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Matteo Bizon is a PPC Specialist at Bobsled. 

Like other major eCommerce platforms, Instacart’s advertising features and metric tracking priorities have changed in 2022. However, a lot of fundamentals remain the same over the years - particularly when it comes to what it takes to track important business elements and act on them. This was the focus of our latest Instacart Advertising Webinar, from a few months ago, which helps brands garner success on Instacart by tracking the most important objectives and results.

 

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Source: Amazon

 

It's easy to be distracted by the most obvious, easy-to-track metrics on your Instacart advertising dashboard. But which metrics should your brand be focusing on?

The most successful brands on Instacart choose to focus on a handful of overall business Objectives to paint a clearer picture of the company’s eCommerce goals. Then they use these objectives to help them identify which Key Results will best achieve those objectives.

Below, you’ll find our cheat sheet of Key Results on Instacart, which business Objective they relate to, and a description of the factors influencing them. This is based on Bobsled’s experience managing Instacart advertising for dozens of consumer brands. 

 

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Objectives and Key Results, Explained

In Measure What Matters, John Doerr builds a strong case for Objectives and Key Results - otherwise known as OKRs. There are plenty of great tools available to use in order to follow along with this approach, which also comes with actionable advice and many solid examples of this idea seeing success today. 

 

Objectives

Objectives define WHAT you want to achieve. According to Doerr, “Objectives are significant, concrete, action-oriented, and (ideally) inspirational”. They should always encapsulate the core values and goals for you to always focus on above all else. 

 

Key Results

The key results help you figure out HOW you are going to achieve your strong objectives. Doerr says that the best Key results are “specific and time-bound, aggressive yet realistic. Most of all, they are measurable and verifiable”. With good key results, there can be no room for doubt. They effectively monitor and benchmark the methods of achieving your objectives. 

 

OKR Example

Some brands have trouble distinguishing between Objectives and Key Results when trying to plan growth and profitability goals for the long term. Here’s an example to set these definitions into stone: 

 

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As you can see in the image above, there is an Objective and 5 Key Results. Keep in mind that Key Results are not just a series of steps to achieve the objective. They do not necessarily outline a plan that should be set in motion, but rather a collection of inputs (processes) and outputs (the result of those processes). 

With the example Objective to “Win the Indy 500”, one Key Result is to “Reduce pit stop errors by 50%”, which is an output of a process. In this case, the process is skill improvement and driver growth. Another Key Result is to “Practice pit stops one hour per day”, which is an input, or process. 

Key results are, to the best of the brand’s knowledge, the best ways to achieve the ultimate Objective.

 

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Take a peek at this second example and see if you can identify input KRs and output KRs while you familiarize yourself with the overall OKR formula.

 

Growth Vs. Profitability 

When trying to develop growth and profitability Objectives, a lot of sellers may conflate key terms and definitions. Growth itself is not a strategy, so it is important to create an Objective that can steer your business towards growth in a way that works best. 

Our Bobsled experts might recommend that a brand simplify its commercial Objectives by placing them in one of the two biggest categories: growth or profitability. There can be additional Objectives as well, but most generalized Objectives can be related back to these two major types. 

Again, growth and profitability should be the two major Objectives of any brand on any online platform.

 

Considering the Trade-Offs

Something we have learned at Bobsled over the years is that there are many trade-offs between these two major Objectives - especially when it comes to advertising performance. We like to think of it as a pair of scales: one directly affects the other. As an example, if you want to pour your resources and goals into growth, you may have to sacrifice some of your profitability needs. Below-the-brand advertising can expand your reach, but profits might take a hit. 

 

Bobsled Clients Already Know

Some of our Bobsled clients and prospective clients ask us if we can increase their ROAS to a specific number. While we can certainly do this to promote profitability, it may not bode well for other Objectives and goals you have put into action. Clients looking for a ROAS of 20 can achieve that when we bid on high-intent, long-tail branded search terms. On the other side of the coin, this attracts no net-new customers which means that the brand will not be seeing much growth at all while this strategy plays out. 

 

What About Profitable Growth? 

You can choose to invest in both growth and profitability at the same time, but your results may be diluted across both categories. For the most part, it may be a better idea to spend brand advertising efforts on one type of Objective at a time. 

