How Instacart is using shoppable videos to prove it can drive brand sales

Ahead of its IPO, Instacart is looking to prove to investors and consumer packaged goods (CPG) brands that the app is just as good as roaming grocery aisles in real life. The company is adding more features to its ad platform, such as shoppable video, to try to cater to more brands and increase customers’ basket sizes. “We want to be more inspirational for consumers, rather than transactional, and believe ads can help with driving that full-funnel awareness,” said Ali Miller, VP of ad product at Instacart. But it’s not clear if retaining advertisers and customers will come easily. In 2020, Instacart had over $23 billion in grocery sales, up from just $7 billion in 2019, according to eMarketer. It's estimated that sales could reach $30 billion this year. Earlier this month, Instacart filed with the Securities and Exchange Commission to go public. But in March, the company slashed its own valuation by almost 40% to $24 billion. Now, the company will have to get investors to look beyond the departure of executives including Carolyn Everson and Seth Dellaire, and prove to advertisers that its growth in the pandemic and consumer preferences for delivery will stick. Sign up for Ad Age newsletters Get the latest news and analysis delivered to your inbox Click here Part of that strategy has been leaning into the company’s technology. Instacart offers enterprise analytics software for grocers, fulfillment services, e-commerce technology, an ads platform and 15-minute delivery, not to mention a trove of consumer basket data. In 2021, the company acquired Caper AI, an AI startup that developed a “smart” shopping cart that recognized products placed in the cart and can automatically charge shoppers. The latest step in that technology push is rolling out a new ad format, shoppable video ads, with the goal of surfacing new products to shoppers, leading to bigger baskets at checkout. Credit: Instacart This is Instacart’s first video ad product and is still being piloted by brands like Dove, Mondelez and S.Pellegrino. Instacart said it will be in the “test and learn” phase along with these CPGs to make adjustments for when the format is available to all brands later this year. “We are constantly looking for innovative platforms to engage with our audience. Working with Instacart Ads has enabled us to try new tools that do just that,” Leslie Miller, Dove’s marketing director, said in a statement. “Testing Instacart's new shoppable display and shoppable video ads have equipped us to inspire even more people with our brand storytelling and seamlessly drive purchases as they shop on Instacart." But Instacart also faces competition from quick-delivery companies like Gopuff and Getir, as well as Amazon Prime customers who get discounts at Amazon-owned Whole Foods and have access to Amazon Fresh. In 2021, Amazon’s U.S, average revenue per user (ARPU) for its retail media network was $111 per user, while Instacart’s was $29, according to eMarketer. While Instacart may be lagging compared to Amazon, it’s still ahead of Walmart’s $13 per user. “We believe that Instacart ads are a way to reach consumers that are inventory-aware, taking into account stock on retailer shelves,” said Instacart's Miller. “Keeping in mind difficulties in the market, we think these will drive an impact that matters. We want consumers to know that they can turn to Instacart not just for weekly food orders, but personal care, wine, and household items.” There are plenty of other “pandemic darling” companies that have faced a similar challenge. DoorDash benefited from people staying home and trying to support local restaurants with takeout; while Shopify gained plenty of new users as small businesses and entrepreneurs shifted to e-commerce to stay afloat. Zoom’s stock has also started to fall as companies embrace hybrid working and return to the office. Peloton went public before the pandemic, reaching a stock price of $160 in December 2020. Since then, the brand has faced executive shake-ups, layoffs, and is trying to add new products to attract customers. Related: Agencies return to office—inside the bumpy transition Instacart is also improving its shoppable display ad option, which has been in the pilot phase since last year. The new version will let users add featured products with one click. Previously, there were more steps between seeing the ad and putting the items in their cart. The company says that more than 40 CPG brands including Dove and PepsiCo are a part of the pilot, and the option will roll out to brand partners later this summer. Credit: Instacart “Shoppable display has proven to be an effective way to drive first-time purchase of our products via the Instacart platform,” Emily Frankel, senior VP and e-commerce marketing head at PepsiCo, said in a statement. “And while we’re just getting started with shoppable video, we look forward to continuing our work to give consumers a compelling omnichannel experience.”

How Instacart is using shoppable videos to prove it can drive brand sales

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