acart’s IPO: Seven key takeaways from advertisers

Instacart, a grocery delivery service and advertising platform, filed its IPO Friday.

Why should we care? Instacart Ads allows CPG brands to advertise their products (via sponsored ads, display advertisements, coupons) in front of 7.7 million monthly active orderers as they shop.

1. Instacart 2023’s ad revenues. Instacart reported a $406 million ad income for the first six months of 2023. This is a 24% increase year-on-year.

• The increase in ad spending was due to an increase in advertising volumes and the adoption of new features and products. This is despite a decrease in ad expenditure by brand partners because of “macroeconomic uncertainties” and changes in their businesses and performance.
• The same period in 2020, the ad revenue was $327 millions.

2. Instacart 2022 advertising revenue. Instacart’s full-year revenue reached $740 million, an increase of 29% YoY. Instacart’s advertising revenue was 29%.

• Ad revenue in 2021 will be $572 million, or 31% of the total revenue. In 2020, it will be $295 million.

3. Intacart has more than 5,500 active brand partners using Instacart ads as of June 30, 2018. This number has increased “five times” since December 2019

4. Instacart Ads will be launching new offerings. According to the S-1, Instacart plans to launch new display advertising options.

5. Instacart intends to increase its advertising tech for more retailers. According to the S-1 filing, the company plans to grow and invest in the Instacart enterprise platform.

• “In 2021 we launched Carrot Ads. This helps our retail partners capture monetization opportunities, while expanding advertiser reach to new millions of customers through additional relevant placements in retailers’ own and operated online stores.”

6. Instacart’s quarterly financial results will be affected by seasonality.

• According to the filing, “our advertising and other revenues have historically been seasonal high in the fourth and low in the first in a given calendar year due to how advertisers allocate their budgets.”

7. Instacart Ads revenue growth strategy. Instacart’s advertising revenue growth strategy.

• “Capture more ad spend and add new brands to Instacart Ads. We plan to capture a larger portion of brand spend through digital marketing, as well as data and customer insight. The number of brand partners who are active and their spending will depend on how well we can grow our customer base, create more impressions and clicks, and innovate our ad offerings to provide attractive ROI for our brand partners.”
• “Grow sales for emerging brands and non-food categories.” We plan to increase sales of emerging brands and nonfood categories with higher advertising budgets such as pet products, household items, and personal hygiene. We expect a shift in the mix towards GTV as we increase sales of emerging brands and non-food categories. These include household products, pet items, and personal care.

Instacart’s filing. The company also praised its ability to drive sales and high ROI.

• Our grocery expertise has allowed us to create differentiated advertising tools and solutions that enable CPG brands reach and engage high-intent consumers at the point of sale and within minutes after delivery and consumption. We provide brands with differentiated analytics based on our unique insights and customer data, which allows them to optimize their advertising budget and increase their wallet share.

Instacart Form S-1 .

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