Webinar

A Discussion on Instacart Strategy for CPG Brands

Tuesday, May 25, 2021
@
-

Jamie Dooley

Partner, Digital Commerce Practice
TPG
TPG

Tim Madigan

Partner, Digital Commerce Practice
TPG
TPG

Webinar

A Discussion on Instacart Strategy for CPG Brands

Thursdays
May 25, 2021
@
-

Jamie Dooley

Partner, Digital Commerce Practice
TPG
TPG

Tim Madigan

Partner, Digital Commerce Practice
TPG
TPG

Webinar

A Discussion on Instacart Strategy for CPG Brands

Date:

Tuesday, May 25, 2021

Time:

-

Register Here.

Webinar

A Discussion on Instacart Strategy for CPG Brands

Date:

Thursdays

May 25, 2021

Time:

-

Register Here.

Instacart Advertising: How to Guarantee Your CPG Brand's Success with Winning Strategies

Date Recorded:

May 25, 2021

Recorded Webinar:

A Discussion on Instacart Strategy for CPG Brands

Jamie Dooley
Partner, Digital Commerce Practice
TPG
TPG
Tim Madigan
Partner, Digital Commerce Practice
TPG
TPG

If you missed this webinar, check back soon to view a recording.

Summary

With Instacart’s explosive growth, recognize and leverage opportunities for brand growth in the eCommerce industry. This webinar will take you through a roadmap of how your CPG brand can begin and perfect the advertising strategy on Instacart, as experts answer ten of the most burning questions.

Key Takeaways

  • Analyze Instacart’s profit sustainability: Visualize Instacart’s predicted shifts in the near future to formulate a plan for long-term growth with the platform.
  • Adopt strategies of successful CPG brands: Find the approach that Instagram has applauded historically and adapt in concert with your native platforms.
  • Categorize goals for efficient promotions: Create a balance between consolidation and division of your budget for a smart promo approach.
  • Avoid consumer double-dipping: Recognize double-dipping threats by reviewing your pricing data and being prepared in advance with offers and coupons.
  • Measure your results for better performance: Understand category-wise ranking and use your analytics to future-proof your growth.
  • Priority Instacart Tactics for retailers: Sneak peek into the best and worst advertising tactics according to latest statistics.

Related Resources

View All Webinars

Transcript

Jamie
Good morning, good afternoon everyone, depending on where you are in the US, and welcome to our webinar and Q and A analyst discussion today around Instacart strategy for CPG brands. I am your moderator today, my name is Jamie Dooley, I'm a partner in the e-commerce practice for the Partnering Group or TPG, for short. Pacvue and TPG are co-sponsoring today's webinar, we have a packed agenda today, we already took a number of questions from the registrants, so we have a lot of great stuff to go through with regard to Instacart, so we're gonna jump right in now and just a reminder to everyone that we're recording today's event for future posterity, so we're gonna do our best not to say anything inappropriate, but I don't make 100% promises there. So as we look at our really esteemed panel here, I'm gonna start by introducing Todd Hassenfelt who is the Senior Director of e-commerce at Simple Mills, which is a high-growth female-founded health and wellness food brand in crackers, cookies, baking mixes and soft baked bars categories. Todd has versatile experience with leadership roles in both brick and mortar and e-commerce channels at large corporations and start-ups, so Tom, thanks so much for joining us for this discussion today.

Todd
Happy to be here, thanks for everyone who joined.

Jamie
Great. Next up is Tim Madigan, who is a digital commerce partner at TPG, he was previously vice president of E-business and E-commerce at Tyson Foods. And his background also includes having held E-Commerce leadership roles at SC Johnson as well as Procter and Gamble, Tim, thanks so much for joining us for this discussion as well.

Tim
Glad to be here.

Jamie
And then last, but not least, is Melissa Burdick, President of Pacvue. She's an expert in designing for online and e-commerce marketing strategies, she was a 10-year Amazon veteran and was an early leader of the Amazon Media Group. So thanks so much for joining us and Pacvue for co-sponsoring today's event, and I know you wanted to say a few words about Pacvue as well.

Melissa
Absolutely, thanks for having me. Excited to be here, talk Instacart. So for those of you who don't know us, we're an enterprise platform or a SaaS technology that sits on top of the APIs, unifying retail media, so we help brands with their advertising strategies in technology across Amazon, Walmart, Instacart, Target, and a whole slew of retailers that you can access. Excited to be here and talk about Instacart and the rise of retail media as well.

