THINKING OUTSIDE THE BUD PODCAST

Thinking Outside the Bud is a business podcast devoted to driving innovation in the cannabis space. During each episode, we speak with founders, investors, thought leaders, researchers, advocates, and policy makers who are finding new and exciting ways for cannabis to positively impact business, society, and culture.

Eric recently sat down with host Bruce Eckfeldt to discuss the positive impact of cannabis shopper data as brand marketers navigate the currently challenging advertising landscape to effectively reach, educate and convert their target consumers into buyers of their products.

Check out the podcast here Thinking Outside The Bud – Episode 38 – Good Harvest Co. or on iTunes/Google Play.

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.

The Cannabis Industry Boom is Kinda Like the Internet Boom of the 90’s…..But not for the reasons you think.

I know because I was there. 

There has been no shortage of recent articles coming out of Wall Street comparing the current cannabis stock market to the boom (and subsequent bubble burst) of the internet stocks of the late 90s.

I jumped into the online economy in its early days, dabbling in a few stocks of pioneering public internet companies in my meager portfolio, and my adviser at the time thought I was a 20-something idiot. I invested because I believed in the next phase of not just the budding (and then booming) internet economy.  At the time, I was a couple of years into my leap from the world of traditional print media sales to the Wild West of online media sales. I wasn’t just talking the talk, I was walking the walk as the internet was putting food on my plate, money in my bank account & 401K by selling good old banner ads.

My grandmother was greatly disappointed when I took the digital plunge from selling Sunday newspaper coupon free standing inserts or FSI’s. She could no longer proudly brag to her friends that her grandson sold “all of the coupons” they used to save money at the grocery store. The virtues of digital media included: “instant response to your ads” (IE Click-Throughs)…. and that was about it at the time (Or maybe all of the cool things AOL did to make our lives easier, but I digress). The click-through cursed the industry, even to this day, as most marketers still look at this metric through a myopic lens. Because success goes way beyond the click, as we’ve come to learn over time.

Success is about effective creative, tied to audience targeting, tied to unique and purposefully utilized data to create a connection with consumers to take a specific action. And it’s not, (repeat) it’s not about the click. It’s about the engagement of the ad. It’s about the recall. It’s about the conversion.

Advertising and Marketing-Tech, while sometimes appearing complicated, has come a long way since the late 90’s. Digital allows marketers a more cost-effective channel compared to traditional media to create advertising efficacy. Furthermore, the proliferation of data and subsequent providers of data, allows marketers to build better connections with consumers through precise targeting and relevant messaging.  We can apply data to serve specific creative to consumers based on the weather, their geography or demographics, and in my opinion, the most relevant, a consumer’s purchase behavior.

What consumers shop for and purchase is the purest and most deterministic form of intent in the market. Not content, not look-a-likes, not general online or mobile browsing behavior. Shopping data & purchase data. Period.

As the cannabis market continues to grow at a rapid pace, despite the financial, legal, legislative and other logistical challenges that persist, brands are challenged with finding places to reach their consumers. Today, there are limitations or flat out prohibitions that exist on the “go-to” places for consumer advertising – Google, Facebook, Apple, Microsoft & Amazon (The “Big 5”), leaving marketers with a select group of platforms that allow for cannabis brand advertising.

Additionally, all major publishers are sitting on the sidelines, reluctant to open their doors for cannabis brand advertising. Non-endemic brands aiming to reach cannabis consumers with relevant creative messaging are also left with no options. The main reason?

There is no bona fide data source expressly tied to adult/21+ cannabis shoppers and buyers.

When this type of data is available and utilized properly to reach in-market consumers tied to their purchase behaviors, the game changes.

However, the Pareto Principal will be in full effect. While they may not currently allow for advertising, The Big 5 are all currently and quietly amassing cannabis consumer data. When the timing is right and legalization migrates from state to federal levels in the US and other countries, they all will of course jump into the mix, full throttle. And the data will follow, in the same walled gardens that exist today. Facebook data will reside in FBX. Google data in AdX/Adwords/AdSense, etc. Amazon data in Amazon Advertising & A9, etc.

One call out, as Amazon should be viewed as having the upper hand among the Goliaths given the uniqueness of their valuable first-party shopping data vs the others which are based on “Likes” and “Favorites”. While valuable to a degree, these are lesser forms of true intent compared to actual shopping and buying behaviors attributed to actual consumers.

However, a more democratized data source with staying power, made available to all other media exchanges and marketplaces will continue to serve a valuable purpose in the market. 20% of the ad dollars against what is projected to be a $500B global market in the coming years is nothing to simply pass up once the big guys start playing the game.

So let’s not repeat the same mistakes made back in the 90’s as we revolutionize the digital marketing strategies for the cannabis industry.

It’s not about the clicks, it’s about the data…

….And all of the goodness it can provide.

