Amazon just opened up ads within its Instacart-killer AmazonFresh to win over big packaged goods brands

Getty/Kevork Djansezian

Amazon is expanding its advertising business to AmazonFresh, letting consumer packaged goods brands run ads for their grocery products.
On Thursday morning, Frito-Lay and Nestle Waters were running ads within search results and product detail pages.
Online grocery is a competitive industry with Instacart, Walmart and Peapod all offering grocery services.

Amazon’s move into advertising has been compared to Facebook and Google for its size and data, and now it’s taking a page from retailers like Walmart to win over packaged-goods brands.

Amazon said today that it’s rolling out ads within AmazonFresh, its online grocery service that competes with companies like Instacart and Peapod.

Walmart is also moving into online grocery delivery through its acquisition of Jet.com and Google has experimented with Google Express.

AmazonFresh is only available to Prime members and costs an additional monthly fee of $14.99 in big cities including New York, Boston, Dallas and Chicago. According to a report from Deutsche Bank analyst Paul Trussell last year, Amazon will be tied with Instacart in e-grocery delivery by 2025 with 19% market share, ahead of Walmart’s 17% and Kroger at 7%.

Amazon announced the new advertising feature in an email to advertisers that Business Insider reviewed. "You already know the great benefits of Sponsored Products on Amazon Advertising," read the email. "Now you can add your ASINs with AmazonFresh offers to new or existing Sponsored Product campaigns." ASIN is a 10-digit number that identifies products and stands for Amazon Standard Identification Number.

Packaged goods brands that sell items on AmazonFresh can now run ads in search results and product-detail pages that specifically target AmazonFresh shoppers, Amazon said. The email also said that AmazonFresh ads will only be shown to customers who are eligible to purchase their products and can be targeted to a brand’s new or returning shoppers.

Amazon did not respond to a press inquiry.

On Thursday morning, Frito-Lay was running ads promoting Fritos, Cheetos and Smartfood Popcorn in the AmazonFresh section while Nestle Waters’ San Pellegrino was running ads for sparkling water at the top of search results.

Trevor George, CEO of Amazon-focused agency Blue Wheel Media, said AmazonFresh could be a big opportunity for CPG brands to work their way into Amazon’s advertising program. He said that because AmazonFresh is a new area for ads, the cost per click will initially be low.

"This could be a very profitable endeavor for brands that realize this," he said.

Amazon’s ad business is growing

Amazon has long had close ties with CPG brands as its ad business has grown. According to Pivotal Research, Amazon’s ad business is set to more than quadruple by 2023.

Amazon has been trying to make inroads with big brands, recently rolling out a new metric called "new-to-brand" that tracks the number of people who saw an ad and then bought that brand on Amazon for the first time in a year.

The e-commerce giant has been experimenting with video advertising in its streaming service FreeDive and in mobile search results. Business Insider recently reported that Amazon has been pushing a video ad format within mobile search results, though agencies noted that there were challenges around the price, data and creative.

"To Amazon’s credit, they’re trying to figure out if there’s space for video in the low-funnel shopping experience," said Nich Weinheimer, VP of e-commerce at Kenshoo, told Business Insider recently. "For most marketers that leverage Amazon, it’s very transactional, it’s all about sell-through. Amazon’s trying to make strides to develop that consideration phase of their site and engage with a brand more broadly."

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