Jamie
Great, well, we're gonna dive into all the questions we received prior to this about Instacart as well as wanted to leave it open for you guys to ask questions in the audience as well, but before we do that... Some of you may not have heard of TPG. So that's the Partnering Group, we are a Retail and CPG growth consultancy, we've been in business for over 25 years, we have over 250 clients in 45 to 50 countries, and we help the world's largest brands and retailers scale their e-commerce sales and capabilities, both on the supplier side, about two-thirds of our clients are Fortune 500 and other CPG manufacturers, as well as on the retailer side, and as you can see, technology side with companies like Microsoft, Facebook, Salsify, Intel and others. And as we talk about Instacart, just a quick plug for us, TPG offers solutions that help brands build a ecommerce strategy as well as the organizational structure, content merchandising and marketing around Instacart, and then we help brands build their Instacart activation planning strategies and execution as well. So before we jump in one last housekeeping thing, we wanna encourage everybody to ask questions during the webinar, so if you have a question, feel free to enter it into the Zoom chat, and we're also gonna test the polling functionality now and just ask you a couple of questions about yourself.

So I'm gonna ask Amanda here to put up the Instacart polls right now. Question one, are you actively advertising on Instacart today, so all of you could just select which one applies to you... Yes. For one year or more. Yes, but for less than a year. Just getting started with Instacart or not yet. And then the second question that you wanna answer is, in two to three years, where do you see Instacart... You see, Instacart is growing, declining, going out of business, becoming a non-profit or not sure. And not to bias everyone, but my money is probably not on Instacart turning into a non-profit, but that's just me. I'm not a psychic.

Melissa
Todd probably agrees with you.

Todd
Yep.

Jamie
And then moving to the third question, Who is Instacart biggest competitor? Is it Walmart, OPD? Is it Gopuff? Is it Doordash? Uber? 1 800 Flowers? Or none of the above? And some insider info there, 1-800 Flowers was my contribution towards the choices 'cause that's where my money is on their biggest competitor.

Melissa
Sounds like my volumes having some problems again, sorry about that. You guys, let me see if I can.

Jamie
Great, so I think we're gonna close the poll out in just a moment now, if you still wanted to answer these questions, feel free to enter them into a chat. It's good to help us get a feel for what all of you in the audience are thinking about Instacart. Okay, and Amanda, we close it. Great, we're gonna keep moving here. So before we jump in, we wanted to do a quick overview of updates and news and just set up some basic primer knowledge for Instacart. So Tim is gonna take us through just a summary of some of Instacart fundamentals here. So Tim, do you wanna take control?

Tim
While E-grocery overall did really well during covid, Instacart was by far the clear winner within e-grocery. There were reports that said they grew to own 50 to 75% of the total e-grocery delivery share of the business during covid, so this is why we're here today, because Instacart is just, not only are they in the headlines, but they're actually making a significant impact to CPG and retailers businesses. Instacart really won across all different fronts and increasing the number of orders coming in, the of shoppers joining a platform, their average basket size increase, and they also brought in a lot more grocery retailers to their platform over the last year. We've been really interesting to watch is now they've expanded even beyond grocery to include non-food retailers like Best Buy and Bed Bath & Beyond, and then recently, the big announcement was Walgreens is joining a platform. So Instacart has just exploded in both shoppers and retailers, just making their presence nationally, so much larger. Just for those who aren't quite familiar, how Instacart works, there's really three big buckets of solutions that Instacart offers. The first one is the classic delivery model where you go on to the Instacart app, you place your order through a retailer that's participating in your area, and then an Instacart shopper goes and shops the retailer and then brings in the delivery to your house within a couple of hours. A similar kind of take on that is pick up, it's not quite as broadly used or instituted across retailers, so this is one that you don't see a whole lot of, but it's pretty similar, it's just instead of delivery to your home, you go to the store and get it, delivered to your car. And the third model, which we'll spend another minute on is just the white label model, and this is where essentially a retailer is turning over their grocery business to Instacart to operate on their behalf. And Costco is a classic example of this, where if you go to Costco dot com, the grocery section of Costco is really managed by Instacart, both the site experience as well as the delivery and fulfillment experience for Costco, and then you can also go through the Instacart app and shop on Costco. So it's just an interesting new capability or newer capability that Instacart is offering a partnership with retailers.

One of the big questions that's asked is, Well, how do you determine what price is gonna show up on Instacart, who owns that? And the answer is, the retailer owns that decision. There really are two ways that retailers partner with Instacart, and again, this Instacart does customize how they work across different retailers, but broadly speaking, the way they work with the retailers, the retailer can determine: I'm gonna reflect online, the same price that is in store. We'll talk in a minute about the financial model and what the implications are to the retailer, but essentially the retailer has to pay Instacart as well to do this fulfillment service on their behalf. So in this instance, where the retailer is just passing along the same prices in store, the retailer has to find some other way to pay Instacart for doing the service for them. The alternative model is this up-charge model where the retailer tells Instacart to have it at a higher price than in-store, and so that's how, that margin is how the retailer can start to offset some of the costs that they have. And this is just an example, again, the amount of the up-charge and how much per category per product is charged is completely up to the retailer, and you will see anything from roughly 8 to 13% as a usual up charge. This just intends to kinda capture the latest that what you're seeing in the market across a pretty broad spectrum of different kinds of retailers and how they're working with Instacart. They really, retailers can choose how they wanna partner with Instacart, and sometimes a partner, even if they have really strong e-commerce capabilities, and Walmart's a great example of that, Costco, we just talked about, is another example. Costco has a very strong dot com business, but they're essentially leveraging Instacart for their grocery. Publix is another example where they're using Instacart really end to end for pretty much all of their e-commerce capabilities.

