May 7, 2021
E-commerce may be the future of shopping, but brick-and-mortar pretail isn’t going away any time soon. Delivery apps like Instacart bring these worlds together in what’s proven to be a recipe for phenomenal growth. But that success didn’t occur overnight, and mobile user acquisition through digital advertising had a big role to play in affecting change. In this article, we’ll highlight the strategies that made Instacart’s advertising stand out, particularly in the wake of COVID-19.
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The Instacart advertising strategy
Understanding Instacart customers and shoppers
Forging partnerships with retailers
Optimizing for performance in the post-pandemic world
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Instacart’s advertising goal begins with reaching customers and converting them from traditional food shopping to a life of digital commerce, but hungry customers aren’t the only audience. Personal shoppers are also a crucial part of the market — without them, it’s impossible to complete grocery deliveries! Every time Instacart expands into a new region, it must develop sustainable baselines for each group simultaneously. If there aren’t enough shoppers, customers will use alternatives. Without enough customers, shoppers find work elsewhere.
Promoting food delivery to each audience requires three key steps:
This approach is precisely why Instacart began small, focusing on the San Francisco area. Once the concept proved successful, Instacart conducted extensive market research and laid the groundwork for each expansion. Mobile user acquisition is far easier once brands have data to inform their regional strategies.
Instacart, like other online grocery services, can only promote itself to audiences if it understands their needs. What factors convince customers to submit an online order instead of entering the store? What age groups are most likely to start work as a personal shopper? While this answer will vary by region, Instacart’s statistics do reveal some general trends to keep in mind:
These metrics suggest two core personas reflected in Instacart’s advertising strategy. The first is the young mother with limited time to make her grocery shopping trips. The second is an internet-savvy retiree who needs assistance to get their groceries — representing a smaller but still dedicated audience. These target audiences are significantly represented in Instacart mobile ad creative to form a direct connection with mobile users and encourage direct response.
Another significant Instacart insight is that shoppers are not so different from customers:
This overlap is common in two-sided market apps — Airbnb’s marketing strategy of recruiting hosts from its guests being another example. By marketing to existing customers, Instacart was able to expand its available labor market and offset churn within its delivery team.
Outside of Instacart advertising, one of the best methods to cultivate customer adoption is through retail partnerships. These relationships benefit Instacart, customers, and retailers in equal measure. By integrating its platform with over 300 retailers — including Costco, Sam’s Club, Kroger, and many more — storefront customers can see convenient, same-day delivery options from each brand’s app and website. Meanwhile, retailers gain access to a successful e-commerce and logistics infrastructure, saving on investment costs. Finally, each new partner expands Instacart’s brand visibility — not just among customers but other retailers as well — while creating opportunities for shared branded messaging like the example below.
As strange as it sounds, Instacart’s biggest retail challenge was that its partnerships were too successful. In January 2020, Instacart was already positioning itself as a valuable retail service. As the COVID-19 pandemic went global, these integrations were in place just as customers began searching for retail delivery options. Online orders grew by 500% within a single month, forcing Instacart to scramble and scale its platform to address higher traffic volumes. Even recent ad creative talks candidly about COVID’s challenges, offering Instacart as a potential solution.
Meeting pandemic demand was both a trial and an opportunity for Instacart, but COVID-19 will eventually come to an end. When that happens, some customers will return to in-person shopping while many continue to use online deliveries. What that environment will look like it unclear, but consumers are going to maintain a higher level of online and on-demand consumption — which means retailers will have a bigger presence in mobile advertising spaces than ever before.
Adjusting to these changes will be a challenge for grocery delivery apps, but Instacart’s strategy offers a solution. To begin, we can analyze data to better understand who is shopping online — whether through apps or the mobile web — that wasn’t before. Next, we can segment audiences into customers and potential shoppers who can help meet increased demand. The final step is to A/B test and optimize ad creative to find the most effective ways of acquiring mobile app users in the post-pandemic environment.
Instacart may be the right platform for the right moment, but its massive success required more than coincidental timing. It needed to develop connections with customers, shoppers, and even retailers to create the infrastructure for its e-commerce service. The Instacart advertising strategy of segmenting local audiences, remarketing to potential shoppers, and optimizing ads for performance will continue to be effective once COVID-19 is a memory.
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