Another question our Bobsled marketing pros get a lot is whether or not there can be a different type of Objective across channels and assortments. There absolutely can! Launching new sub-brands typically fall under the category of growth Objectives. On the other hand, cash-cow products in assortments will aim for higher profitability. This can be applied to emerging vs. existing channels as well. 

 

Growth Objectives

Using the OKR process, we can now define major growth objectives for brands investing in Advertising on Instacart. Take another look at our KPI cheat sheet and follow along with these OKRs:

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Objective: Grow Market Share

Market share is calculated as the certain percentage of company sales compared to the overall share of sales in its industry over a certain amount of time. This is a good Objective for those looking to accommodate markets that are rapidly growing, or more specifically defined. It can also be designed specifically around Instacart as an online channel. 

 

Key Results for Growing Market Share: 

  • Basket Penetration is a metric that Instacart often uses to determine the value of top-selling products at all times. It is calculated by the percentage of baskets on Instacart that contain your brand’s product(s). 
  • Share of Voice (SOV) allows you to assess how much space your products take up in search results. This doesn’t show actual sales, but it is a good way to measure impressions. There are a few factors that can affect a brand’s SOV, such as the advertising budget and bid levels.
  • First-Time Buyers should always be targeted by brands looking to facilitate growth.

Objective: Advertising Incrementality

Advertising incrementality measures your brand’s ability to scale advertising results. There is a problem unique to Instacart where brands can’t directly control their inventory position. This could mean that incremental growth is more challenging for brands that don’t have a wide area of retail distribution. Even brands that bid aggressively might not be able to increase impressions as quickly as they would like. Just like with the previous Objective, a brand’s advertising budget could also come into play. 

 

Key Results for Advertising Incrementality 

  • Retail Distribution Networks and inventory availability should be a top priority for brands looking to achieve this Objective. 
  • Search Volume may be driven by outside macro factors like category growth or channel growth. They can also be affected by organic or paid efforts to grow a brand overall. 

Profitability Objectives

Profitability objectives help you increase your bottom line while staying true to goals that will prioritize profits over growth. In our experience, total ROAS and LTV are two of the biggest profitability goals for brands of all sizes. 

 

Objective: Improve Total ROAS

Also known as Return On Advertising Spend, your ROAS includes everything that is generated organically as well as through paid advertising budgets. This is the ultimate metric to plain ROAS when looking for complete results. This Objective can help give you a wider view of how a brand’s advertising strategy affects its overall performance on the platform. Not to mention, most brands are trying to hit a specific profit margin target on Instacart. TROAS (Total Return On Advertising Spend) makes it so much easier to calculate this profitability. 

 

Key Results for Improving TROAS

  • Average Order Value (AOV) is an important metric for improving TROAS. You can increase your average order value by optimizing landing pages and product pages for easier shopping experiences. Reducing cart abandonment rates can also help.
  • Cost Per Click (CPC) is a great metric to measure overall and can be especially helpful in directly controlling your profitability. 
  • Conversion Rates will ultimately result in a higher TROAS.
  • Percentage of Ad Sales will give you a good idea of your organic profitability vs. the net worth of your ad expenditure. 

Objective: Increase Lifetime Value (LTV)

Consumable products sold on Instacart often guarantee repeat purchases. It’s important that brands know how many times a single customer returns to keep buying products over the course of their life. That is why a customer’s worth is known as LTV, or Lifetime Value. This is used to determine how much money, time, and resources should be spent on acquiring a new customer. 

 

Key Results for Increasing LTV 

  • Repeat Purchase Behavior is the biggest indicator of a customer’s LTV and directly impacts these values on Instacart. 
  • Average Order Value can determine what is being purchased on a repeat basis and whether those products are valuable enough to contribute to LTV. 
  • Product Mix and Catalogue Size both play a part in increasing a customer’s lifetime value. This can include bundles, pack sizes, and halo products.

     

Get Your Own OKR Cheat Sheet!

Want to download this blog as a PDF cheat sheet to help you track your brand’s OKRs? Click here!

 

Next week, we will go into further detail about specific OKRs that brands should be measuring in order to improve growth and profitability through Instacart. Learn about what influences a brand’s ability to grow and see some critical examples of growth vs. profitability to see what Objectives and Key Results will work best for you moving forward!

 

Book a FREE consultation with one of our experts today!

 

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Tagged: PPC Advertising, Instacart, Bobsled Marketing

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