Advertising key to Instacart's revenue growth of 39% in 2022 | WARC | The Feed

Advertising key to Instacart's revenue growth of 39% in 2022

Instacart, the digital commerce platform, has posted strong growth ahead of an anticipated – but since delayed – IPO, with advertising critical to its performance. 

Why it matters

A formidable company in its own right, Instacart’s success nevertheless falls into a pattern of serious growth in retail media, with major retailers like Amazon and Walmart identifying their ads businesses as bright spots in an otherwise difficult environment. 

What’s interesting about Instacart’s ad business is that it has very quickly moved into upper-funnel formats with shoppable ads and click-to-purchase social video, both of which go some way to resisting the possibility of falling down the ‘performance plughole’. 

What’s going on

The Wall Street Journal reports on an internal memo shared at the company, revealing a few key figures: 

• Full-year revenues for 2022 grew 39% to $2.5bn. 
• Gross transaction volume for 2022 was up 16% to reach $29bn (but a significant slowdown versus its pandemic growth).
• Q4 revenues up 50% with gross profit up more than 80%. This is up on reported Q3 growth of 40% and 45% respectively. 

Advertising key to business

With sales volumes slowing, advertising has been key to the business, and the company talks an aggressive game about its ability to generate sales increases of up to 15% for brands, which appears to be working. 

The company is making significant strides in advertising, as Modern Retail has reported, with the company expanding into brand and full-funnel offerings. Most recently, this has manifested as a shoppable TV ad with AB InBev, and shoppable recipes on TikTok. 

Sourced from WSJ, WARC, TechCrunch, Modern Retail