Online grocery shopping became a pandemic response necessity for those who could afford it, with revenues to exceed $100 billion (link is external) in 2021. Leading supermarket chains such as Kroger, big box stores like Walmart, online specialist companies such as Instacart, and the ubiquitous Amazon, have all experienced greater demand from the public to have groceries ordered and then quickly delivered or available for pick up. The pandemic has spurred “record” (link is external) downloads of grocery shopping apps from Instacart, Walmart Grocery and Target, among others. Consequently, this marketplace is now rapidly expanding its data collection and digital marketing operations, to generate significant revenues from advertisers and food and beverage brand sponsors.
So it’s not a surprise that Instacart’s new (link is external) CEO comes from Facebook (link is external), and the company has also just hired that social network’s former head of advertising. Walmart, Kroger, Amazon and others are also further adding (link is external) adtech and data marketing experts. There has been a spate of announcements involving new grocery-focused alliances to improve the role digital data play in marketing and sales, including by Albertson’s (involving Google (link is external)) (link is external) and Hy-Vee (link is external) (also with Google). Albertson’s (link is external) (which includes the Safeway, Vons and Jewel-Osco divisions) deal with Google is designed to include “shoppable digital maps to make it easier for consumers to find and purchase products online; AI-powered conversation commerce” technologies for shopping, and “predictive grocery list building….” Similarly, Hy-Vee’s work with the Google Cloud will help enable “predictive (link is external) shopping carts,” among other services. (Hy-Vee is also one of the supermarket chains participating in the USDA’s online SNAP (link is external) pilot project, raising questions regarding how its alliance with Google will impact the privacy and well-being of people enrolled in SNAP).
All the data that is flowing into these companies, how it is being analyzed, its use by advertisers and product sponsors, and how it impacts the products we see and purchase, should all be subject to scrutiny from consumer protection and privacy regulators.
A good example is Instacart. Its Instacart (link is external) Advertising service allows brands to pay to become “featured products” and more (link is external). Featured Product ads are a form of paid search advertising. As Instacart tells its clients, if a consumer is searching (link is external)for “chocolate ice cream” or just “ice cream,” and you have bought such ads, “your product can appear as one of the first products in the search result.” And even after “consumers place an order, we’ll make some suggestions for last-minute additions to the order that the consumer might be interested in. Among these suggestions, the system can include Featured Product ads.”
But it’s all the data and connections to their consuming customers that is the real “secret sauce” for Instacart’s ad-targeting and influence operations. The company knows what’s in and out of everyone’s shopping carts, explaining that “Instacart tracks (link is external) the source or ‘path to cart’ for all items purchased through Instacart marketplace, differentiating between three main groups—items bought from search results, browsing departments, aisles, and other discovery areas of Instacart, or from a list of previous purchases, which we call ‘buy it again.’” As it explains, the “Instacart Ads solution (link is external)” offers “a full suite of advertising products that animate the entire customer journey—from search through purchase.” These include opportunities for marketers to become part of “the ‘buy it again’ lists where consumers are shown a list of products that they have bought on previous orders. These can act as reminders of meals or recipes they’ve made before and items they tend to stock up on. Our brand partners can leverage Instacart Ads products to appear on ‘buy it again’ lists so they stay top of mind with their customers and aid in retaining valuable customers.”
The company’s advertising blog discusses its use of what is increasingly the most valuable information a company can have—known as “first-party” data, where (allegedly) a consumer has given their consent to have all their information used. Instacart explains (link is external) this data “encompasses intent and purchase signals… from users signed up to an online grocery app,” and that it can be leveraged by its brand and advertising clients. The online ordering company explains that its “rich and diverse data sources” include “access to millions of orders over time from over 600 retail partners, across 45,000 stores, involving millions of households…. [A] tremendously valuable data set…this data is updated every night….” Instacart analyzes this trove of data, including point-of-sale, transaction log and out-of-stock information, to help it zero in on a key goal—to enable its advertisers to better understand and take advantage of what it terms “basket affinities.” In a webinar, Instacart defined (link is external) that concept:
Basket affinities helps Instacart, and its brand partners, to create consumer ‘types’, discover product interactions, understand mission-dominant baskets, and identify trigger products — ultimately building a picture of how brands are bought online that we then share with our partners to build a better plan to acquire and retain valuable consumers. The term ‘basket affinity’ covers examining the one-to-one, group-to-group, or many-to-many relationships between products, as well as identifying consumer shopping missions and consumer profiles. [We note that Instacart says it “aggregates and anonymizes” this information. However, given its ability to target individuals, we will rely on regulators to determine how well such personal information is actually handled].
Instacart also touts its ability to track the actual impact of advertising on its site, noting that it is a “closed loop” service “where ads are served to consumers in the same ‘space’ any resulting sales occur.” In a blog post (link is external) on how it empowers its advertiser partners, the company notes that Our advertising products provide options that can put their products in front of consumers on every ‘discovery surface’ on the platform to catch their eye when they are in this mode. Plus, our data shows that the majority of add to carts from these discovery surfaces are the first time the consumer has added that item to their cart — meaning it’s a great place for brands to acquire new customers.
As with other major data (link is external)-driven digital marketers, Instacart has many grocery tech and ecommerce specialist partners, who provide brands and advertisers with a myriad of ways to promote, sell and otherwise “optimize” their products on its platform (such as Perpetua, (link is external) Tinuiti, (link is external) Skai (link is external) and Commerce IQ, (link is external) to only name several).
The dramatic and recent growth of what’s called grocery tech is shaping the way consumers buy products and what prices they may pay. With companies such as Amazon, (link is external) Kroger, (link is external) Walmart, (link is external) Albertson’s (link is external) and Instacart now in essence Big Data-driven digital advertising companies, the public is being subjected to various practices that warrant regulatory scrutiny, oversight and public policy. We call on the Federal Trade Commission and state regulators to act. Among the key questions are how, if at all, are racial, ethnic and income data being used to target a consumer; are health data, including the buying of drugs and over-the-counter medications, being leveraged; and what measurement and performance information is being made available to partners and advertisers? We don’t want to have to “drop” our privacy and autonomy when we shop in the 21st Century.