Despite being a highly regulated industry, cannabis sales grew by 67% in 2020. This upward trajectory is a sign that cannabis marketing has found ways to navigate the complicated landscape of this sensitive category, and thrive.
In a discussion for the How Agencies Thrive podcast, we’re joined by Peter Reitano from Abacus and Amika Evans from StackAdapt to learn how using compliant tactics and leveraging emerging technology can help advertisers thrive, even when working in verticals like cannabis marketing.
Read on to learn three key insights from our discussion, or listen to the full episode, here.
The Cannabis Marketing Landscape is Changing
Throughout 2020 and into 2021 we’ve seen historic shifts in consumer behaviour across most verticals. These shifts have impacted the cannabis industry, too. According to Amika, the pandemic drove adoption of cannabis for recreational consumption. This was in part because people were spending more time at home, but was also due to the changing perceptions around cannabis use.
Changes in legislation across North America has made cannabis use less stigmatized, and more culturally normalized. The rise of cannabis sales reflects this changing sentiment. Amika says that as a result, she’s observed that supply-side platforms (SSPs) have rapidly increased their supply to yield more budget, and play a greater role in the cannabis industry.
Peter says that the landscape has also changed because of the rise of public markets in cannabis. In recent years, capital was raised for public markets, and we saw a resulting hype cycle. There was enormous valuation and a lot of money being invested in the industry. But then of course, the rubber hit the road. Business had to start to actually produce and sell cannabis rather than just promise future revenue.
Some businesses weren’t successful in this, which led to backlash that was ultimately healthy. The brands that were doing it right have continued to find success in their campaigns and their business. Canopy, for example, is now buying out other brands.
Peter and Amika emphasize that right now there’s a lot of room for growth in the cannabis industry. There will continue to be purchases and consolidation, and we’ll continue to see more public markets in the US—especially with more states, as well as Europe, coming online. The hype cycle may have passed, but there is tons of growth potential, making right now an exciting moment for cannabis.
A Challenge in Cannabis Marketing is Compliance
Compliance is a challenge in cannabis marketing because there are a number of regulations that limit the advertiser’s ability to drive conversions. For example, regulations around Cannabis in Ontario are tight. Online cannabis purchases can only be done through the Ontario Cannabis Store (OCS), which is the only legal online retailer of recreational cannabis in the province.
Regulations like these mean that cannabis marketing is more about consumer education and awareness building. According to Peter, it’s important to be on top of regulations so that you can mitigate risk in the vertical. If you do get flagged for breaking regulations, there are serious ramifications, like losing your license.
Peter and Amika note that creatives are an area where you need to be aware of compliance. But the limitations of compliance shouldn’t hold you back. You can find creative ways to work around those limitations. Creatives in cannabis marketing are usually very simple because that’s what regulations require.
Cannabis ads must have basic imagery and copy. They can’t show the product or people, and the copy cannot attempt to influence. Instead cannabis marketers have to stick to neutral copy that highlights value adds like, “Delivery available same day.” Being creative is key because you need to send a compliant message without breaking any of the regulations in the geo you are advertising in.
There are solutions emerging that help in navigating compliance. According to Amika, many demand-side platforms offer compliance packages. Another workaround is to purchase placements through private marketplace (PMP) deals.
A Consumer-Centric Approach is Key
Working around compliance that creates limitations in a marketing strategy makes it especially important to have a consumer-centric approach. According to Amika, when it comes to audience strategies in cannabis marketing, the key is to build a really strong awareness strategy.
The goal is to build brand recognition and affinity that will help drive consumers further down the funnel. Educate consumers about product offerings (and cannabis use), so that they have the confidence in your product to make a purchase.
Peter says that he thinks about cannabis in a similar framework that he thinks about CPG marketing. The goal is to figure out what consumers want, and what they love. He says that in cannabis marketing, brands will often get carried away with trends and hacks, which takes away from their ability to invest in building a quality, long-lasting brand.
One way to approach this is to look at cannabis as a lifestyle product. Build campaigns around it that use quality marketing and visuals to communicate to audiences how cannabis fits their lifestyle. In the end, centering the consumer will set you up for long-term success and growth.
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Projections for the growth in the cannabis industry are looking bright. In a recent study, it was found that the legal market is projected to pull in $43 billion by 2025. In wrapping up, Peter says that in the coming years we will see the industry adjust to this growth.
More federal legalization will emerge across the US, and we’ll start to see fewer restrictions in the industry. Amika says that as the industry evolves, we will also see development on the technical side. For example, over time, agencies will be able to lean more onto CRM lists for their cannabis marketing campaigns.
To hear more of what Peter and Amika had to say about cannabis marketing, tune into the latest episode of How Agencies Thrive!