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Advertising cannabis and CBD brands present their own unique set of challenges, and we blogged about this some here and here. But if you’re beginning to think about advertising your product/service, let’s talk a bit about what a brand should consider first. Or, put another way, let’s have at least thought about the factors we enumerate below before we agree to spend a penny of your money on advertising. Because spending without checking fundamentals will yield bad results.
Don’t just do it because your gut tells you to or you read a blog post somewhere about how you should do it (see what I did there…)
In all seriousness, some version of the following conversation happens all too often on first calls with start-up cannabis brands.
Prospect: (Excitedly…) I have this new fantastic cannabis (name or category of product) I want to launch, and I want to advertise… And it should be easy because - IT. IS. AWESOME. and EVERYONE will want one.
Us: Great, it sounds fantastic, do you have an idea of what type of advertising, where and to whom? Who are the potential customers (or clients for B2B) you would want to attract?
Prospect: Well, first we want to do Google Ads. And we want to start fast!
Us: How fast?
Prospect: In 2 weeks… Because we want to be out there promoting before [insert major sales holiday happening in 30 days, e.g. 4/20; Black Friday; Labor Day…
Us: …Okay… That might be tight (more like, impossible to execute well, you are late if you’re starting to think about it anything less than 6 months out). Tell us who your target audience is?
Prospect: Oh, our product is for all ages, all genders, 21 to 99! EVERYONE will want one once we launch.
Us: Do you have research about your market to support your assumption?
Prospect: No research, but my gut tells me… (FULL STOP)
If reading this is making you cringe or roll your eyes… good, you are our people, use the rest of this post as a checklist to make sure you have it all in place, and then call us (we are fun to talk to and do know how to do this marketing stuff really well). If you are going “I don’t get it, this seems perfectly reasonable to me”… you are not ready to break that piggy bank just yet, keep reading.
Whether you’re selling candy, cars, software, or cannabis, you are doing the same exact thing: meeting a need someone out there has for your product or service.
About a year ago we were approached by a client who said that they wanted to advertise big, really BIG. At the point that client came to us they had already spent north of 6 figures on a video and other advertising, including B2B, and they were not getting the results they wanted. They had tens of thousands of units sitting in a warehouse, and they needed to move them. We suggested research to help them figure why, and who would want to buy their product, and at what price point. They said no, they did not want to spend the $10,000-$15,000 to understand their market. Instead, they wanted to spend 6 times as much on advertising, what we call in the industry “spray and pray”. The advertising was targeted overwhelmingly at men and specifically younger men. But when the post-mortem was done on the media push, we found that while 75% of the traffic to the website was indeed men, women had a 27% higher conversion rate than men. Gut fail. Go figure.
What is the lesson here? Gut feelings are notoriously unreliable. Data is real and it matters. There’s research to back this up. Risking your livelihood based on gut without at least some basic data gathering to inform your direction and help you understand who wants what you’re peddling first is irresponsible and plain dumb. Run a small test to validate your gut feeling if you must. But don’t go out there blowing your media budget on a feeling.
So, you think that your product is the best thing since sliced bread? And your grandma and sister and best friend all agree? Great, are you going to be selling your entire inventory to them? Because if you are not, then you need to first figure out if anyone else agrees with you. A focus group will run you about $5,000 but can save you tens of thousands of misdirected, misspent, and wasted advertising dollars. We have seen this happen. Spend $500 on a Survey Monkey survey if you are low on cash but do something. Find and talk to a couple of potential customers and have them try your product before you mass produce it and advertise.
Too often we see prospects who want us to promote their product but have not thought about much beyond that. It is mindboggling how often entrepreneurs are willing to spend investor money willy-nilly, without a plan. I still get wistfully nostalgic about one of my first clients as a digital marketer who was able to articulate a set of goals for me that made it possible, for us both to be successful. I even still remember the figures. She wanted to sell 350 $50 monthly software subscriptions by the end of July, wanted to pay no more than $80 per acquisition (including spending on media and our services), because she knew her lifetime value of a customer was around $1350 on average, so $80 to get a customer would give her an acceptable ROI. And we were having the discussion in February or March. She was estimating based on what she knew about her business from having been at the frontlines with her sales team. We met then exceeded that goal and drove the cost per acquisition down to $25. This company remained a client for the next 5 years, growing their media budget from $2000 to $30,000 per month, and eventually could afford to hire a marketing team, which is what we expected.
The point is, she had a goal, some targets, even if back-of-the-envelope, based on some reality that allowed us to build a plan, estimate a budget to achieve that plan during a known and realistic time frame. Budget, cost per acquisition, and time to generate the goal all matter and should be considered before you spend your first advertising dollar.
Given how finicky Google is, not to mention Bing, Facebook, Instagram, or other “mainstream” advertising platforms, you’ll need to not just have a Plan A for “going out” there, we recommend a Plan B and a Plan C, including cannabis friendly media platforms. And you need to be realistic about media spend and about the anticipated timeline and return on investment.
