As consumers increasingly shift to online ordering, click-and-collect, curbside pickup, and delivery, dispensaries must begin leveraging digital advertising options to drive online orders, keep their brands top-of-mind, and increase total sales revenue.
At present, cannabis dispensaries lag far behind their mainstream retail counterparts in the use of digital advertising campaigns. While it is true cannabis retailers are subject to more rules and regulations than mainstream businesses, myriad compliant digital advertising channels already are available to dispensary owners and other cannabis marketers. In fact, digital ads are easier to keep compliant than physical advertisements, because physical factors (such as whether the ad is too near a school, library, or public park) do not come into play and digital identity data can ensure ad viewers are exclusively 21 and older.
That compliant digital advertising options abound may surprise some dispensary owners whose only experience with digital advertising is the rejection of their ads by Facebook, Google, or both. Because the two largest advertising platforms in the world categorically ban cannabis ads according to their own internal policies, many marketers have come to believe digital advertising as a whole is not allowed.
This belief overlooks the entire remainder of the internet, where sites from the New York Times and HuffPost to ESPN and USA Today are more than happy to accept cannabis ad buys. The vast majority of inventory available from these sites and thousands of others can be accessed together through a relatively new form of digital advertising technology called “programmatic.”
Programmatic advertising is the automated purchasing of online ad space, generally through a process called real-time bidding. Of the $93 billion that will be spent on digital ads in the United States in 2020, programmatic advertising will represent 85 percent, and that number is increasing year over year. Dispensary advertisers can use “demand-side platforms” built expressly for the cannabis industry to bid for advertising inventory on mainstream websites based on a wide variety of data and other factors such as day of week, time of day, browser type, location, content topic, and intended audience. Publishers auction off their ad space through corresponding “supply-side platforms,” and an ad exchange plays matchmaker between the two sides, automatically selling each individual impression to the highest bidder in the time it takes the web page to load.
Now that dispensaries can run data-driven digital ad campaigns through programmatic technology in the same way mainstream retailers can, the question becomes not whether but how digital dispensary ads should be deployed. The following five tactics can help increase the return on ad spend, and most dispensaries should be using all of them to increase online ordering revenue as cannabis purchasing continues to shift steadily—and likely irrevocably—into the digital realm.
Retargeting
A brand’s most likely customers nearly always are those who already have visited, purchased from, or otherwise interacted with that brand in some way in the past.
Ad retargeting uses existing first-party data from a dispensary’s own email lists, loyalty programs, past purchases, website visitors, and more to reach the same consumers with new messaging in new places. This keeps your dispensary top of mind and drives an increase in repeat purchases, growing the lifetime value of each customer over time. Retargeting can be implemented across any programmatic advertising channel, including display, mobile, native, video, connected TV, and audio ads.
Look-alike audiences
Often, a brand’s second-most-likely customers are people who share similar attributes with existing customer groups. Look-alike audiences are created by pairing the first-party data mentioned above with supplementary third-party data sets available through programmatic advertising platforms. This rapidly expands a dispensary’s target audience, adding people who are most similar to that brand’s existing customer base.
For example, if your past purchasers include a large number of college-educated women ages 35 to 55 with an interest in outdoor activities, third-party data sets can help you reach more people in these same demographics, statistically increasing the likelihood that the new audiences also will engage with your brand.
Geofencing
Because location is such an important factor for consumers deciding which dispensary to visit, mobile geofence targeting, or geofencing, is one of the most powerful advertising capabilities available to cannabis dispensaries. Geofencing involves drawing a virtual boundary around a physical location—which can be your dispensary, a nearby yoga studio, a specific event, or your competitors’ dispensaries.
Geofencing technology uses GPS, Wi-Fi, or cellular data to trigger the appearance of your mobile ads when a device enters your virtual boundary. Foot traffic attribution capabilities also let dispensaries understand how effectively their geofenced ad campaigns are driving visitors into their physical stores.
Online menu integrations
For any dispensary currently able to drive ad viewers to an online menu to place an order, this should be the goal of your ad campaign. Driving traffic directly to your menu, rather than your home page or other general information about your store, increases ad conversion rates by moving the visitor further down the purchase funnel toward the desired outcome—a sale.
New analytics and reporting capabilities for the cannabis industry allow programmatic ad platforms to integrate directly with menus from Dutchie, iHeartJane, Meadow, and others. This lets dispensary owners understand how ad-driven visitors engage with their menu, what products they view or leave in their carts, and the exact return on investment for their ad campaign in terms of online ordering revenue.
Video advertising
Video ads often are ignored by cannabis business owners due to their higher price point compared to classic display ads and the effort required to create the videos themselves. But sight, sound, and motion long have been the best way to capture consumer attention. They entice your target audience by showing, rather than simply telling, your story.
Dispensaries can leverage digital video and connected TV ads to showcase their physical locations, share how they’re addressing safety during COVID-19, and entice new customers to visit stores. For many cannabis-curious consumers, the prospect of visiting a dispensary for the first time—whether they’re merely new to your store or new to the industry entirely—is a lot less scary when they can preview the experience on their digital devices in the comfort of their own homes.
Brett Konen has been in the cannabis industry since 2015, first as a senior editor at Leafly and currently as senior marketing manager at PrograMetrix. PrograMetrix specializes in helping cannabis, CBD, and dispensary brands run compliant digital advertising campaigns using Fortune 500-level tactics and technology.