Instacart pushes its smart carts into in-store retail media
The news: Instacart will begin testing ads on its AI-powered Caper Cart smart shopping carts at Good Food Holdings’ Bristol Farms stores in Southern California. Launch partners include Del Monte Foods, Dreyer’s Grand Ice Cream, and General Mills.
- The personalized, dynamic ads will showcase new products, brands, and deals, as well as product recommendations based on shoppers’ real-time behaviors or cart contents.
- For example, if a customer adds ice cream cones to their cart, they might see a recommendation for Dreyer’s ice cream, along with directions that steer them to the aisle where they can find it.
- Instacart will share smart cart advertising revenues with retailers.
The big picture: As Instacart’s grocery delivery business slows, it has leaned into its high-margin advertising business to drive growth.
- We noted in November that while advertising accounted for 30% of the company’s overall revenues in Q3, its growth potential had a ceiling given its tight ties to its grocery delivery business.
- Expanding into in-store retail media addresses that potential challenge. By weaving advertising into its smart carts, Instacart is positioning itself (and the retailers it is partnering with) to reach consumers where the vast majority—86.3%, per our grocery non-ecommerce grocery sales forecast—of grocery sales take place.
The in-store retail media opportunity: In-store retail media enables advertisers to access massive audiences that are an average of 70% larger than digital audiences for leading brick-and-mortar retailers, per data from Placer.ai and Comscore Media Metrix Multi-Platform.
- Instacart’s Caper Cart ads have a captive audience, which will enable brands to build awareness and consideration, in addition to in-store sales.
- Of course, caution is warranted given that it is very early days for both in-store retail media and smart carts. Our US in-store retail media ad spending forecast expects spending will reach $370 million this year, up 35.3% year-over-year. That’s a tiny fraction of the $59.61 billion that US advertisers will spend on retail media this year.
- Instacart has only deployed a small number of Caper Carts at stores including those operated by Good Foods, Kroger Co., and Wakefern Food Corp. It expects to deploy “thousands” by year-end, CEO Fidji Simo told Bloomberg Television.
The big takeaway: Because Caper Carts could enable Instacart to present consumers with products finely tuned to the items in their carts, they offer significant promise. But the proof will be in the pudding.
Most brands with an established customer base will consider launching on Amazon at some point. And why not?! With over 310 million active users, it’s the most popular e-commerce marketplace in the U.S. AND chances are a lot of your customers frequent Amazon already for online shopping and may even be wondering if your brand has a presence there. For brands that don’t have an Amazon storefront, two things can happen if a customer searches for your products on their search engine: Customers who can’t find your brand on Amazon will return to your website and purchase. Worst case scenario: They end up buying a competing product from Amazon instead. To battle these issues, the Pilothouse Amazon team sees a lot of brands take these two approaches when selling on Amazon: 1. Focusing on branded keywords Build it, brand it, and forget it. A lot of DTC brands will create an Amazon storefront, target only branded keywords in their ad campaigns, and then leave it at that. To do this, you’ll need to build an optimized Amazon listing, send in some inventory, and add some advertising dollars on branded keywords so you show up first in search results. Branded campaigns are a great way for your existing customers to find you with ease — Just make sure your competitors aren’t stealing away your customers! This can be a viable option for brands at a decent scale who don’t have the bandwidth to take a more comprehensive approach to Amazon selling. While this can add some profit to your bottom line, with this approach your Amazon revenue will only ever be as large as your branded presence. This means you're: ✅ Only targeting customers who are aware of your brand and products ❌ Not acquiring brand new customers 2. Focusing on generic keywords Now let’s talk about generic keyword advertising. A generic term is a non-branded term. For example, if you are selling a Nike Pegasus Trail Runner, “trail runner” would be a generic term and “Nike trail runner” would be a branded term.. Ranking well for generic keywords is a major win since these shoppers are net new customers for your brand with a strong intent to purchase. This approach is an investment at first but has the potential to result in huge gains. Here are two ways to achieve growth: Slow Profitable Growth In addition to branded campaigns that generate a high return, generic campaigns are built slowly and consistently on long tail low volume keywords that generate a profitable ACOS (Advertising Cost of Sale). Minimal budget is invested into ranking (high volume generic terms) in order to maintain a target-ACOS that is profitable to the brand. Fast Unprofitable Growth Allocate the bulk of your budget to campaigns that are designed to generate rank and combine this with an aggressive discounting and pricing strategy to boost CVR. Purposely running the account below a profitable Total Advertising Cost of Sale is the fastest way to achieve sales volume. Once volume and rank is achieved, the account is shifted to a profitable position. This is a cash investment approach and can generate great results, (provided the business is in a position to invest). Ultimately how and when you approach Amazon depends on the current goals of the business, the current cash scenario, and the long term goals for the Amazon channel.
As 2024 approaches, the digital advertising world stands on the brink of a significant transformation. The anticipated phase-out of cookies by Google has been a topic of discussion and speculation for years, yet the ad industry seems to be in a holding pattern, with many clinging to old habits as the deadline looms closer. Despite Google's history of delaying its timeline, the move towards a cookieless future is inevitable. Data from 33Across shows that all 10 industries tracked continue to rely heavily on cookies for programmatic ad buys, suggesting a slow adaptation to alternative identity solutions. This resistance to change could spell trouble, as the deprecation of cookies will not only affect tracking but will also necessitate a shift in how we approach digital advertising strategies. The Reality of Transition The transition is set to trigger a consolidation in the identity provider market, with a current oversaturation of services unlikely to be sustainable in a post-cookie environment. This consolidation could lead to a stronger, albeit smaller, group of providers emerging to lead the way in the new era of digital advertising. Apple's Move into Advertising Interestingly, Apple's foray into advertising appears to be gaining traction, with the company making moves to establish its own demand-side platform (DSP). This development is not only indicative of Apple's ambitions in the advertising space but also highlights the evolving landscape where privacy and advertising strategies need to coexist more harmoniously. The Path Forward As professionals in the marketing and publishing industries, the time is now to pivot and prepare. Embracing new technologies, exploring alternative tracking methods, and fostering a deeper understanding of consumer privacy will be key to thriving in this new reality. The journey towards a cookieless future may be fraught with uncertainty, but it also offers an opportunity to innovate and redefine the boundaries of digital advertising.