So one of the big questions is, if E-commerce is becoming such a big part of the business and E-grocery is becoming more and more strategic, why would a retailer sort of outsource that, if you will, to Instacart? Well, one of the reasons is because the retailers don't have the capability today to really offer a competitive offering versus whether it's an Instacart or an Amazon or anybody else in the market, is really challenging to put that infrastructure in place, get the resources in place and do it as efficiently as Instacart does, and this is sort of a blended average of some of the work that we at TPG been able to do in assessing what those fees would look like for Instacart to do the service or a retailer to do the service. So on the left side, you can see Instacart fees to our retailers is in this example, about 10% of sales is what Instacart would charge retailer, but if a retailer were to try to go do that same service themselves, there is a picking cost of roughly 14% of sales, depending on how efficient that retailer is at doing picking, and then a delivery charge that the retailer has to incur.

And we had roughly that delivery charge would be about 10 bucks, sometimes there's a fee to offset some of the cost, so we have roughly 2% on average would be what retailer’s cost would be. So in total, the retailer's cost to do a delivery on their own, it would be about 16% where Instacart is only charging 10%. So Instacart advantage to the retailers is roughly 6% of sales, and by the way, you don't have to go build out the infrastructure, build the team, all of the other things that come with the retailer having to do this themselves. So this is really one of the main reasons why you saw this take off of Instacart, especially in a time during covid, when retailers knew they had to get into the space really quickly to meet the shift that they were seeing with their shopper behavior. Now is this sustainable? Where is this going? Well, that's the purpose of the rest of our time together. 

Jamie
Thanks a lot. And that's super helpful. We have so many questions asking the very similar question is, Why aren't retailers just gonna eventually do this for themselves? So this definitely helps give some insight into why that's not necessarily gonna end up being the case for the over 500 retailers that Instacart is currently managing right now. So let's dive into some questions now, so it's probably one of the most common ones we got was: Instacart’s growing, but do we see it as sustainable? And Tim, you just referenced that. Also tangentially, where do we see Instacart going in the next two to three years? So I'm gonna start off with Todd, What do you think there?

Todd
Yeah, and I think great insights and data from Tim there. When you look at Instacart and being sustainable: definitely, and three reasons. One, can they stay ahead of that curve like they are now, can they be a good value and ahead of the logistics curve than their retail partners? If you look historically, Instacart has always been a solution in key times for retailers. When Amazon acquired Whole Foods, a lot of retailers went to Instacart to figure out this online grocery thing. Then you looked at last year with covid and how fast you had to scale and consumers doing online grocery at the rate that they were in the adoption, Instacart was there for them as a solution. So as we look ahead here, I think this year is going to be and already is a test and learn here for a lot of retailers, and everyone's trying to have everything figured out, what the new normal is gonna look like, but as long as Instacart can stay ahead, whether it's with micro fulfillment centers or just a better value, I do think it's sustainable there. 

I think the other part of from a brand’s perspective, with everything that happened last year, look at what Instacart did, creating the ICIP reporting, really providing data to brands, so to really unlock that investment. And that kind of data and while we always want more data from all of our retailers, of all of our partners, Instacart has done a good job of showing brands, Hey, the consumers are with us, we all know that, but then also here is how you can differentiate yourself within your category, here's different options, and we can show you return on investment. I think other things they can show brands too, is they don't have any third party resellers like some other platforms do. Right, there's no Lost Buy Box issues on Instacart. And then also, when you look at it from a cost per click, your CPC, they have been a better value there when looking at others, either retailer dot com or on Amazon, so if they can continue to provide that value and unlock investment for brands, stay sustainable and then the last part is from the consumer standpoint, they have a huge head start. Consumers don't change apps, typically. And they got all the app down downloads last year and did a great job of delivery and satisfying consumers. But when you look at this, can they continue to be sticky, you look at the kind of models, Amazon Prime and all the other benefits that Amazon does, as well as Uber. Uber has rides and Eats, and they're trying to get in here and they’re partnering, and they're partnering with Gopuff, which has the 30 minutes or less delivery. But in true Instacart fashion, they’re pivoting already and they're adjusting their partnership with Seven Eleven has just expanded in the last week or two, I believe, to really offer that 30-minute window. So as long as they can stay sticky with the consumer, and the other factors I mentioned from a brand perspective, as well as staying ahead of the curve for their retail partners, Yes, I do see them as sustainable. 

