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Featured Product Ad Strategy for Winning on Instacart

Featured Product Ad Strategy for Winning on Instacart

Featured Product Ad Strategy for Winning on Instacart

Jul 27, 2021

In this article, we examine what a best-in-class Featured Product strategy for advertising on Instacart marketplace looks like. Then we’ll provide some steps you can take right now to optimize your Featured Product campaigns.

When thinking about advertising on Instacart, it is important to recognize the differences between how consumers shop for groceries online and in-person. When consumers visit the grocery store they need to walk up and down the aisles to find the products they’re looking for. This means sight-lines, shelf position, packaging, among many other factors influence which products end up in the basket.

Shopping for groceries online does not impose this structure. Instead, when consumers shop their favorite grocery retailer on Instacart marketplace they can browse directly to a department or aisle, search for a specific item, and review personalized suggestions served up to them. Our data shows that consumers are adding items to their cart from all of these sources. Plus, the consumer journey is non-linear — meaning they don’t always start and finish in the same spot. Consumers can instantly switch between departments, search, recipes, and personalized suggestions without having to travel down an aisle or through a department, as they do when shopping in person.

Another major difference between shopping in-person and online through Instacart marketplace is the number of products displayed to consumers at a time. A consumer shopping in-person might be able to see the majority of the produce department or quickly scan the frozen foods aisle and take in dozens of products at once. But when shopping online, they can only see the items that fit on their screen at one time. On a computer, this can be around two dozen products, but on mobile, which as many as 70% of Instacart consumers use to shop, it’s roughly 4–6 products.

The limitation of screen ‘real estate’ drives the value of premium digital shelf space for brands and advertisers. While shopping in person, consumers must walk through the store; online they are not scrolling through pages and pages of products.

Brands that partner with us to advertise on Instacart can secure premium digital shelf space using Featured Product ads. In a previous post, we talked about how the consumer journey is non-linear and they buy products from discovery surfaces, search results, and personalized recommendations in ‘Buy it Again’ lists. One of the benefits of using Featured Product ads is that they work for all steps of the consumer journey. Whether consumers search, browse and discover, or buy again, Featured Products puts relevant products in their sight-lines.

Featured Product placements in search

While not the only way consumers shop, search remains an important way that consumers find products to buy. On average, consumers make 20+ searches each visit to their favorite grocery retailer on Instacart and 40% of all clicks on search results are on the top three products, which are Featured Products. These have a 20% higher click-through rate (CTR) than the next three items on the search results.

Featured Product placements in discovery

As consumers navigate the Instacart marketplace, browsing departments and aisles, reviewing their order, adding last minute items to their cart, they encounter what we call ‘discovery surfaces’, areas of the app which display products for discovery and inspiration. This is akin to walking up and down the aisles in the grocery store — consumers are not always looking for a specific item, often they are just browsing, looking for inspiration or to try something new. A consumer on a typical journey through Instacart marketplace will encounter 7+ discovery surfaces, each of which display Featured Products. 70% of add to carts from these discovery surfaces are consumers trying products for the first time, making these placements perfect for brands trying to capture new customers.

Featured Product placements on Buy it Again

After consumers select which retailer they want to order from on Instacart marketplace, the app displays what we call the storefront. It’s like a homepage for that store. On the storefront, the app displays a ‘Buy It Again’ list which contains products the consumer has previously purchased. This list, a preview of a full page of Buy It Again items, helps drive convenience for the consumer by reminding them of their ‘go to’ items which they can easily add to their cart without browsing or searching for them. 67% of all Buy It Again add to carts come from the list on the storefront. Instacart displays this list as a ‘carousel’ which consumers can scroll through. But with 30% of all Buy It Again add to carts coming from the top four items on the list and over 170 items, on average, in a consumer’s Buy It Again list, brands winning this space use Featured Product placements to surface their products.

Optimizing your campaigns

Given the importance of Featured Product for driving basket penetration, boosting sales, and growing and protecting category share, brands need to optimize their Featured Product campaigns by addressing the three main components to a successful Featured Product strategy:

  • High product coverage
  • Strong bids
  • Sufficient budget for an always on strategy

Let’s look at each component in turn, starting with high product coverage. Why is this important? To both block out the competition and account for variability across retailers and preferences, a high UPC coverage is required.

To block out the competition, brands need multiple products winning Featured Product placements so they can occupy all of the premium digital shelf space. For example, when consumers search for ‘soda’ on the Instacart app, there is only enough room for four Featured Products. If a soda brand only advertised for one of their UPCs, say the two liter bottle of their soda, the other three Featured Products displayed at the top of the search results would be from the competition. If, on the other hand, the soda brand advertised for all their soda products, individual cans, packs, large bottles, diet and sugar free versions, different flavours, they would have a shot at winning all of the premium digital shelf space.

Brands also need a high product coverage to account for the variability in the different UPCs different retailers carry. Instacart only displays Featured Products for products that are available and in stock at the retailer and specific store a consumer is ordering from. So the soda brand with a Featured Product for just the two liter bottle of their soda won’t feature in any Featured Product placement when consumers shop at any retailer which does not carry, or have in stock, that UPC. With 600+ retailers on Instacart marketplace with a diverse selection of products, brands need to use a high UPC coverage to ensure their brand shows up when consumers order from any retailer.

The next factor in a Featured Product optimization strategy is the bid amount. This is relatively straightforward, but the higher the bid, the better chance of winning a top placement. Brands looking to optimize their Featured Product campaigns need to be bidding to win one of the top three placements. Because being on the page isn’t enough — consumers using Instacart for convenience are unlikely to scroll through lists of items, instead adding products from the top of the page. 81% of all Featured Product sales come from the top three placements. And these placements have a 10x higher CTR than ads lower down on the page.

The last component in a successful Featured Product strategy is the campaign’s budget. Obviously a brand with an unlimited budget does not have to worry about this factor. They could run Featured Product ads for all of their UPCs and set bids high enough to win every top placement on every page. But in the real world, brands have budgets. So to optimize their Featured Product strategy, brands need to balance their UPC coverage and bids within their budget to implement an ‘always on’ strategy.

When ad campaigns consume their daily budget, they stop participating in auctions and no longer show up in Featured Product placements. So great UPC coverage with a high bid to win the top Featured Product placements won’t be effective with a budget that runs out by 9 a.m. most days. Brands get better performance with competitive bids on a number of UPCs that their budget can support. Finding this balance is an ongoing process of logging in to Ads Manager to review bid and budget recommendations.

Of course the first step to implementing a successful strategy for winning on Instacart is to partner with us! You have to play to win, as the saying goes, and only brands running Featured Product campaigns are getting their products onto premium digital shelf spaces. To get started, visit https://ads.instacart.com/signup.

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