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How Digital Grocery Advertising Boosts Your Bottom Line

Adding digital grocery advertising to your eCommerce site can significantly improve your eCommerce profit margin with the right approach.

As eCommerce has boomed in popularity, so has digital grocery advertising. 

Internet ad spending in North America has risen each year since 20001, with significant gains in the last seven years. For the most part, the growth rate of digital advertising has exceeded every other media over the past 20 years.2

While initial predictions for 2020 showed a dip in CPG ad spend, research firm WARC found that the rapid adoption of eCommerce worldwide due to COVID-19 reversed that number, rising to a projected $58.5 billion. They reported that brands’ eCommerce advertising investments are set to increase 18.3% worldwide, with focus on targeted point of purchase advertising.3

Global, eCommerce advertising spend, USD billions and year-on-year percentage change

Grocery Digital Advertising Adspend

Grocery Digital Advertising Adspend

Retail giants like Walmart and Kroger, and marketplaces like Amazon and Instacart, have invested heavily to secure it as part of their revenue stream. Walmart, for example, declared its intentions in this regard in 2018, and the following year made good on this promise by bringing online ad sales in-house and acquiring ad tech company Polymorph Labs. 

The appeal of digital grocery advertising

Large national players are seeking to reach an audience that is increasingly found online. COVID-19 has pushed consumers to digital purchasing across all retail categories, especially pronounced grocery, and this trend is anticipated to continue. Online grocery sales have seen a dramatic increase since March, stabilizing in August at $5.7 billion, up 375% from one year ago.4 Research suggests that eGrocery sales will account for 21.5% of total grocery sales by 2025 – an estimated $250 billion, which is more than a 60% increase over pre-pandemic estimates.5

This sudden shift in shopper behavior hasn’t gone unnoticed by CPGs. Business Insider interviewed CPG advertisers today, who confirmed that more of their budget is going digital, and that they are actively experimenting on alternatives to the dominant Amazon advertising platform. This is especially the case for small to midsize advertisers, who tend to be more nimble in their budgetary approval processes compared to national-level CPGs.

Increased traffic is a motivator, but the real draw of online grocery advertising for CPGs is that shoppers who are browsing grocery eCommerce sites are ready to make a purchase soon. Thus, a serious dilemma for many online advertisers — how to close the intention gap — is not an issue for CPG companies who bid on point of purchase ad placements on grocery eCommerce sites.

Another key benefit to advertisers lies in shopper data. Grocers with their own eCommerce site can offer in-depth, high-quality shopper data. With this information, CPGs can develop segmented and targeted campaigns that are relevant to shoppers with much higher conversion rates than traditional media advertising. This ultimately benefits both the brand advertiser and grocer.

Regional grocers are often excluded

So, why aren’t more regional grocers claiming their slice of the $11 billion CPG online advertising pie?

Regional grocers who rely solely on delivery-provider marketplaces for their online orders are automatically excluded from the benefits of advertising. While operators such as Instacart benefit heavily from CPG online ad dollars, the grocers who bring their shoppers into the marketplace don’t see a penny of these revenues.

Grocers who do have their own eCommerce site face a different set of challenges: they need to establish the infrastructure required to manage what can be a complex operation, requiring data management, ad buying and ad serving capabilities. Even if they have invested in developing a strategy and resources, they may lack the quantity of traffic that’s needed to attract ad campaigns. 

All digital ads are not equal

It’s also important to have an understanding of how advertising within the digital channel is evolving. 

“Traditional digital” ads can take the form of display ads, banner ads and pop-ups. While these placements can be impactful, traditional digital ad content disrupts the user’s online shopping experience, instead of enhancing it. Whether sending a user away to a landing page or to a different site entirely, these advertisements aren’t very effective at increasing sales or conversions for retailers or CPG advertisers. 

online grocery advertisingThis is increasingly being displaced by the much more effective “native advertising,” which is non-disruptive to the user experience. Native ads are presented in a format that matches the look, feel and function of the space in which they appear. On a web page, a native ad might take the form of a product recommendation or a promoted listing. Most importantly, the ad is embedded into the basket building experience, so that shoppers stay on the grocer’s site and are more likely to convert by completing a purchase. 

 

Mercatus Digital Advertising opens the door

One way to capture online advertising revenue without major investment is by working with the right solution provider, one who can do the heavy lifting for you, from managing CPG relationships and ad campaigns, to optimizing campaign ad placements on your eGrocery website.

With Mercatus, for example, you can claim your share of digital grocery advertising revenue, with no set-up costs and seamless integration with your existing systems. We split the revenue evenly with you and we manage the entire program, so that you can enjoy the full benefits of digital advertising without lifting a finger.

Grocery Digital Advertising Technology

Mercatus Digital Advertising combines Mercatus’ leading grocery digital commerce platform with CitrusAd’s cutting-edge retail media technology to enable contextual and compelling native advertising throughout the online shopping journey. Retailers using the Mercatus eCommerce platform also benefit from the CitrusAd Network’s retail media sales expertise to help drive additional revenue by monetizing traffic on their web and mobile digital commerce sites. 

Why do leading grocery retailers choose this solution? Research from CitrusAd indicates that a competitive digital advertising program can bring the following results:

  • 89x higher click-through rates
  • 1/3+ existing customers are upsold
  • 3.5x higher CPM cost than traditional media 

All of this results in more revenue for you. And boosting revenue is particularly important right now. COVID-19 has strained in-store resources and caused an unprecedented surge in online traffic. As a result, grocers are facing increased costs, while simultaneously needing to invest in expanding their eCommerce capabilities to meet the higher demand of a post-pandemic world. 

Mercatus Digital Advertising is a low-risk, easy way to increase revenue at this critical moment in digital grocery advertising. Find out how you can start collecting ad revenue by incorporating Mercatus Digital Advertising into your retail grocery eCommerce site. 

Want to learn more about the benefits of digital grocery advertising to your business? Read our next blog to learn the 5 Ways Online Grocery Advertising Can Generate Revenue For Your Business.

Sources:

  1. Zenith, Advertising Expenditure Forecasts December 2019, cited by Statista, Digital Advertising in North America.
  2. Zenith, Advertising Expenditure Forecasts December 2019, cited by Statista, Digital Advertising in North America.
  3. WARC DATA, Global Ad Trends, September 2020, https://www.warc.com/newsandopinion/news/brands-to-spend-59bn-on-e-commerce-ads-this-year/44139 
  4. Brick Meets Click/Mercatus Grocery Survey, fielded August 24-26, 2020.
  5. eGrocery’s New Reality: The Pandemic’s Lasting Impact on U.S. Grocery Shopping Behavior, Mercatus/ Incisiv. September 17, 2020.

 

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Kevin Kidd
Kevin Kidd is a strategic product and R&D professional. His expertise lies in delivering market-driven solutions for long-term success.
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