Instacart and the WPP team to increase delivery revenue

With the cutthroat margins of grocery delivery making it difficult to run a profitable business, Instacart is banking on advertising.

The grocery aggregator announced on Tuesday (February 1) Press release that it is partnering with London-based multinational advertising and communications company WPP to offer advertising solutions and analytics tools to consumer packaged goods (CPG) brands on the Instacart marketplace.

“Instacart Ads is designed to support brands of all sizes, helping them access the opportunity to deeply engage with their customers online,” said Instacart’s VP of Sales. Ryan Mayward in the release. “We are thrilled to partner with WPP to continue to deliver this experience and together equip brands to succeed in the digital aisles with robust information capabilities and educational resources.”

The partnership gives WPP clients early access to Instacart’s advertising products and makes Instacart’s application programming interface (API) and data integration tool available to the agency, offering insight into consumer basket building and other shopping habits. Additionally, the companies are working together to create an Instacart Ads agency certification program.

The announcement comes less than a week after Instacart announced its own new suite of marketing products for brands on Wednesday (January 26), which included brand pages and new display ads. These moves make sense, given that delivery and groceries are notoriously narrow-margin categories, and as such, grocery delivery can be nearly impossible to run as a profitable business. By monetizing looks on the platform, Instacart gives itself more leeway.

See more : Instacart intensifies the advertising offer for brands

With this move, brands can capitalize on growing consumer demand for online grocery shopping. Research from the PYMNTS study “What consumers expect from their grocery shopping experience”, created in collaboration with ACI in the worldfound that 34% of grocery shoppers buy online, with 18% of them ranking the channel as their favorite.

Read more: Digital features can help grocers win over 43% of shoppers

Notably, however, the study found that only 2% rank shopping online using an aggregator that delivers products the same day as their most used shopping method. Eleven percent of consumers said they use these aggregators overall.

Additionally, according to data from PYMNTS’ How We Eat Playbook, created in collaboration with Carat of Fiserv43% of all consumers order home delivery of their restaurant meals or groceries more often than before March 2020.

See more : Restaurants and grocers see the way to attract 200 million new customers

While some of the new on-demand grocery delivery services struggle to make the model economy work, Instacart has found ways to open up new revenue streams. In addition to this advertising initiative, Instacart announced a few weeks ago the launch of its Ready Meals Hub, which competes with restaurant delivery services by offering prepared meals in grocery stores.

Read more: Instacart aims to buy DoorDash with meal delivery launch

Around the same time, the company also announced an extension of its partnership with Chase to launch a co-branded card, the Instacart Mastercard credit card, incentivizing purchases.

See more : Instacart launches co-branded credit card with Chase, Mastercard