The Complete, Omnichannel Guide to Cannabis Marketing in 2020
Maybe you used to buy it in the seedy parking lot behind Gold's Gym and smoke it out of an apple in your friend’s Impreza blowing through 99-cent cans of Arizona Iced Tea and those extra spicy Doritos while a crooning Robert Plant penetrated your earholes?
Things have changed.
Now, in a dozen states (and counting), you can walk into a store with nothing more than a license and a fistful of cash and select from assorted prerolls, vape pens, and THC-laden sweet treats. Heck, Illinois did $39 million in sales in its first month and, by the time you read this, that won’t even be impressive.
The recreational cannabis industry is booming, folks, and it’s just getting started.
Unfortunately, the marketing of cannabis—and CBD, it’s non-psychoactive cousin peddled by gas station attendants and ecommerce #brands as cures to every ailment imaginable with impunity—remains woefully behind. This is part regulatory hamstringing, part foolhardy hubris; in many fledgling markets, the prevailing attitude remains: “Marketing?! My customers are still in awe that they can buy a blunt in a spot that looks like an Apple store.”
In what follows, I'll share what I've learned over the past several years running a marketing agency that caters to the cannabis industry. I'll share an industry snapshot as well as what I see as the biggest challenges for cannabis marketers. Finally, I’ll review seven common marketing channels through the lens of a cannabis marketing:
- Paid search
- Paid social
- Programmatic advertising
- Email marketing
- Out-of-home advertising
Some are hot fire, others are tire fires, and some blacklist the devil’s lettuce entirely; today, you’ll learn where it makes sense to spend your time and money if you hope to drive revenue and sidestep regulatory wrath.
Cannabis marketing: An industry snapshot
The cannabis industry is, uhhhhh, not small.
Despite a tenuous federal status, the legal cannabis market spans 33 medical and 13 medical/recreational states and is comprised of more than 10,000 businesses. The space is experiencing rapid growth, with sales in excess of $14 billion in 2019 and projected to reach $25 billion by 2021.
While cannabis has created cottage industries across the country (ancillary businesses ranging from armored cars to delivery apps, IoT soil regulators to PoS systems), plant-touching businesses—a very literal industry term—can be subdivided into the following segments.
Dispensaries: The local businesses of the cannabis industry
Ah, the SMB, the backbone of America. Dispensaries are often small, local businesses with limited marketing budgets looking to drive foot traffic and, ultimately, sales. They’re like any other brick-and-mortar, but with more red tape and longer lines.
Dispensaries tend to struggle mightily with advertising because, well, most of what’s out there seems unfathomably expensive (who actually knows what a billboard costs, anyway?) or nonexistent. As such, these businesses lean heavily on email and SMS to cross-sell and drive repeat business. While this certainly improves customer lifetime value, or CLV, it has virtually no impact on net-new customers.
Biggest marketing challenges
- Raising awareness
- Local SEO
- Limited ad budgets
CPG: Think “smokable White Claw”
As in any other industry, cannabis features its own suite of consumer goods vying for shelf space and customer loyalty. While the existence of consumer-packaged goods, or CPG, brands in the space is mostly limited to mature recreational markets today, their prevalence will undoubtedly increase (particularly as rights to launch established brands in nascent markets are sold off and, eventually, interstate commerce becomes a reality).
For these businesses, the ability to develop and target an audience across brand-safe digital properties is essential; it’s also a huge challenge. The lack of availability and accessibility on the digital front. Worse still is the fact that CPG brands are reliant on second-hand or anecdotal data to determine the efficacy of digital campaigns designed to drive foot traffic in dispensaries that stock their products. This makes CPG brands discerning spenders who are forced to lean heavily on secondary metrics (impressions, brand lift, etc.) to gauge success.
You can roll most CBD brands into this category but with one key caveat: The ability to peddle wares online makes tying clicks and impressions to revenue a cinch, so you can treat CBD brands like any other ecommerce client (with some mode-specific FDA hurdles).
Biggest marketing challenges
- Brand awareness
- Omnichannel execution
Multi-state operators: Marijuanopolies-in-waiting
Last but certainly not least, we have the large, often publicly traded entities, multi-state operators (colloquially referred to as MSOs).
These folks typically operate dispensaries across the country and have their own in-house CPG brands to boot; they also tend to have the most advanced in-house marketing teams (and marketing needs).