Jamie
Great, thanks. Tim, anything you wanna add there? 

Tim
Yeah, no, I agree with Todd. I think it's really gonna come down to retailers’ strategies, Instacart is a platform of retailers today, and the benefit they have is both the amount of retailers they have on the platform and to Todd’s point the growing number of consumers, shoppers that they're adding to the platform. If retailers strategically are willing to continue to seed e-commerce to Instacart and not have to make that big investment in e-commerce, thenInstacart is gonna continue to flourish as it is over the next several years. The risk for retailers is seeing what happened to Toys R Us and Target a decade to go with Amazon where they outsourced their dot com business to Amazon, and it really did end up costing Toys R Us their business and took Target years to. once they moved off the platform, to build their own and catch back up with the Walmart and some of the other major platforms out there. So the question to me is are retailers gonna continue to just let Instacart own the experience on their behalf for the foreseeable future. So I think that's a big question for me. And then Instacart has this massive shopper platform, which is a huge value to retailers, and so that's the juxtaposition. If you move away from Instacart, you're also abandoning a tremendous amount of shoppers who are now wanting e-grocery and will they still stay with your brand or will they just find another Instacart participating retailer to move to, so that's the strategic question that they are up against.

Jamie
Great, let me look that question around a little bit. We've talked about it from the perspective of what retailers might do, but in the news a few months ago, a lot of the news headlines coming out were around Instacart opening up, potentially their own micro fulfillment centers, and I think a lot of brands and partner retailers were just asking what up with that? Are they gonna just disintegrate all of their partnerships and try and become a free-standing online retailer on their own? So I'll open that up to the panel, and I think I know that one of you has some intel on that, what's going on with Instacart and where do we think Instacart may go in the next few years? 

Todd
I think this is all conjecture, right, no inside information here and all speculation, but Instacart has made very clear that they do not wanna become their own grocery chain, and they wanna work with our partners. When we talk about these, I think that's where you see what Kroger is doing, and there's others testing different, between auto store and fabric and a number of different MFCs, great tests and learns. Will some figure it out from a retailer perspective? Sure. Will all of them? Probably not. There's probably not enough land to put micro fulfillment centers in every key area for all the different retailers, so I do think that could potentially be the next step, like I said, going from the Whole Foods acquisition to covid, the MFC network or having the concrete port and the logistics of that in the cost, Instacart could negotiate with their retail partners and be that solution for them. I think outside of them, let's say just look into maybe a couple of threats as well, and again, just speculation here, but you look at the gig economy as well, how is that gonna be defined and whether it's defined as it is now, it's not gonna become employees for anyone, like an Instacart or personal shoppers or others, how many gig workers do we have? We've already seen Uber and Lyft having to pay sign on bonuses to get drivers, and then I think just retailers, do we have an exclusive deal type thing coming where, I don't think it'll happen this year, but you have something where you start looking at different whether it's Instacart or their competitors, do retailers try to single out and have a negotiation just to partner with one? Again, I don't think these things will happen, I think Instacart has proven they can pivot quickly, but I think that micro-fulfillment kind of operational logistics part could be the next step question. 

Tim
Just real quick to build on that, I think Todd's talking about those cost drivers and how do you make those things more efficient? And as retailers continue to re-consider, do we outsource to Instacart, do we do it ourselves? Remember that math I just did a little while ago, the lower Instacart can bring down their costs, which is through drivers and more efficient picking through your MFCs, the more competitive they're gonna be, or the better they're going to look versus a retailer trying to go do it themselves. That gap just gets bigger and bigger and bigger and more challenging for a retailer sites. So I really wanna try to do this myself. 

Jamie
Great, thanks, we're gonna move on to the next question, and I just want to close this out and say we're all in agreement that Instacart does not become a non-profit organization in the next two to three years. That's what I've heard from everyone. Great, so next question, what's the best CPG strategy for working with Instacart? And we’ll parse that out. We had questions about how to put their strategy together from an item set-up and content standpoint, from a structure of their organization, and who should actually own Instacart and then joint business planning. So let's start with item setup and content, and what's the best way to work with Instacart from that perspective? 

Todd
I think as a brand, you have to look at Instacart as you would a lot, most of your retailers, all of your retailers and partners is communication, and I think with item set-ups, no different, if you have new items coming out, you have to get, one, Instacart the UPCS so they're aware and they can set it up on their side, but you also have to think of it from an omnichannel perspective with your retailers, of course, they're gonna set it up in their system for in-store, but they also have to do some things on the back end to let Instacart know and get it live in the system. If you don't do it that way, you're probably have to wait six, eight weeks after the product is physically in the store, so think of Instacart as you do with your communications with new items and get ahead of the curve there.

