Instacart just took its first steps beyond owned-and-operated Instacart media with the launch of a new retail media offering that serves ads on grocers’ sites and apps.
The new retail advertising product, called Carrot Ads, is part of a broader ecommerce offering Instacart introduced on Wednesday, which also includes Carrot Warehouses, a warehousing and fulfillment service, and an advertising analytics product dubbed Carrot Insights. These three pieces make up the Instacart Platform.
Instacart isn’t disclosing the revenue share for retailers that use Carrot Ads on their own sites or apps.
Although Instacart is the tech platform that sits behind many grocery sites – Wegmans and Publix, to name two blue chip clients – it’s never served ads or sponsored search placements into those surfaces.
While some grocers already work with retail ad tech vendors or have their own basic search ads, most have no sponsored ads whatsoever, Ryan Mayward, Instacart’s VP of ad sales, told AdExchanger.
The Carrot Insights analytics product also dangles a tempting, well, carrot. Metrics, such as delivery times, delivery ratings and order sizes are exclusive to the service.
Grocers can use the Instacart tech to serve their own direct campaigns with existing CPG retail marketing clients or source demand from Instacart.
Why would any retailer hold off?
Well, because there’s a delicate competitive dance between Instacart and the retailers on its platform.
The more shoppers and overall purchases are tied to Instacart, the more difficult it is for grocers to leave. But as grocers invest in their own advertising and fulfillment services, they’re incentivized to cut out the middleman.
“If Instacart gets too greedy or cannibalistic, grocery chains could delist and the pendulum could swing back to the grocers’ own sites or apps,” Forrester principal analyst Sucharita Kodali told AdExchanger last year in reference to Instacart’s owned-and-operated ad platform launch.
Whole Foods, for instance, was Instacart’s flagship partner for years – until the chain was acquired by Amazon and pulled out of its deal with Instacart.
But Amazon aside, the pendulum has swung towards Instacart since then. Target said it would leave Instacart after it acquired the fulfillment service Shipt in 2017, but it never did. Walmart joined Instacart last September, starting in New York City.
“With Instacart Platform, we want to power – or, rather, we want to build the technology to power every grocery transaction in North America,” Mayward said.
The Instacart Platform may be packed with carrots (that’s the last carrot pun, I swear), but the winner is still Instacart, even without knowing the rev-share terms.
When a sponsored search or (coming soon) a display ad on a grocer’s property puts an item in a shopper’s cart, the checkout and payment happens on that site or app, Mayward said, but the user must also have an authenticated Instacart account.
In other words, Carrot Ads is also a potentially invaluable prospecting channel for the Instacart app. So don’t expect Walmart or Target to sign up for that particular aspect anytime soon.
The three pilot customers named in the release are Schnuck’s, Plum Market and Good Food Holdings, all regional chains that benefit greatly from Instacart’s platform products, as well as the fact that Instacart can be a substitute to hiring and maintaining their own ad tech operation, Mayward said.
But as grocers get more sophisticated with online shopping, however, their demands on Instacart will become more sophisticated as well. It’s a process the company has already started to see play out.
“As retailers open up to ecommerce channels … they want to run their own ecommerce websites and want their own direct connection with consumers,” Mayward said. “And, more and more, they want to run their own ads businesses as well.”