As such, these businesses require complex, compliant, omni-channel media strategies, making them the primary market for cross-channel campaigns (a single creative concept applied across OOH, organic social, and print, for example), premium digital placements (direct ad buys from national, recognized publishers), and dynamic ad units (video, connected TV, etc.).
Biggest marketing challenges
- Market penetration during expansion
- Finding places to spend marketing dollars
- Compliance (across states)
Cannabis marketing channels: What to use and what to avoid
Now, we've covered what the cannabis industry looks like and who the players are in cannabis marketing—it's time to get into how you can reach your potential customers. Because depending on the novelty of buying blunt in a spot that looks like an Apple store just won't hold up.
Cannabis marketing is highly regulated and highly monitored, so you need to know where you can market. Here are seven common marketing channels and how they work (or, spoiler, don't work) for the industry.
Cannabis marketing channel #1: Paid search
Although paid search can be a very effective tool for non-cannabis organizations to acquire more customers (preaching to the choir here), cannabis organizations are not able to use it at this time. Google’s ad policy clearly states that “ads for substances that alter mental state for the purpose of recreation or otherwise include ‘highs’” are not allowed:
Which makes this super interesting:
That’s an ad for a dispensary! And a poorly geotargeted one at that; I’m in Jamaica Plain, MA, and I’m being served an ad for a dispensary in Florida. The commercialization of these terms would suggest that changes could be on the horizon (at least in legal markets), but there’s been no official word from Google on the matter.
Until that’s the case, I would advise against tempting the search gods. If you operate a dispensary, there’s too much to be gained from a functional Google My Business account and access to your customers’ inboxes to fly in the face of clearly written policy.
I mean, everyone … if it were kosher.
The ability to target the canna-curious (top and mid-funnel prospects) and those looking to allow for creative differentiation that you’re not going to get anywhere else. That being said, I’d advise capping your search-related endeavours at SEO and GMB optimization until Google gives the OK.
Cannabis marketing channel #2: Paid social
Social media has quickly become one of the most crucial tools for digital marketers to communicate their message effectively to a specified target audience, ostensibly replacing blogs in the B2C space.
Cannabis is no exception.
That being said, major social platforms parallel search’s ban on ads. While cannabis companies can maintain a social media presence to engage and communicate with their customers it is still against Facebook’s advertising policy to promote cannabis through Instagram and Facebook advertisements:
Crushing, I know. The exceptional targeting options afforded to advertisers (including but not limited to age; many states require advertisers to ensure 70+% of their audience is 21+) would make Facebook/Instagram the ideal place to reach cannabis consumers. The creative units would make for a true brand-building
Now, there are marketers in the space who claim to have found haxxx, but can and should are not the same thing.
Like GMB, Facebook business pages and Facebook Messenger represent an invaluable customer services tool and a means by which to engage with prospects and customers in an unpaid, promotional capacity; Instagram, while less of space for promoting deals, is also an exceptional organic brand-building tool. Giving up the opportunity to leverage these channels in the name of running a few ads that might lead to an online cart complete (not a transaction, mind you), is a fool’s errand.
Folks who sell ”topical hemp” (read: CBD that goes on your skin, not in your mouth) can advertise on social without incurring the wrath of Zuck; they’ve been given the green (okay, more like gray) light to run ads on Facebook and Instagram. If you sell cannabis—or orally administered CBD—avoid paid promotion on Facebook for now.
Cannabis marketing channel #3: Programmatic advertising
Imagine you could zoom out and see what (almost) everyone on the internet is doing in real-time. If you could cherry-pick specific people to reach based on content they're consuming and where/when they’re consuming it.
That’s what programmatic advertising allows you to do.
I’m biased here as helping cannabis brands execute programmatic ad buys is how I make my livin’, but it’s one of the most effective ways to reach current and future cannabis consumers in a compliant fashion.
While it may sound terrifyingly complex because of the buzzword soup in which it's mired (DMP, VTC, SSP, DSP, etc.), programmatic is really just the digital ad buying you’re used to on steroids. It started as a means by which to buy the inventory on websites nobody else wanted; the placements publishers couldn’t sell for top dollar were offloaded and sold on the cheap in a real-time auction.
This has since evolved to encompass premium inventory and many different ad units (display, native, video, OTT, DOOH: the acronyms never stop!); it’s a way for agencies and brands to use first- and third-party targeting data to reach their ideal customers across an incalculable number of potential impressions.
