Instacart's Shift to Retail Media

The key shift by 2021 was that Instacart had stopped being only a delivery toll collector and started becoming the owner of the digital grocery shelf. Brands like Pepsi, Nestle, and Campbell’s were paying for better placement inside search results and product feeds at the exact moment shoppers were building baskets, which made that revenue far more profitable than the underlying delivery transaction and let advertising reach about $550M, or roughly 30% of 2021 revenue.1 2 3

• This worked because grocery delivery itself is a thin margin business. Instacart typically took 5% to 8% from retail partners for demand and fulfillment access, while stores themselves often run at about 2% profit margins. Selling ad slots on top of that same shopping flow added revenue without adding another driver or picker.1 4 5
• The ad engine was driven by scale and better tooling. In its IPO filing, Instacart said advertising and other revenue grew 94% from 2020 to 2021, helped by a 59% increase in the number of brands on the platform, new ad products, and a 30% increase in orders. By 2023, it was serving over 5,500 brands.2 6
• This is also what separated Instacart from rivals. Walmart and Amazon had their own first party grocery demand, while Uber and DoorDash were still earlier in grocery. Instacart’s advantage was that it sat across many grocers at once, so a CPG brand could buy one campaign and reach shoppers across a large cross retailer network.1 3 7

Going forward, the important question is less whether Instacart can sell ads and more how far it can extend that retail media layer beyond its own app. Recent results show advertising and other revenue passing $1B in 2025, and the next leg is pushing those tools into retailer sites, off platform media, and more parts of the grocery shopping workflow.6 8 9