I think with content, content is so important on a screen, right, and as shoppers look at that, and Instacart just recently announced the content library, which will give brands more control to control their content and update images, update titles in different parts of the PDP. You can still go through a PIM provider, different services, the retailer can still have control of it as well, but I think with the brands being able to do the changes on their content, with the new content library Instacart offered, it will be more efficient and that helps the consumer if they're finding a lot of new brands or new products on Instacart, to see the more clear content to convert helps everyone. I think also as you look at just from a setup and content perspective is thinking about promotions and how you go down the path of: if I'm running a promotion in-store, how does that impact my online experience and could you potentially have a double dip? You could, that does happen, but I think you do have to think from a consumer standpoint, it's a little different buying on a screen than it is buying on a shelf, if that helps.

Melissa
I would just add to Todd's point about the self-service feature, which is nice to see, and we see this across all these platforms, but the power of putting this into more of the brand’s hands, I think we're gonna continue to see that with more functionality and features with the ability for people to control that destiny, and so continue to build out that expertise or agencies to help you with that is going to be key to help you have the best content, all your items set up. We run into that sometimes with advertising where maybe the SKUs you wanna advertise aren't available, so getting the tip that Todd provided of being able to get those listings available is a good point too.

Jamie 
Excellent, excellent. So building into the conversation: org structure and how should teams be structured around Instacart? We had a question come in from one of the audience members around who should own it, because it really does, it touches so many different retailers, is a shopper marketing? Is it an e-commerce center of excellence? Is it a sales team? So what's your point of view there, Melissa, how are you seeing other organizations structure their teams to ultimately manage and own Instacart?

Melissa 
This question, the answer is always a hard one because it's so dependent on the organization, like Todd, I think you have a nimble organization, so you're able to structure it a certain way, that's most helpful to you, but bigger CPG companies aren't able to structure it that way. The answer to this is the answer for a lot of things, which is what is the most effective for your organization? I think what happened is Instacart came to be up and coming out of nowhere because of covid last year, and it was kind of a scramble 'cause nobody owned it, and so it kind of fell on maybe the e-commerce teams. And right now, people are trying to figure out who should own it, is it one of the ones that you mentioned, but at the end of the day, it's honestly, who is best suited to own it within your organization that you are going to have the most effective approach, and it's different with more traditional CPG companies and may fall under pure play and may fall under whichever organization can best own it and run it, but I would say Todd, who owns it within your organization, what is the most effective for you? And that's an example of a company similar to Todd’s company versus a more traditional CPG bigger company.

Todd 
Yeah, and I agree with you, Melissa. There's no one-size-fits-all for this. For us, I came too Simple Mills in April of 2020, in the middle of covid, Instacart was with our shopper marketing team, and they had a relationship already, but as a few months went on and just looking at the importance of search or feature products on Instacart and looking at that PDP and content and how to look at things from a consumer's eyes, we ended up shifting it to the e-commerce team underneath me, and while we shifted it there, the mentality though was, because the product is coming out of the physical stores, but they're buying on the screen, it's coming off the shelf, but they're buying on the screen, e-commerce is under marketing at Simple Mills, but this was, Instacart was even more than an Amazon, Instacart was more of a catalyst to connect our organizations. We looked at it as, okay, who's not getting credit, but how are we gonna connect with the consumer in this new world, and so the building the bridges across different departments with sales and even finance, 'cause we had to figure out, Okay, how are we paying for this? Again, the volume is coming out of the sales accounts, but I think Instacart will allow us to have those conversations and really to your point, being nimble, and I think whether you are our size or you are a bigger, large multinational organization, use Instacart as the catalyst to build those bridges and have the conversations, because the cost of doing nothing and being mired and who's a control and what budget is this coming from? And spending too much time on that, you're gonna lose that first mover advantage, you're getting lose getting that first cart in your category, and that's actually gonna be worse.

Melissa
Yeah, I would just add, this is kind of a twist of that question 'cause I work with so many agencies that license our technology, but from an agency perspective, in terms of who's working on Instacart, what we're seeing is a lot of consolidation of whoever is running retail media paid search, the least, having less partners on the agency side, the better where you can consolidate all into one place, and that's what we're seeing, which is someone who's able to kind of have one point of contact and the context across all these platforms is super helpful 'cause that's the time savings, the person managing it as well. So we're seeing that as a trend, which is kind of consolidation of all the retail media into one place to have economies of scale there as well.

Todd
Yeah, and I think also from the brand side, that's a great point, and I agree with you, it allows you potentially as a brand to be more nimble with your budget and follow the consumer, and so you can shift that quicker, versus saying, alright, this is a retailer one, two, and three, and Instacart, and this is what we're gonna do for the next quarter. You can have it as a general search or feature product fund and change it weekly, daily, monthly. Whatever the consumer is doing and what trends you’re seeing, and also who's giving you the most data, who's giving you the most data back, so yeah, I agree. I think that's a smart approach, I'm glad you're seeing it from a lot of brands. 