Now, as it pertains to cannabis, programmatic is still largely unavailable; the biggest, sexiest exchanges (read: Google) do not accept the category. It’s simply too much of a headache to deal with state-level regulation to warrant opening the floodgates. As such, most established agencies and ad tech orgs can’t or won’t touch the space.
Unless, of course, you have access to pre-negotiated private marketplace deals that allow you to advertise across premium media properties and harness more than 250mm unique impressions each month.
Over the last 18 months, some publishers have begun to open their inventory to cannabis brands, albeit with regulations more stringent than most states. The general rule(s) of thumb:
- Avoid people.
- No depictions of consumptions.
- No health claims.
- No use of words like “weed,” “cannabis,” and “marijuana.”
- Lean towards educational vs. transactional CTAs.
Provided you can craft compliant creative and adhere to state and city/town regulations (which are constantly changing), you can leverage programmatic advertising to reach new and existing customers online.
Everyone in the cannabis space with marketing dollars. Duh.
On a more serious note...
If you’re a dispensary owner, the hyper-local targeting capabilities available to you are unrivaled; better still, you can pair programmatic with your email and SMS campaigns to build powerful retargeting funnels.
If you're a CPG brand, the ability to tailor an ideal customer profile through third-party data makes it easier to drive your target consumer into dispensaries that stock your products.
And if you’re an MSO, you can do everything above and more, there just happens to be more red tape—what’s allowed in State X is explicitly forbidden in State Y and ambiguously defined in State Z.
Cannabis marketing channel #4: Email marketing
Email marketing is one of the most effective marketing channels for cannabis organizations as it allows them to communicate their message without restrictions (outside of opt-in, of course).
If an organization can incentivize customers to opt into their email list—either during an in-store purchase or with a CTA on their website—by offering some type of deal or discount to subscribers this can be an excellent way to build leads and push marketing to existing or prospective customers.
It’s also one of the few places where product-centric creative—which is to say, marketing material that actually depicts what’s being sold as opposed to, like, nebulous stock photos of a middle aged couple gazing off into the sea during a blustery twilight—can shine. Where you can promote deals. Check out this email from Curaleaf’s Arizona team:
If you tried to run a product shot of tincture in a banner ad (or, god forbid, on Instagram), you’d be shut down. Here, it’s totally kosher.
Everyone with a cannabis business should be using email marketing. Even if it’s just a MailChimp account, there is no excuse to avoid this valuable (ostensibly free) touchpoint. Plus, since dispensaries are often mandated by states to have some sort of CRM in place, they are actively collecting the requisite information anyway. No excuses.
Cannabis marketing channel #5: Content/SEO
Nobody knows the value of a killer content marketing program quite like WordStream. I challenge you to search anything PPC-related and find something other than a WordStream blog post at the top of the SERP.
Cannabis is like most industries in that authoritative sites that invested in content early and often rool the roost. For paid search, it’s WordStream. For inbound marketing content, it's HubSpot. For cannabis, it’s Leafly.
Trying to get a website to rank for mid-funnel, educationally-leaning search terms in 2020 is a fool’s errand.
“What’s a sativa?”
“Do edibles make you higher?”
And so forth are all dominated by Leafly (it’s been around for years; it’s weedkipedia).
As a result, attempting to build a content marketing program around these terms is akin to spinning your tires.
Fortunately, opportunity still exists at the local level.
While Pure Oasis, for instance, is never going to rank for “dispensary” or “best indica-leaning hybrid,” it can certainly rank for hyper-local search terms like “recreational dispensary boston.”
As is the case for any other local business, optimizing local SEO by creating and updating a GMB account, soliciting quality reviews and backlinks, and ensuring local keywords make an appearance in your metadata, copy, and URLs can be the difference between discoverability and certain death.
Dispensaries! A concerted focus on local SEO should be table stakes for any local cannabis retailer.
The increased footprint of MSOs will make it easier to rank for higher-competition keywords, but location-specific pages (or microsites, depending on state requirements) should adhere to the same best practices outlined above.
CPG brands, on the other hand, will likely struggle to gain traction via content and good SEO; keywords like “tincture” and “preroll” are dominated by Leafly or dispensary sites optimized for hyperlocal variants. They’re better off leaning on organic social.
Cannabis marketing channel #6: SMS
SMS advertising can often be a difficult channel to navigate due to privacy and regulatory concerns; customers often refrain from opting into receiving marketing materials by text, leaving little room for advertisers.