Mission Possible: Cannabis Shopper Marketing is Getting Ready for Prime-time

The Mission

I’m on a mission. Granted a self-imposed one, but a mission nonetheless.

This mission started roughly a year ago as I contemplated how to impact change in the contested yet incredibly fast-growing cannabis industry.

Specifically, to bring the knowledge I’ve gained over the last 25 years of my career in CPG advertising, retail and shopper marketing in both start-ups and the most widely recognized media brands out there. At the end of the day, the global cannabis industry is the new CPG economy.

Manufacturers of cannabis products are creating an amazing array of products for all types of consumers: Luxury, mainstream, budget, organic etc. More and more are utilizing wonderful packaging and brand imaging to complement their products to resonate their value with intended consumers.

Those packages are currently on the shelves of adult-use retailers and medical dispensaries, aiming to build a connection with consumers to purchase those products. Namely via the packaging, a text or email sent by the retailer highlighting that brand to their customers that are part of a loyalty program, a print/digital/social message or ad (with major limitations). But there are so many more opportunities to build a connection to the consumer waiting to be tapped.

The data associated with these active cannabis consumers is ready to be leveraged in a thoughtful and effective way. The same strategies that persuade you to buy Advil vs Motrin, Degree deodorant vs Dial, Gillette vs Schick are all applicable to the burgeoning legal cannabis market. Add shopper marketing/co-marketing into the equation and the consumer is persuaded to buy these products in Walgreens vs CVS or Vons vs Albertsons.

All of this is ready-made for cannabis brands to act like mainstream CPG marketers, where retailers and dispensaries can embrace these same tried and true marketing strategies that are proven to drive consumer reach and sales lift. Suddenly consumers are asking for products by name, like Wana BrandsKivaStillwater and Canndescent at dispensaries like MedmenGreen DragonTreehouse or the thousands of other legal retailers across the country.

Let’s also not forget the value of millions of known cannabis consumers for non-cannabis brands. Hello Lyft and Uber? Pick up riders to avoid impaired drivers on the road. GrubHub and Netflix? Reach those binge watchers while they figure what they’ll order to feed their cravings. Aside from the obvious examples, current cannabis consumers are a diverse set made up of professionals, with desirable income levels, are creative & social individuals that enjoy the outdoors and are parents raising families. All ideal for many other mainstream brands to connect with, as well as cannabis brands and retailers. There’s plenty to go around for everyone.

So I accepted this mission. With myself.

The Challenges

Despite the numerous challenges with its current status in the US, namely that it remains a Federal Schedule 1 drug, legal cannabis sales are continuing to grow at roughly 40% YoY with compounded annual growth rate of over 30% since Colorado and Washington commenced adult-use sales in 2014 after being legalized at the state level in 2012.

While cannabis remains a Schedule 1 controlled substance in the US, claiming no medical benefits, there are now 30 states that have legalized cannabis for……wait for it…. medical use. That’s just the tipping point of the crazy.

A whole host of other challenges exist, including: banking and taxation issues, ass-backwards state mandated QA & testing procedures related to manufacturing and packaging logistics, supply chain issues, advertising & marketing limitations and a general persistent stigma that remains around this amazing plant. Despite all of this, the growth continues. Why? Because over 2/3 of US citizens believe in some form of cannabis legalization. Not to mention, roughly $10B in projected 2018 US sales with a trajectory to increase to ~$24B by 2022.  This is in no way surprising as well over 100M Americans have used cannabis in one way or another, representing a large base of viable consumers.

Investment in the cannabis industry also continues to grow at a lighting pace, with roughly $5B in debt and equity investment to date in 2018 (representing a 220% YoY increase) based on the latest Viridian Capital cannabis deal tracker. Industry companies continue to go public on both the Canadian and US stock markets at a blazing pace, with early unicorns like MedMen, Kush Bottles, Canopy and Aurora and many other potentials all seeing skyrocketing market caps. Not to mention well-known brands outside the industry, like Constellation Brands, Molson Coors, Scott’s Miracle Gro and others (even Coca-Cola) are actively investing in or exploring the market at astounding levels within the past year.

Again, all points combined is why I chose to accept this mission.

The paramount element here is to remain purposeful and thoughtful on how that data is harvested, protected, distilled of all personal information, and become a useful tool when packaged and sent to market. No pesticides, mold or spider mites here. Testing applied by 3rd parties to keep everyone honest.

I call on my former ad tech partners to join this mission and more seriously consider ways to sensibly and thoughtfully approach this massive market that hasn’t even reached its real growth stride.

Contact me at ejm@goodharvest.co to find out what I’ve been up to and what’s on tap. Your collective feedback will help shape this game-changing industry and is welcomed.

More to follow!

This article will self-destruct in 5 seconds….

X

Contact Form