Tim
The challenge we run into is just the budgets that we typically associate to a trade thing is one kind, and then marketing is another, Amazon started to create this new conversation, what's shopper, what's marketing, what's trade. Instacart is just kind of doubling down on the complexity on that because it really does feel like you're pulling through retailers and that's more of a trade level activity, but there’s plenty of marketing tactics on Instacart so that that means to some confusion I think the biggest point is exactly what you guys were saying around, what's the work to be done, and so who in the organization and who are the partners that are best suited to go do that work and be effective and efficient at doing that work. So I think that really needs to drive the organizational decision.

Todd
Yeah, and don't just look at Instacart as serving the bottom of the funnel though, either they have delivery promotions and about 20 brands every week, have a buy 15, get five type of deal, and as you talk to a sales team about that, as you evaluate, Hey, we want to increase revenue, get more product off the shelf, but we also wanna build awareness, you have to look at these even from your in-store options for trade spend and say, Is there a halo or a hangover, and what am I getting for this? And I think from a delivery promotion, the great thing is you don't actually take down your price as you might with a traditional TPR or coupon, whatever it may be, which then can maybe reduce channel conflict in your other accounts, right. So you really have to have these broader conversations on what are your overall goals, and don't just look at Instacart or others as bottom of the funnel, it's awareness too, but also what are you getting if a sale, TPR is only getting you a pull-forward, that's more your hang over, how do you evaluate each of these to get your ultimate goals of brand? 

Jamie
That's a great segue into our next couple of questions is: How should brands approach promotions to ensure that the promotion they were running on retailer X also shows up on Instacart?And then on the flip side, how do they approach making sure that the consumer isn't able to double dip, if you will?

Todd
Yeah, I would say so you're from an e-commerce perspective, kind of Simple Mills, we tend not to do a lot of online promotions, we do look at search more, but I will say when you. for ones that we have down or for brands that are, when you're approaching promotions, again, similar, as you think about your other retailers, it is about communication both with the retailer that you're running that on, have that discussion, is it or is it not going to show up on Instacart, if you have the control of it, do you want it to or not? As well as talking to Instacart potentially, and see if there's anything that can be done to if you wanna give it more exposure to boost it or not. I think though you say how can they approach preventing double dip. Yeah, I'm not sure. Maybe Tim has a different way, but I'm not sure there is that option necessarily, unless you really have in-depth conversations and can stop that, I think you are gonna have to plan for a potential double dip if you have something in-store and then you're running let's say a promotion or something else, just on Instacart, you could see that.

I think the other part, it's a variation of double-dipping here though, is when you evaluate your in-store promotions, and this varies by retailer, you have to figure out how much was actually bought off the shelf and how much was bought off the screen, because now you're pricing, maybe if that discount was not seen on Instacart, but it was only in-store, your average price drink promotion, and before promotion changes, if there are mark-ups that changes, so you really have to look at your pricing data in a little more surgical way, so that you're not either, I don't wanna say double counting, but you're not looking at the wrong way with the different online pricing or online double dip. 

Tim
Yeah, the nuance there is that the retailer is gonna decide what goes on Instacart, which offers go through Instacart, which don’t. So again, that was a great coaching by Todd in that you wanna have the conversation with your retailer to understand, are they gonna pass these through or not. On the Instacart side, if you're doing the coupon, there's four tactics, we'll talk about those in a few minutes, but one of them is a Instacart-specific coupon, and if you're doing that, a policy of Instacart is if the retailer is putting forward an offer that they will not put the coupon on top of it. So there is a policy in place at Instacart. I'm sure to Todd’s point that there have, in instances where there have been an overlay, but that I'm also sure that if you reach out to Instacart, that could be fixed again, it's their policy to avoid that. 

Jamie
As we move from promotions to advertising, closely aligned obviously, how should brands think about advertising on Instacart where many of the clients we work with, they already have a budget set up for advertising and marketing for their retailers, and now they're looking at Instacart and saying, how do I avoid the double dip, where should I budget additional advertising dollars for Instacart, or do I re-allocate? So how do my budgets as a brand work in concert with each other for Instacart versus the native retailer platforms?

Todd
I'll jump in this one right now is when you think about it, it goes back to that data piece and one: follow the consumer and where the consumer is, and we know consumers on Instacart right now as well as other retailers, but I think you have to as a brand, and depending who you're getting the money from internally, you have to be able to provide return on investments, New to Brand numbers, you have to look at, are you winning within your category, are you out competing to competition? So I think when you think about that advertising on Instacart, it's also looking at the full suite of options that they have, you have feature products, and you have a delivery promotion that I've mentioned, and you can talk about: are there other betas that they're doing and kind of try to get in some of those for different advertising. I think the one thing is, it may not be that you need to look at this if you're trying to shift funding or figure out where funding is coming, Instacart versus call it the native retailer platforms, but rather is it gonna come from a Facebook, is it gonna come from a Google and everything going on with iOS 14.5 and the death of the cookie and all this, so that we can have a whole another call on, but maybe if your efficiency or effectiveness of those areas of your advertising within a brand are not there, then you look at Instacart versus native retailers versus trying to push and pull just within the online grocery space.

