When Will Media Companies Take the Leap of Faith Into Cannabis?
Each New Year starts with market predictions. 2019 was no different, but I noticed one thing when I read the well penned clairvoyant articles of a few ad tech industry friends, colleagues and investment leaders: there was no mention of cannabis. Yes, the current ~$12B industry projected to reach $32B within the next 4 years.
I’m a relative newcomer to the cannabis space, applying my roots in CPG/Retail marketing, media sales and advertising technology to the fast growing and emerging cannabis market. In a past post, I’ve outlined the similarities between the emerging internet economy during the boom years and the similarly emerging cannabis industry of today. Yet, I found the lack of foreshadowing on a topic that is gaining national attention and in the daily spotlight a bit perplexing.
Good Harvest Co. (GHC) was built to address a market need – to provide the best intent-based data tied to cannabis consumers for marketers aiming to reach this audience. While there is no shortage of POS and CRM data available within this vertical, the ability to plug these consumer behavior segments into viable and scalable media supply is currently limited. The result is two-fold: serving relevant ads to consumers in the purchase funnel based on active shopping patterns (retargeting) and uncovering new customers based on modeled behaviors of the known consumers (audience discovery).
Today, the larger players like the “Big 5” (or “Frightful Five” as the NYT once referred to them) and major DSPs, SSPs and publishers that contribute their inventory into these marketplaces, namely remain on the sidelines, unwilling to accept cannabis marketing dollars. There are a handful of endemic ad buying platforms in the market, like Safe Reach (a current GHC partner) and Traffic Roots that have amassed inventory from publishers accepting cannabis ads. However, most others in the market lack data-driven audience segments to pinpoint these desired consumers that brand marketers are aiming to reach.
The rejection by CBS of Acreage Holdings' Super Bowl commercial, showed us that this is not limited to digital media. The primary goal was to reach a global audience showcasing the benefits of medical cannabis and igniting constituents to reach out to their elected officials to further the legalization of cannabis in the US. The after-effects resulted in billions of earned-media impressions, and, their message was heard. But we cannot overlook the fact that Acreage was ready to commit $5M to spread their message, and CBS would not -- or could not(?) -- accept their money.
This advertising and marketing prohibition, extends to industry events like CES, where leading cannabis technology products like PAX Labs and Puffco were not allowed to showcase their products on the floor of the convention center. Much to the chagrin of CES organizers, they deployed their event marketing budgets through alternative ways to showcase their innovative products, driving attendees and traffic off-site. Mind you, this occurred in Nevada -- a legalized adult-use and medical state!
The reasons are perhaps justified, but cannabis is happening, so why hang on the beach while big waves of opportunity are forming in the ocean? I’m not saying that cannabis advertising is easy. Execution isn’t simple, as each state imposes their own regulations on how consumers can be reached. However, current advertising technology can ensure with deterministic accuracy the two main guidelines are met. By utilizing existing solutions that were built to address similar traditional marketing challenges (IE Alcohol), the recipients of the ads are qualified as Adults/21+ and the ads are geo-fenced within the states (or counties/zip codes) where cannabis has been legalized (IE regional targeting).
The creative messaging also needs to cater to mandated guidelines, which typically restricts the types of product claims, how products are featured and the inclusion of cannabis operator’s licensee numbers as well as other requirements. There is a decent (but somewhat outdated - Note to Mr. Rothenberg and team to update!) compilation from the IAB here for those interested in the details, as well as a recent post by the law firm of Davis & Gilbert outlining the current California cannabis advertising guidelines.
In the interim, GHC will stay focused on the primary objective of partnering with platforms that are willing to take the first dives into the deep end of digital cannabis marketing, as the doors are being kicked down. While the visibility is a bit murky and a few unknown creatures lurk below the surface, the data will continue to provide a solid sonar signal to navigate the seas.
To my fellow ad tech friends and platforms, when you’re ready to join GHC’s efforts, jump in…the water is fine.