Instacart’s advertising platform hits the teens, with new optimization products and auction data

Two years after Instacart made its first major advance in advertising technology, the company is launching more products that follow the playbook written by other major online advertising platforms.

Two new tools, called Optimized Bidding and Bid Landscapes, were launched on Tuesday.

The Optimizer product is Instacart’s first product that optimizes campaigns on behalf of advertisers.

For advertisers running their own campaigns, Bid Landscapes provides more data to inform bidding strategies, like how likely a certain keyword will lead to a conversion, for example, or whether seasonal changes mean certain words keys lose or strengthen their advantage throughout the year.

“We’re a maturing advertising platform,” said Ali Miller, vice president of ad product management at Instacart. As Instacart learns over time what works and what doesn’t work on its advertising platform, it will turn those learnings into business products.

Most ad optimization technologies or self-service advertisers configure future spend based on post-campaign performance, Miller said, instead of Instacart’s predictive approach. One reason this approach doesn’t work well in food is that consumption is highly seasonal.

If users searching for cinnamon baked goods were big spenders in December, most platforms will tell the brand to prioritize that keyword even more in January. But what about the fact that cinnamon baked goods only sell out in December? Maybe in January, the same brand would be better off promoting healthier options to dieters, before launching into chocolate in February.

With a few years under its belt, the Instacart advertising platform sees how offers change seasonally throughout the year, and other ways to extract value and efficiency on the platform by function of grocery store models.

Hometown Foods (which owns Pillsbury among other baked goods brands) worked with shopper data firm IRI on a marketing overhaul last year and determined the company was losing market share in terms of e-commerce and online grocery ordering, said COO Dan Anglemyer (the former market head).

Hometown’s marketing review led the company to Instacart, after checking out virtually every grocery ad platform out there.

“We wanted to have the flexibility to test and learn in a flexible way,” Anglemyer said. Hometown Foods was a pilot partner for Instacart’s enhanced bidding product.

But Instacart’s young platform comes with more controls that the brand needs. Most important is margin management and the ability to target a particular ad ROI, according to Anglemyer.

Other major retail ad platforms have “prohibitive” minimum spend commitments, he said. “It seemed like they were trying to lock us into a number and the results were doomed.”

Hometown found that Instacart’s bid optimization didn’t work for its smaller regional bakery brands, which couldn’t outrank the big brands despite its marketing spend. A large retailer will continue to push that spend regardless of margin and bottom line management. So instead of investing wasted dollars in those brands, with Instacart, those dollars are transferred to other products or search terms that meet the brand’s targeted profitability returns.

“We wanted to put more gas on the fire, in terms of investing in e-commerce sales,” Anglemyer said. “But we wanted to do it with a high degree of certainty that it works.”

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