Melissa 
Yeah, and I would just add that what we're seeing is people really are allocating a budget to Instacart, just like they do Amazon, just like they do Walmart, so I would just think of it as another, it’s where the shoppers are, so you wanna spend money where the shoppers are, and then having access to performance. One of the benefits of these newer platforms is the first mover advantage, CPCs are low. I posted this nice graphic on LinkedIn where early days we were seeing CPC at 50 cents when you rather test at a 50 cent CPC versus a 3 dollar CPC when it becomes a more mature platform and all your competition is there, and so really jumping in early to test and learn and find out what's working for you is really critical, but really just seeing Instacart as a place where shoppers are, and so releasing as a separate platform. And then there's a lot of nuances, each of these retail media platforms have their own nuances, and so it's really building out your strategic playbook for what works on Instacart. Some examples, things like Instacart doesn't allow you to choose a specific store region, and so really advertising your full portfolio so that then where it is available, it shows up in terms of in stock. So there's just a lot of nuances across these platforms to be able to learn and understand and build that out, but I would really recommend looking at Instacart as its own entity and platform because shoppers are all of these places, so capturing them at the right place. Then the really cool thing, the vision that we have at Pacvue is really being able to manage all these retailer platforms as a portfolio, so for example, we know lower ASP items convert better on Walmart, so you wanna pick that portfolio to show up on the top spot of Walmart and then understanding what works better on Instacart. A lot of people have said their club skus, Costco performed the best on Instacart or their high sales or their club skus. So really doubling down on that for advertising.

Tim
What Melissa just shared is, probably the most profound impact on CPG organizations over the next three years, which is brands are really going to need to kinda get their arms around all of the spend going online, whether that's retail or non-retail, it doesn't matter if it's digital, the brands need to kinda own it and treat it as a portfolio, in Melissa’s words, I think that's where this goes, versus just kind of pre-allocating funds and then a year later, let's take a look at how it did. It's gonna be much more of this portfolio play, you're seeing some of the most sophisticated players making this move.

Todd
And to that point, at the one of them about, this isn't just about online either, and whether it's Instacart or the kind of naive retailers here, but especially Instacart where the consumers are, the better you do there, the more volumes coming off the shelf, the better it may help you with SKU rationalization, either maintain or gain space because of what you've done online, or how consumers may be finding you searching online and then going to the store and buying. So there’s this true omni-channel approach. I think a couple of other things, just looking at different advertising, this is you have to look what is a first place auction and second place auction benefit the pros and cons of that Instacart and the second place auction. The CPC that we've talked about earlier, but also Instacart allows you to have two different options of how you set up your campaigns, you can do maximize impressions, which will give you the best chance of having the highest win rate and above the fold the most often, depending on your budget. But if you wanna do a more test and learn approach or you have limited funds and you have to kind of prove your case out, they do have a pace spending option. So I think as you look at all these kind of nuances and to Tim's point and Melissa, you have to start to rack and stack these across all of them and see where the pros and cons of each are. 

Jamie
So as we allude to that, how do brands approach whether measuring whether they're winning or performing well on Instacart, since as we all know, it's not possible to break out retailer-specific reporting through the self-service platform?

Todd
Yeah, I think one part is what Instacart launched in, I think it was July of last year, the Instacart shopper intelligence platform or ICIP, as it's called, and those are monthly reports that you get depending on your percent of spend, it's fair, a brand like us that's smaller may not have the budget of our big food competitors, depending on a percent of spend to our sales, can get the different levels of access to that, and what those ICIP reports can show us is not only our overall sales on Instacart, whether it's search attributed or just overall, but it can show us new to brand, people that are new to Instacart, how many came on, how many items per basket were there, how many dollars of our products were in there for up or down versus last year and last month. You can look at your out-of stocks, and a nice thing about Instacart out of stock, it will show you the initial out of stock, and then if the replacement item was another Simple Mills, right in in our case, or if you lost it all together. Now, you don't have it by retailer, and Instacart has been very clear about that, you're not gonna get granular level like that, but they do provide, I think it's eight or nine different Geo-regions that you can take a look at where the bulk of your sales are where you're performing better in a region or not, and if you really wanna get savvy and granular with that is where you may be different Geos that you're at the bottom of the list with your Instacart performance is now you can look at that as maybe more shopper marketing spend or different TPRs or whatever it may be. You can look at it there. So I think that's the basic with the ICIP, but then depending on your relationship with Instacart, their data team has been very clear that they wanna keep growing and they've shown that. I always wanna get more data out of them, but you can see things like where do your skus rank within the category. We know where our pancake sku ranks within Instacart. You can take a look at your overall groupings like for us crackers and cookies and see did we outperform the competition in terms of growth rates? So these are some other ways that you can then go internally and say, Yes, we have our dollars, we have our year-over year growth, but here's how we're comparing to our category, here's where our skus range, so they're just starting to come out with some Share of Voice rankings that you may have on other platforms for different terms, so there are more and more ways to justify that investment and show that if you're winning or not compared to other brands on Instacart. 

