Advertising can be cheap. But acquiring new users is almost always expensive.
Which is why the Instacart ads team is focused on creating new advertising opportunities to reach the customers it already has.
On Wednesday, the company introduced its first display ad units, as well as branded pages that serve as the hub for CPG and food brands on Instacart.
The new brand pages are free and designed to help brands do more, well, branding. In the aisles of a physical retail store, brands can rely on packaging, shelf placement and the product itself to stand out. Food brands with a shorter shelf life, like fruit and vegetables, bank on the look and feel of fresh products to catch a shopper’s eye.
Consider Driscoll’s, the world’s largest berry seller, which has spent hundreds of millions of dollars to genetically modify berries to look delicious – in person. The juiciness of real-life berries doesn’t translate to a JPEG, especially when trying to compete with other berry brands on Instacart.
The brand pages are an opportunity for marketers to highlight products and add storytelling elements in their own style and language, rather than the clipped, businesslike item descriptions shoppers see in their Instacart feed.
But although the brand pages are gratis, Instacart plans to generate revenue with display advertising.
Instacart’s display ads are sold separately from its Sponsored Product search units, which place items in the grocery feed. The display ads appear atop the page and in the side bar and are sold on a CPM basis, whereas the search units are pay per click.
Taken together, the display and sponsored search units will likely increase branded competition on Instacart.
“There are smaller brands that aren’t breaking through in search,” said Ryan Mayward. These brands can now buy display ads to reach customers without competing directly on prized search terms with deep-pocketed CPGs.
But large CPGs have also been asking Instacart for ad products to help new items stand out, Mayward said.
Big CPGs are constantly rolling out new products and assortments for one or another of their well-known brands. Consider how many different spinoff Oreos or cereal options you see on the shelves. They need display units to increase awareness, since people can’t search for items if they don’t know those items exist.
The display ads are also way to increase basket size, Mayward said. A customer who adds Pepsi drinks to their cart might also be looking for Tostitos or Doritos, to name just a couple related Pepsi snack brands. Now Pepsi can nudge those options even if a shopper doesn’t enter a term like “chips” or “snacks” into the search bar.
Additionally, brands can now target Instacart users more broadly. They’re able to reserve the retail shopping homepages that shoppers go through on the platform, reaching a larger share of the overall user base in one fell swoop.
It’s similar to how the YouTube homepage can be purchased by a brand to reach all viewers without having to win each video impression one by one, Mayward said. Also like the YouTube homepage banner, Instacart’s “storefront” ad unit, as it’s called, is carved out from the auction and sold on a reservation basis.
Still, Instacart’s new ad products will require some tinkering. Since the CPC-based search ads are separate from CPM-based display, an active brand could easily end up as both the sponsored in-feed product and in the display ad banners.
But Instacart also has targeting options for its display ads, including the ability to target customers who regularly shop a category – vegan, say, or salty snacks – or who are the known customers of a competitor brand.
And on Instacart, shoppers see a far larger selection of items than they would in a grocery store, Mayward said.
“So they switch into discovery mode and their brand preferences become somewhat malleable,” he said.