But while it might feel like a thing of the past, SMS marketing—"direct mail” delivered via text message—is a boon for the cannabis industry.
Dispensaries can use SMS marketing tools like Sprout to inform customers of new products or special discounts and, ultimately incentivize repeat visits. This is particularly valuable in saturated markets, where a customer’s loyalty ultimately lies with their wallets; in what can quickly become a race to the bottom price-wise, fostering engagement through cross-selling and upselling with manicured, persona-based offers are incredibly valuable.
Since SMS messaging has such a high open-rate (~98%!), it is key that cannabis businesses communicate their messages briefly and effectively with more personalization; there’s no better way to engage an existing customer.
If you operate a dispensary and you aren’t leveraging SMS—or its media rich cousin, MMS (multi-media messaging)—please start ASAP.
If you operate multiple dispensaries, take a step back and really assess your options. Multi-state operators can run into some serious fees when using an SMS service, as many charge based on volume. If you’re slinging a few hundred thousand messages a month, you may want to have a conversation with your provider and negotiate more favorable terms; most are amenable.
Cannabis marketing channel #7: OOH
I went to Vegas about a month ago to visit with some cannabis cultivators and CBD producers and the thing that shocked me most wasn’t the sheer volume of dispensaries but, rather, the sheer volume of billboards and cab ads.
As far as cannabis markets go, you could not possibly get more different from Boston, where there’s a single dispensary (soon to be two!) and a few billboards over by the airport.
As restrictions are lifted on cannabis for out-of-home advertising (billboards, vehicle wraps, bench ads, etc.) this channel is quickly becoming an effective way to grab consumers attention and get some buzz around your cannabis brand. Every state has different rules around OOH advertising, but most of the time they boil down to this:
- Don’t put it near a school.
- Don’t depict consumption.
- Don’t depict product.
- Don’t make health claims.
- DO ensure that 70+% of viewers are over 21 years old (and get it in writing from your vendor).
- DO add the state’s required disclaimer.
These disclaimers will vary. In Nevada, for example, it’s this: "For use by individuals 21 years of age or older only. Keep out of reach of children. It is illegal to drive a motor vehicle while under the influence of marihuana. National Poison Control Center 1-800-222-1222.”
Some states also have educational requirements; others disallow OOH entirely (Michigan did until they rolled out recreational at the beginning of the year).
Although it is often difficult to measure returns on OOH, the most successful out-of-home advertising grabs consumers attention and quickly resonates with the target audience to leave them with a lasting impression of your brand or service.
While it’s not as exact as device ID or cookie-based tracking, here are a few of the ways you can measure the effectiveness of OOH advertising for cannabis:
- Direct response: By using a market or billboard-specific vanity URL (something like [brand][location].com or [yournormalurl].com/[location or promotion]), you can measure both site traffic and sign ups based on entry point; this is also a great opportunity to share region-specific value propositions and regulatory information with your new customers.
- Additional form field: Asking prospects where they hear about your cannabis brand once they hit your website is also a viable way to gauge efficacy. This is reliant on self-reporting—you could make the field mandatory or optional—but if it's a radio button or drop-down appended to your existing form, it’s not a big deal to ask this question.
- Flight-based: The least scientific option, this involves simply cycling periods in which you are or are not running OOH ads in order to get an idea as to how they impact success.
Pricing varies wildly based on location, duration (typically rates are quoted in four-week increments) and inventory, but OOH is a solid route for most cannabis businesses looking to expand outside of digital marketing.
No matter what kind of cannabis business you’re marketing, if you’re entering a geo with established players (or none at all), OOH advertising is an effective way to reach eyeballs. It’s the perfect complement to digital activity (and, as an added benefit, it can make investors feel warm and fuzzy inside: never a bad thing in a volatile market).
For cannabis marketing, it’s omnichannel or GTFO
While not every channel outlined in this post is appropriate for every kind of cannabis business or budget threshold, I advise you to take a look at what you can manage and spread your time, energy, and dollars across multiple tactics; reliance on a single strategy for acquisition and customer marketing and an ever-changing landscape is setting yourself up to fail. Diversify!
Oh, and please familiarize yourself with the regulatory environment in which you (or your clients) operate. Failure to comply means fines, and crackdowns on the folks to follow the letter of the law. Don’t you dare harsh my mellow.