For many states across America, April is turning into what November is for year-end retail promotions – specifically for legal cannabis.
The wave of legal weed has never been higher. Increased social acceptance and awareness, and diversification of consumption products hitting medical and adult-use markets have all contributed to the rapid industry growth.
As a result, the opportunities and needs for direct-to-consumer cannabis brands have grown similarly. This has created a never before seen demand for advertising solutions geared explicitly towards this still highly regulated industry.
And, of course, it’s not easy for these brands to spread the word and bring in new customers, especially while federal legality remains in its current state. So, as a marketer who’s spent the last three years in the space, I wanted to mark this year’s 420 – the highest holiday for cannabis consumers – with an assessment of some of the challenges of advertising within the cannabis industry.
Differing State-Level Regulations
One of the biggest challenges advertisers face in the cannabis industry is differing state-level regulations. As long as adult usage is still illegal at the federal level, each state has its rules governing advertising for cannabis products. Some states have strict regulations on advertising, while others have little to no defined advertising regulations.
California, for example, one of the largest cannabis markets in the United States, has strict regulations governing the advertising of cannabis products. Cannabis advertisements in the Golden State cannot appeal to children, use symbols or images associated with illegal drug use, or be placed within 1,000 feet of schools or playgrounds.
On the other hand, Colorado, one of the first states to legalize recreational adult use, has far less strict regulations. In Colorado, cannabis advertisements can be placed in newspapers, magazines, and billboards, as long as they are not placed near schools or targeted towards children.
Variable regulations impact brands that run large multi-state operations (MSOs) but can also help level the playing field for more locally sourced brands and retailers.
Channel and Tactic Effectiveness
Other challenges that advertisers in the cannabis industry face are the effectiveness of channels and tactics. Because more traditional advertising channels (i.e., linear TV, broadcast radio) are not yet warmly welcoming cannabis brands, digital channels have been heavily pushed, especially from a paid media perspective.
However, where the cream rises to the top is showcased by brands that can deploy paid strategies in trackable ways. Paid social still isn’t an option for these brands – but programmatic tactics are much more widely relied on. The catch is that much of the programmatic space is still too reliant on legacy targeting and measurement systems that use 3P cookies, which are on their way out very soon.
The most successful brands are the ones that leverage tactics such as programmatic as a way to complement an organic brand-building strategic approach while also using measurement tools that both respect user privacy concerns and deterministically connect to bottom-line business metrics, like sales and revenue. Measurement solutions that use persistent IDs, like LiveRamp’s Ramp ID, are often the best way to cover all these bases but can be cost-prohibitive for smaller or newer brands.
Finding the Right Help
I’ve been fortunate enough to work on both the brand and agency sides of the ad tech industry. From a brand’s POV, one of the more exciting things comes after working hard on a campaign, taking it from planning to launching and setting it live! After all the hard work, the mind dreams of all the potential engagement and sales lift.
Often, what happens though is disappointment in the form of limited user engagement, low clarity around the impact on sales and revenue, and a hole in the marketing budget. Working with ad agency partners is one way to yield better results – but too often, brands will either hand off all aspects of work over to an external team and expect miracles to happen, or not get the benefit of priority. At the end of the day, your brand is unique only to the people who make it.
I’ve always found success through working with subject matter experts who have a competent understanding of strategy and execution. The key is finding support from people with hands-on experience in multiple roles – both technical and non-technical.
For cannabis brands – this means finding and working with a supporting cast who understands the specific tools of the industry. Some questions to ask could be:
- Can you track both online and in-store sales?
- Can you track interactions and sales with my website menu?
- How detailed will a performance report look with respect to bottom-line metrics vs. media engagement?
Good partner prospects will have answers to these questions – great partners will tell you about how they successfully implemented solutions to tackle them directly.
The last three years have certainly been a wild ride for the cannabis space. This 420, I’m going to indulge in some self-reflection over a joint, remembering experiences spanning from seeing cannabis brands rise and fall, working with small brands that exploded while others got rolled up into corporate MSOs, and adapting to tech innovations that have changed the consumer experiences across the country. One thing is for sure – there will always be more change on the horizon.