Instacart Retail

3 Ways to Use Retail Media Advertising to Boost Your Bottom Line

Instacart

Instacart

Nov 4, 2022

You may remember receiving weekly ad circulars in the mail that listed discounts at local grocery stores for popular products and brands. Before retail media advertising, these print ads, along with TV commercials, billboards, and other traditional media, were the de facto way for grocers to get the word out about products and specials.

And while these ad tactics worked well in the past, digital-age marketers don’t use them nearly as often. Today, there is rising demand for more effective placement and more direct targeting. The key to creating alluring ads now lies in retail media advertising. In fact, a recent survey by McKinsey found that 70% of advertisers report that their retail media advertising spend is performing better than in other marketing channels. As advertisers continue to recognize the value of retail media, retailers will have more opportunities than ever before to effectively monetize their potential ad space.

What is retail media advertising?

Advertising with retail media has transformed the way retailers interact with and capture audiences online. Unlike a commercial mass-marketed to anyone with a television, retail media advertising gives advertisers the most bang for their buck by honing in on an intended audience ready to buy — whether it’s retailers promoting private-label products or consumer packaged goods (CPG) brands advertising hero products. Reaching consumers where they actively shop allows advertisements in retail media to help influence their purchase decisions as they actively choose what to add to their carts. Unlike traditional digital media, retail media’s ability to target consumers at that point of purchase typically yields much higher ROI than ads across other channels.

Picture of finger on a touch screen with increasing graph. Text reads 70% of advertisers report that their retail media ad spend is performing better than in other marketing channels. source: "Retail Media Network Survey", McKinsey & Company, 2022

In order to leverage retail media advertising, grocery retailers can partner with a retail media network, like Instacart Platform’s Carrot Ads, to enable CPG brands to purchase ad space on the retailers digital properties, like their owned and operated e-commerce site. Revenue from these ad sales can unlock an additional source of profit for retailers.

Retail media networks use first-party data — such as category trends, basket composition, and new to brand insights — to advertise across everything from home pages to search result pages. Through these online paid placements, grocers and other retailers can connect with consumers throughout the shopping journey. 

Three ways to maximize retail media advertising practices

Here are a few best practices any retailer can employ to make effective use of their ad space and target the right audience for the brands they’ll advertise.

Text reading "How to maximize retail ad practices" and three bullet points reading "1. Highlight brands that align with your unique selections 2.Leverage optimization tools right in our platform 3. Measure impact and make informed decisions"

Highlight brands that align with key differentiators

Every company offers key differentiators that set it apart from its competitors. For one retailer, it might be a long-standing reputation of trustworthy service and commitment to social change. For an independent retailer, it may be a focus on deep customer relationships and use of sustainably and locally sourced products. Using Carrot Ads, retailers can highlight the brands they want to feature, playing to their selection and strengths. 

The independent retailer, for instance, may highlight emerging brands or alternative products using banner ads, while a chain may focus advertising efforts on highly targeted digital ads segmented by flavor or product preferences. No matter what a company’s unique identity offers, retail media puts them in front of audiences that are most receptive to that messaging.

Take advantage of optimization tools

Retail media advertising features like Instacart’s optimized bidding tool automatically sets bids for your “sponsored product” campaigns. For a retailer or brand placing their own ads, this is a low-lift way to effectively improve campaign performance. For a retailer looking to increase revenue through ads sold on their site, this self-service tool alleviates the need for constant back-and-forth with advertisers. 

The optimized bidding feature automatically modifies bids of ad placement based on factors like seasonality, product performance, or changes in competition from other ads in retail media. This ability aims to generate the highest-possible revenue from an advertiser’s set budget.

Optimized bidding also allows advertisers to customize and set bids for placements that are important to their brand, whether it’s a sponsored product they want to highlight or a narrative-driven display ad to connect with their customer base. This feature separates out each ad, keyword, banner, or other digital placement as its own entity, allowing the user to set bids that align with their business budget and ad goals. As a result of these optimizations, retailers can effectively monetize their owned and operated storefront without worrying about staffing or managing their advertising program.

Track outcomes and impact

Let your advertisers’ outcomes speak for themselves with measurable, defined results. With more than 100 brands in its portfolio, the team at General Mills knew it needed to better measure its retail media advertising to guide decision-making and maximize its ad budgets. 

As a result of running large-scale, randomized control tests on the Instacart App to evaluate its ad processes, the team at General Mills implemented widespread optimized bidding. Shifting away from manual processes to automated bidding drove its return on ad spend (ROAS) 49.7% higher. Luckily, these measurements aren’t just available to global entities and big-name retailers. Even small retailers can leverage the tools via the Instacart Platform to track sales ROAS for ad placements on their owned and operated site, letting them see the results for themselves and make the most of monetizing their platform.

Image with an arrow facing up with text inside reading "49.7%". Text next to the arrow reads "By implementing widespread optimized bidding, General Mills drove its return on ad spend 49.7% higher."

Consistently reviewing campaign results while evaluating strategies, product features, and tracking customer conversion enables companies to better focus where to spend to optimize performance. 

How Instacart partners with retailers to expedite growth

Grocery specials before the nightly news or Saturday morning cartoons with cereal ads don’t have the same influence they used to, particularly in a world overcrowded with continuous targeted advertising. 

Instacart Platform’s Carrot Ads help everyone from small grocery retailers to large brands like General Mills by expanding and transforming the digital retail marketing experience, whether on Instacart.com and the Instacart App or on retailers’ owned and operated sites via Carrot Ads. For retailers looking to make the most of their platform and brands looking to realize their ROAS, Instacart provides the rich, diverse data and nuanced reporting tools that companies of all sizes need to drive better business outcomes. 

Learn more about how Carrot Ads can help you monetize your platform.

Instacart

Instacart

Instacart is the leading grocery technology company in North America, partnering with more than 1000 national, regional and local retail banners to deliver from more than 75,000 stores across more than 13,000 cities in North America. To read more Instacart posts, you can browse the company blog or search by keyword using the search bar at the top of the page.

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