Jamie
Thanks, Todd. So building on those approaches, Tim, I'm gonna put you on the spot, we've had clients who have found other ways to do it directly with the retailers, can you talk a little bit about the ability to push the rock up the hill and go directly to the retailer and ask for the Instacart sales.

Tim
Yeah, that is it. So depending on their level of cooperation that you have with your retailer, you can start to get that level of the percent of sales through Instacart, where I've seen it to be most effective is when a retailer is actually trying to sell you that Instacart isn't such a big part of their business, and it's more about their own e-commerce platform, so you should kind of shift your Instacart spend to their specific platform, and so it's an interesting dynamic and an interesting way to start to triangulate, well, okay, so that means then this amount of my business is going through Instacart. That's that. I think the only other build I have around the metrics that matter, as you can get to share and percent penetration through those reports, and to me, that's the ultimate measure of success for a brand. The platform’s on fire, the growth is incredible. Those numbers are gonna be great regardless. The ROAS, it's a pretty generous attribution just because of the way it gets calculated, those numbers can look huge, like 11 to 1, and so that feels great when you're putting on a piece of paper, but in reality, am I really getting 11 to 1, or is it just because now my search terms, my paid search terms are the ones being clicked versus my organic ones, and so using Share and percent basket penetration are the ways to understand the real movement of your overall business. And I would say that tactics do work, and I have seen that increase with the right level of spend, but you just need to kinda double-click into the data a little bit. 

Jamie
Excellent, thanks. And we're gonna get to our last question before we try and take a few from the audience, but we can't be on a Pacvue-sponsored webinar without talking about digital advertising tactics. So last couple of questions around that, what are the key types of advertising campaigns that you'd recommend brands try, and then what are the campaigns that we're seeing performed the best on the Instacart platform? So I guess Melissa I'll start with you, what are you seeing as some of the stronger ones that are working for your clients?

Melissa 
Yeah, paid search advertising, that keyword-based advertising works really well, kind of understanding where are these things coming from, so there's a couple of buckets. The buckets are browse, buy it again, did you forget, search and there's kind of an other bucket. And where the majority of the clicks and sales are coming from is first and foremost search, and then secondly is buy it again, and so the way to get into those top three slots, a lot of times is through paid. That's one of the nice things about the Instacart platform, similar to the Amazon platform, is it's very flexible, it allows you to conquest and to be pretty competitive, and so you can pay your way to that top three placement, and the prize is really getting into the Buy It Again list into people's carts, and that is kind of liquid gold to the CPG category where you can get people to repeat purchase, and so some brands really think of this as a customer lifetime value versus ROAS, and that's another metric that you can think about as well, especially this repeat purchase. So that's why the relationship between paid and organic is so important and really getting into the shopping carts is equally as important.

Jamie 
Great, and Tim I know you have a point of view on this too. You actually have a couple of slides. They'll probably do a good job of tactics to recommend and not.

Tim
Well, just I think Melissa is dead on, that's the feature products. Number one, far and away. I've had an opportunity to play with all four of these, both with the business I belong to as well with subsequent with the clients. Absolutely moves the needle from a conversion standpoint, to Melissa's point, not only does it drive the immediate search, but it also puts you in the basket, which is where a majority of shoppers start their next journey on Instacart from. The second one is around coupons, and so that we kinda talked about the fact that Instacart will suppress if you're doing one on their platform and a retailer wants to push through an offer or so, again, helps drive, helps move the needle from a conversion standpoint. I'm gonna flip to the next one and we'll talk about the other two tactics. So the first two are definitely if you're thinking about driving conversion. Delivery promotion, I've put a little bit lower and because it is expensive relative to these other platforms, you do need to have a breadth, typically these work by four or five of these SKUs, and you get X dollars offer free delivery so it's an expensive return and you need a pretty broad portfolio or a couple of partners to come in with you in order to make the delivery promotion really pay out. It does move the needle. I've had mixed results on that one, which is why it's a little bit lower on my priority. And then the last one is media. And again, if you're thinking about driving the business from an e-comm sales standpoint, which is typically the way I always approached Instacart, those other tactics are higher on that conversion driving scale. This one, again, it's relevant, you're hitting the consumers as they're in the mindset so from that standpoint, it's a nice media placement, but I put this out of the lower priority as I was looking at my overall spend, really focus on driving the conversions and other tactics we talked about.