Compliant Advertising with a Programmatic Solution for Cannabis Retail

by | Feb 22, 2022

Written by Jessica McKeil

Jessica McKeil is a cannabis writer and B2B content marketer living in British Columbia, Canada. Her focus on cannabis tech, scientific breakthroughs, and extraction has led to bylines with Cannabis & Tech Today, Terpenes and Testing, Analytical Cannabis, and Grow Mag among others. She is the owner and lead-writer of Sea to Sky Content, which provides content and strategy to the industry’s biggest brands.

How does a cannabis business find a receptive audience in the digital age while staying within the legal parameters laid out by all the relevant regulatory bodies?

Programmatic advertising is a compliant digital marketing solution and one that is data-driven. When done right, it allows businesses to find the right audience on the right device and offers a highly personalized approach to online ads.

What is Programmatic?

The programmatic approach is common knowledge among digital marketers but likely flies over the head of most everyone else. By definition, it's a technology that combines data (both big data and contextually unique) with AI to buy, sell, and serve digital ads.

It can incorporate almost any consumer dataset to build an appropriate audience. That means it can find age-appropriate and otherwise compliant demographics in a more extensive set of possibilities. 

Data sources can include geospatial, cross-device time sequencing, proprietary data lists, and more. The programmatic approach creates a detailed picture of the ideal audience and then intelligently targets this demographic within the online space. It can also create a retargeting program for returning customers.

Essentially, programmatic advertising finds the most relevant customers online to serve relevant digital ads. Machine learning ensures it finds the right person for the right message at the right time.

And importantly, all the information feeds back into a comprehensive data analysis to assess views, clicks-thrus and linked sales. It's a comprehensive and multi-channel approach that is affordable and much more hands-off than the conventional methods of placing ads online.

Why is this applicable for cannabis retailers? Because it automates and streamlines digital marketing, achieving an affordable digital advertising solution that doesn't cross any legal lines.

That means the AI that powers the entire buy, sell, and serve process places relevant ads in the most appropriate places. As a result, you keep your company compliant and avoid costly fines or license suspensions.

Why Automated Digital Ads Make Sense for Cannabis Retailers

Even as a brick-and-mortar dispensary, digital marketing is likely already a critical component within your overall marketing strategy. Today's cannabis customer uses a variety of online avenues to find “where to buy cannabis near me,” to leave reviews, and seek out specific brands or products.

But the online space is a total free-for-all when it comes to digital ads. As per Statista, in 2021, although 79 percent of Americans spent more than three hours a day on their mobile phone alone, they were served somewhere between 4000 to 10,000 digital ads a day. That's a very flooded marketplace, and it can be hard to grab the attention of a targeted audience without overspending.

It's why the programmatic approach makes sense for retailers, especially for cannabis companies.

Cross-Device Conversions

In Google's report “The New Multi-screen World: Understanding Cross-Platform Consumer Behavior,” they evidenced that “90% of people move between devices to accomplish a goal, whether that's on smartphones, PCs, tablets or TV.” Invoca reported that 73 percent of consumers travel across multiple channels to shop.

According to some estimates, if you move across devices with each consumer, you'll get 1.4x more conversion than targeting a single device.

Potential to Tap into Geofencing

Geofencing can be an integral aspect of programmatic for cannabis retailers. It allows for location-based pre-programmed actions (discounts, text messages, and engagement campaigns) based on the entry or exit of a connected device within a virtual border.

According to Increasingly, geofencing doubles the click-thru rate of mobile ads. Plus, up to 53 percent of people served a location-based message visited the retailer afterward.

And for cannabis companies, you can also use geo-targeting to restrict ads around specific areas, like those typically visited by minors. So it serves two very important services.

Substantial Savings

Because programmatic is almost entirely automated, it requires much less time and energy from management than direct ad buying. It's faster, more efficient, and AI-managed, meaning much more affordable than the conventional approach.

How much does it cost? While it varies widely depending on the quality of the listing and targeting measures, you can likely expect $0.50 to $2 per 1,000 ad impressions (CPM). Compared with human-driven online ad trading, which costs around $10 per CPM, that's an immediate cost savings.

Return on Investment

When the right demographic is targeted with relevant and personalized ads, the ROI from programmatic can be quite impressive. According to a case study by Wunderworx, a cannabis-focused digital marketing brand, they delivered a 3,436 percent return on ad spend for a Colorado-based cannabis retailer by leveraging programmatic advertising.

Their six-month compliant programmatic campaign translated into more than 12 million impressions served, 32,743 engaged clicks and a total of $2,988,951 in generated revenue.

Programmatic Doesn’t Guarantee Compliant Advertising

Still, not all digital marketers using programmatic will know about the intricacies of cannabis. Programmatic platforms built for other, less regulated industries may not translate well into this highly regulated space.

As with everything else you adopt within your cannabis retail location, you'll need to do your due diligence to ensure that even the programmatic campaign is compliant in your region.

Wunderworx, used in the example above, built their programmatic technology specifically with cannabis regulations in mind. Their audiences are 21+, and every ad is reviewed to ensure it does not violate state regulations. Ask questions before launching, including regional compliance rules, the overall approach to consumer targeting, and the ad review process.

As is the case in other areas of the industry, just because a company does something well for a brand in another sector doesn't mean it will work in the highly complex legal landscape of cannabis. And while programmatic can be an incredible return on investment into ad spend, it won't do you any good should it accidentally get you fined over compliance breaches. Stay above board by researching before signing on to a programmatically driven campaign.