The Rapidly Expanding Cannabis Industry Needs To Get Its Marketing Act Together, A New Report Finds
A new report says that cannabis companies lack the budgets and tools they need for successful digital marketing.
Just-released research spotlights a problem already familiar to cannabis companies: They’re coming up short with marketing. “This survey confirmed a lot of what we hear anecdotally: Marketers have ambitious goals but work with limited resources when it comes to budgets and staff,” Gary Allen, CEO of New Frontier Data, said in a press statement. New Frontier collaborated with the Cannabis Marketing Association on the report, revealing that:
· More than 80 percent of marketing companies surveyed said they were having problems getting the right message to the right audience.
· Marketers in the industry said they focus much of their limited resources on social media and top-of-funnel brand awareness campaigns.
· They also work with shoestring budgets, nearly half of which are less than $50,000.
· Marketers are misusing or under-using channels that typically perform well.
The report, 2022 Cannabis Digital Marketing Survey: How Cannabis Marketers Are Chasing Their Share of a $32 Billion Market, was released by New Frontier’s NXTeck division in tandem with the Cannabis Marketing Summit in Denver set for June 7-9.
What the researchers emphasized is the big money involved: Cannabis is no longer a fledgling industry. Instead, New Frontier projects $32 billion for 2022 in legal sales of adult-use cannabis (19 states) and medical cannabis (39 states).
Another 18 states seem poised to legalize in one or both categories in the next few years. Already, 148 million Americans live in adult-use states, and 248 million in medical-use states.
Despite the industry’s growth overall, most of the100 cannabis marketers participating in the survey categorized their individual companies as fitting the “small business” segment. Some 22 percent reported annual revenues of up to $250K; 8 percent, $250K-$500K; 11 percent, $500K-$1M; 13 percent, $1M-$5M; 6 percent, $5M to $10M; 9 percent $10M-$20M; and 7 percent, $20M-plus (another 23 percent did not respond or didn’t know).
Some 67 percent of these companies reported marketing staff of fewer than five employees, and 47 percent had marketing budgets less than $50,000.
Of the different kinds of marketing channels, digital marketing was the lead strategy, at 83 percent, followed by events, at 34 percent; partnerships, at 33 percent, and public relations, at 28 percent. Within the digital marketing category, integrated ads led, at 55 percent, followed by email communications, at 50 percent.
For 2021, brand awareness, at 55 percent, was the lead digital objective for companies surveyed, but 63 percent cited budget constraints in achieving that goal. Cannabis publications, at 36 percent, and cannabis platforms, at 35 percent, were the primary channels for digital cannabis marketing.
In terms of methods, email marketing was deemed most successful, at 53 percent, followed by earned media, at 20 percent.
LinkedIn (79 percent), Instagram (78 percent) and Facebook (60 percent) were the most favored social media platforms. Twitter followed, at 58 percent.
Participants acknowledged not adequately tracking key digital performance indicators: Only 12 percent answered “very well” on their efforts (with 24 percent saying “okay”; 23 percent, “well”; and 22 percent, “well enough.”
In comments also included in the report, Lisa Buffo, founder and CEO of the marketing association, noted that marketers “struggle to use that information to iterate and improve on their efforts” and that a “gap in the feedback loop” seems to exist.
The same might be said of efforts to understand buyer personas: Only 58 percent of participants said they had conducted research on this question. That data point means “the rest are blind,” Allen said.
The report was not all pessimistic in its findings. Allen pointed out the good news that regulatory pressures were not seen as being overwhelming for the companies surveyed and that “there is optimism” that marketers can and will increase their understanding of the tools available to them.
Programmatic advertising – meaning the use of automated technology to help with decisions on media buys – is one of those tools. With 53 percent of participants saying they had only “basic knowledge” of programmatic advertising, education in this field is “paramount,” Allen said.
Why? “The volume and efficiency of programmatic ad networks separates the channel from others like social and paid search, has a built-in safety net for compliance and a lower price tag than other digital channels,” Allen explained.
Other advice from the researchers included better tracking of key performance indicators, more A/B testing of campaign variations and the employment of digital channels.
Certainly, cannabis marketing faces challenges companies have no control over, from age restrictions and the United States’ problematic regulatory patchwork plus the problem of media outlets that reject cannabis advertising altogether. Yet Allen’s comments indicated that the challenges marketers face can be eventually overcome, toward a rosy future for all.
