Grocery delivery service and advertising platform Instacart filed for its IPO on Friday.

Why we care. Instacart Ads is an emerging platform where CPG (consumer packaged goods) brands can advertise products (via sponsored product ads, display ads, coupons) to 7.7 million “monthly active orderers” as they shop.

1. Instacart’s 2023 ad revenue. Instacart reported $406 million in ad revenue for the six months of 2023, a year-on-year increase of 24%.

• This increase was driven by an increase in advertising volume and increased adoption of new advertising features and products – despite decreases in ad spend by brand partners due to “macroeconomic uncertainty” and changes in “brand partners’ businesses and performance.”
• Ad revenue was $327 million for the same period in 2022.

2. Instacart’s 2022 ad revenue. Instacart’s full-year advertising revenue hit $740 million in 2022, a 29% YoY increase. Advertising was 29% of Instacart’s total revenue.

• Ad revenue was $572 million in 2021, which was 31% of total revenue, and $295 million in 2020.

3. How many brands use Instacart Ads. Intacart had more than 5,500 “active brand partners” using Instacart Ads as of June 30. This number has grown of “over five times” since December 2019.

4. New Instacart Ads offerings coming. Instacart has plans to add new display advertising offerings, specifically mentioning “shoppable products brand pages to serve as destinations for on- and offsite media,” according to the S-1.

5. Instacart plans to expand its ad tech to more retailers. The company plans to invest in and grow the Instacart Enterprise Platform, according to the S-1 filing:

• “In 2021, we launched Carrot Ads, which helps our retail partners capture new monetization opportunities while broadening advertiser reach to millions of new customers via additional relevant placements on retailers’ owned and operated online storefronts.”

6. Instacart is impacted by seasonality. Instacart expects seasonality to cause fluctuations in its quarterly financial results.

• “Our advertising and other revenue has historically been seasonally high in the fourth quarter and seasonally low in the first quarter in a given year as a result of how advertisers deploy their budgets,” according to the filing.

7. Instacart Ads growth strategy. Here’s how Instacart said it plans to increase its advertising revenue:

• “Capture More Ad Spend and Add New Brands on Instacart Ads. We intend to earn a greater portion of brands’ spend across digital marketing as well as other data and customer insights. Growing the number of active brand partners and their spend will depend on our ability to grow the size and engagement of our customer base to create more clicks and impressions and to innovate on our ads offerings to deliver attractive ROI to our brand partners.”
• “Grow Sales for Emerging Brands and Non-Food Categories. We intend to grow sales for emerging brands and non-food categories that have higher advertising budgets, such as household products, pet items, and personal care. As we grow sales for emerging brands and these categories, we expect to experience a mix shift towards GTV with higher advertising and other investment rate.”

What Instacart said. The company’s filing also touted its high ROI and ability to drive purchases:

• “Our grocery expertise has enabled us to build differentiated advertising solutions and tools that allow CPG brands to reach and engage with high-intent customers at the point of purchase and within minutes of delivery and consumption. With our unique customer data and insights, we provide differentiated analytics for brands, allowing them to better optimize their advertising spend and grow their wallet share.”

The filing. Instacart’s Form S-1.