Photo by Lane Turner/The Boston Globe via Getty Images
Like your aunt and uncle, Instacart is a big fan of Facebook.
Specifically, its high-ranking execs.
No, Instacart isn’t building a social network…
… but its ads business is on the rise, pulling in ~$300m in 2020 with projections to hit $1B in 2022, per The Wall Street Journal.
What exactly are Instacart ads?
- Search-based: This is the core ad business, in which brands pay for placement on customer product searches (these ads are also bundled with coupons and deals).
- Display ads: Old-school banners on the website.
Ads are critical as delivery slows
Instacart’s delivery business boomed during the pandemic. Growth has understandably slowed by the startup is facing other headwinds, too:
- Competition — think Uber Eats and DoorDash (which almost acquired Instacart) — has eaten into market share, which was once more than 60% but is now hovering at ~50%.
- Labor and transportation costs have gone up.
Grocery chains typically sell shelf placement…
…to consumer brands (e.g., eye-level chewing gum at checkout) but may lose that revenue stream if those ad dollars are routed to Instacart.
WSJ notes that brands typically have separate budgets for in-store and digital ads. This could change in a post-COVID world — and if it does, grocers may like Instacart a lot less than Instacart likes Facebook.
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