Why California’s cannabis billboard ban shouldn’t keep you up at night

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(Editor’s note: This column is part of a recurring series of commentaries from professionals focused on the cannabis industry. Jeff Ragovin is the chief commercial officer at Fyllo, a regulation and marketing tracking software company based in Chicago, Illinois.)

It’s no secret that cannabis advertising remains a battle against constantly shifting state and local laws with blanket bans on TV, radio and most forms of social media advertising in place.

But these roadblocks shouldn’t deter cannabis brands, both large and small, from utilizing digital advertising at greater scale.

As we continue to see more states legalize recreational cannabis, advertisers will have to deal with three sets of regulations – those at the federal, state and local levels.

We’ve already seen marketers devise clever workarounds to this patchwork of legislation such as when more than 50 cannabis-related businesses – including LivWell Enlightened Health, which operates 17 dispensaries in Colorado and Oregon – turned to Colorado’s Sponsor a Highway program in order to skirt cannabis billboard bans.

But such creative strategies are a temporary fix for an issue that will become only more fragmented and complicated as states continue to legalize.

There is a better way forward.

California’s recent ban on billboard advertising was a black eye for the cannabis ad world as a whole, but for prepared marketers, it should have been nowhere near a knockout blow.

If anything, the legislation, which banned marijuana ads on any interstate or state highway crossing California’s 1,900-mile border (including some of the nation’s busiest highways, such as U.S. 101, Interstate 10, I-5, I-80, I-15 and I-40) highlighted what we already know.

Programmatic digital advertising is future of cannabis marketing.

One of the greatest advantages of running programmatic advertising is that it allows brands to optimize their targeting in real time.

Changing the course of a digital ad is a lot easier than moving a billboard to a new location to guarantee that the right audience sees the message.

Programmatic advertising can ensure a brand’s message is deployed on thousands of related sites and publications that people visit every day.

One of the most common issues cannabis marketers face is the assumption that not being able to advertise on social media or Google automatically means that digital advertising is simply not an option for cannabis.

While untrue, it’s easy to see why this has become such a widespread misconception.

Over the past 10 years, Facebook’s advertising options have offered brands advanced targeting in the most data-rich and engaging environments, bringing the company more than $84 billion in revenue in 2020 alone.

While Facebook appears to offer what is basically “programmatic for social,” brands need to know that beyond the walls of restrictive social media sites there is a lucrative and compliant programmatic world waiting for cannabis advertisers.

Cannabis brands don’t have to feel left out, they just have to go to where their customers already are.

Despite what might seem like a growing list of restrictions for advertisers in the cannabis space, there is an ocean of transaction and loyalty data that gives insights into who is actually buying – and continuing to buy – cannabis products. This is the one audience that actually matters.

Transaction data from e-commerce platforms, loyalty players, delivery services and more, when aggregated, allow for the targeting of specific consumers who have transacted in the past.

That means specific consumers can be efficiently identified so as to not waste any ad dollars, and people can be interacted no matter where they are.

The cannabis brands who first understand the power of programmatic for their marketing success should follow three core principles:

Lean on CRM data

Customer Relationship Management (CRM) data is some of the most valuable data sources that advertisers can have in such a heavily restricted market. It is especially valuable for retargeting customers who might have previously purchased CBD along with flower products, for example.

For brands such as fitness or health and wellness, CRM data can be particularly useful in targeting customers who have purchased CBD products for recovery and wellness.

In general, if a brand wants to focus on new customer acquisition, CRM data can be leveraged to exclude current and known customers from media-targeting efforts, thus focusing all the investment on users who are new to the brand.

In addition to simple exclusion, CRM data can help identify a brand’s highest-value customers and be used to model out look-a-like audiences of consumers who share demographic and behavioral traits with already known high-value CRM audiences.

It’s surprising that more marketers in this space don’t take advantage of this kind of data.

Think beyond awareness

Cannabis brands need to move beyond just looking to get their name out there.

It’s an increasingly crowded market, so brands need to give consumers a reason to choose their product.

Programmatic advertising can help marketers reach consumers at relevant points and times throughout their day, when they are close to a dispensary or retail location.

Additionally, if a dispensary is trying to promote a new line of edibles, for example, it will be more effective to send specific messaging to edibles consumers rather than utilizing general-awareness advertising to a population that will inherently contain a significant number of non-cannabis consumers.

Make sure you’re getting quality ad inventory

One important aspect of programmatic digital advertising is ensuring that your ad inventory is high quality.

It’s easy to end up on the bottom of irrelevant sites if you’re not careful, negating the benefits of a programmatic strategy.

As more publishers and platforms are opening up to cannabis advertisers, the key to ensuring quality inventory is to create ads that adhere to all state and local compliance guidelines while also following publisher guidance on what is or isn’t allowed in cannabis ads.

Many publishers have policies that are far stricter than regulations pertaining to advertising, so understanding and following their individual policies will allow a cannabis brand to show up in high-quality environments next to other mainstream brands.

In other words, it pays to know where your ads are placed and not adopt a simple “spray and pray” strategy.

Digital advertising goes far beyond the reach that a billboard could ever hope to achieve – highlighting why brands both large and small shouldn’t be basing their marketing strategies on anything that cannot adapt on a whim to the ever-changing legal landscape.

Jeff Ragovin can be reached at Jeff@hellofyllo.com.

The previous installment of this series is available here.

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