part of managed services.
Early testers gave Instacart's ad tool mixed reviews
2020欧洲杯小组赛E-commerce adtech firms and agencies that have tested Instacart's ad offering said it was early days for the grocery delivery startup.
2020欧洲杯小组赛"Initial signs are promising," said Adam Epstein, the vice president of growth at Perpetua Labs, an Amazon-focused startup that sells advertising software to brands and agencies.
Walmart and Amazon have made heavy pushes into online grocery shopping with ad products specifically for grocery brands.
One of Instacart's advantages is that it reaches a larger group of shoppers than people who shop at one retailer. But advertisers' shopper marketing budgets are limited and often just allocated to specific retailers, Publicis' Goldberg said.
"Yes, it's a bigger audience, but no individual trade team wants to pay for it," he said.
He added that Instacart has to compete with retailers like Walmart and Target, which are building their own advertising and grocery initiatives.
"In the long run, if 50% of sales are influenced by your website, you want that website to be your website versus Instacart," he said.