The Rise of Retail Digital Marketing: Instacart as a Case Study

 https://digiday.com/sponsored/retailers-have-become-premium-suppliers-of-ad-inventory/

A trend in digital advertising is the power of the retailer.  Instacart is an example of a company that has reaped the benefits of this trend.  In January 2022, Instacart set forth a strategy to grow via ad revenue (https://www.adexchanger.com/online-advertising/heres-how-instacart-plans-to-become-a-major-ad-platform/).  An article on AdExchanger explains how the grocery industry is one with thin margins, but a focus on ads would allow for Instacart to grow without needing to grow in terms of staffing.  In late February 2023, the Instacart was showing growth as a result of this initiative.  Per the Wall Street Journal, the company recently announced a 50% increase in revenue for 4Q’22 compared to 4Q’21.  (https://www.wsj.com/articles/instacart-sees-revenue-profit-boost-ahead-of-public-listing-1d7891d).  While the company “has struggled to increase order volume at the same pace it did during the height of the Covid-19 pandemic,” they have found success in advertising. 

Per Digiday, spend in retail “is expected to account for 19.3% of digital advertisers’ allotments in 2023.”  Given that platforms have first hand access to consumers’ data, this trend makes sense.  Per Digiday, “retailers’ rich first-party data procured from audiences’ sources has allowed them to become premium suppliers of ad inventory in a relatively short time.”  This is the very reason why Amazon’s ad business is growing. 

It is interesting to watch the transformation of companies such as Wal-Mart.  This business was a traditional brick and mortar operation.  Over time, they expanded to an online platform as well.  Today, they too have an online advertising revenue stream.  While Google will likely remain the winner in digital for years to come, it will be interesting to see how other companies grow profits in the digital ad arena.