But beyond just the media planning, there’s the reality of competition (yes, they are out there, and they are also advertising) and its impact on your cost per acquisition. If you are competing for attention in a crowded market (for e.g. you are selling top-shelf flower), you can expect your cost per acquisition to be generally higher, because you will need to spend more to achieve visibility against the many other brands hoping to catch the eye of a buyer. The cost of acquisition is just a fancy way to express how much money it will cost you to have one customer find you and buy your product. It’s closely related to another concept, ROAS, which is short for Return on Ad Spend. It is a measure of revenue relative to the money spent to generate it. And in the first 3-6 months, with some rare exceptions, and depending on the product, possibly for the first full year post-launch with a new-to-the-market brand or product, you can expect to be spending more than making on advertising.
You need to have comfortable cash reserves and realistic expectations about what can be achieved, and that also includes how fast you want to achieve it. You cannot expect to achieve a million dollars in sales in 6 months with a $500 monthly media budget. That is what we would call “having a champagne appetite on a beer budget”. Probably not even a $50,000 monthly budget, but it may be doable in 1 year, depending on how well you understand your market.
You also want to set aside some media dollars for testing. Say your research shows that one of your target customers would be a 35-45-year-old suburban woman with a specific income level. You can test that market and make sure it generates results. Develop ads targeting that type of individual, run those ads in limited geography for a set amount of time, then review results of your test, and if successful, a) consider investing more media dollars and pursue that audience and creative direction, or b) pause and, depending on what you learn through analysis, consider testing another angle, geography or audience. And with testing, we like to use the ABT, always be testing approach. Whether it is messaging, targeting or creative, there’s always an opportunity there to do better.
But as one of our team members likes to say, everything is possible given enough time and money… So, go ahead and dream big, but also smart.
Think of your website as your front office open 24-7-365. If you have an eCommerce website, it is your digital dispensary. Your home page is like the lobby and receptionist, all-in-one. First impressions matter. And ease of interaction, the user experience visitors have, either on mobile (more than 65% of searches and visits) or desktop or tablet. Offering a good user experience is kind of like having water and coffee in your actual physical store, it’s the digital version of a friendly reception. We recommend that any client with an online presence (that’s everyone), but specifically those who plan to sell stuff online, consider running some basic user testing. All you need is 5-7 users to get feedback that could mean the difference between a sale or a miss. Online shoppers are fickle, they’ve been spoiled by awesome experiences offered by the likes of Amazon and Zappos, and they’ve no patience with wonky forms, cumbersome checkout or anything making them feel uneasy about making a purchase with you. So, a test that sales funnel all the way through. It’ll cost you a fraction of what you may lose if you don’t pay attention.
Is your website rich in content, user friendly, and optimized for search? Do you have a content strategy intended to regularly generate blogs, articles, and other useful, engaging content? You don’t? So, you want to spend money on paid traffic to your website without considering less expensive organic traffic? Quality content is a smart investment, but it only builds its value over time, and if you are in a hurry, you will not have time to benefit from this effort.
Is your website optimized to be easily found in search engines? Yes, word-of-mouth is great, but most visitors to your website will find you by searching online for your product or your brand. To make sure you show up in those organic search engine results, it is important to follow on-page SEO best practices, writing keyword-rich title tags, inviting meta descriptions and alt text. A simple audit of your existing website will help identify problems or opportunities for improvement. If you are building a new website, make sure to include SEO best practices into the design and build to maximize the value of your investment. There is a lot to be said about both on-page and off-page SEO beyond what I touch upon here but just remember: do this first before you spend money on advertising.
Peter Drucker is famously quoted as saying “What gets measured gets managed.” There is no consensus on what he may have meant, but analytics geeks like us think he meant data collection to measure performance so that conclusions can be drawn, lessons learned, and actions are taken to improve performance.
Since almost all interaction with your brand will likely happen online, on your website, on the way to your website, or possibly on a call with a representative if you do not have a physical store or office, part of the foundational “before you advertise” actions to take is to at a minimum is to set up Google Analytics (it’s free!) and Google Search Console. Those two tools working together will provide a picture of visitor activities on your website, including what queries people type into search before clicking on your link, how long they stay when they arrive, what they see, where they go, and which way they leave. If you add tracking to your forms, downloadable papers, videos, and more, you’ll see a picture emerging of the activity of potential customers on your website. Having that information is interesting, it becomes powerful when properly analyzed and turned into actionable insights.
Analytics can show you where visitors get stuck in the check outline. Seeing a lot of abandoned carts? Analytics data can help pinpoint the source of the problem. Setting up, configuring analytics is the #1 foundational activity to undertake before you spend a penny on advertising.
Not sure if you’ve got what it takes just yet? Don’t worry, we specialize in helping companies do the right thing, get the foundational activities taken care of to ensure success in the market. You do all those things, and we can pretty much guarantee that you will see a return on your advertising dollars.