By Brett Konen on September 9th, 2020
The PrograMetrix Guide to Connected TV Ads for Cannabis & CBD
Connected TV (CTV) advertising, also known as over-the-top (OTT) advertising, has grown faster than any other programmatic category in recent months. The Drum estimates its growth at between 150% and 500% depending on industry, and Leichtman Research Group reports that 80% of TV homes now have a connected TV, up from just 57% in 2015.
Connected TV ads can be shown programmatically through most devices and services used for streaming, and they offer greater availability for cannabis and CBD advertisers than traditional TV. They also provide a great way to stand out from your competitors with high-quality commercial video content that reaches your target audience in the comfort of their own homes on their own time.
Below, we explain how connected TV ads for CBD or cannabis are run, what it takes to keep them legally compliant, and how they fit into a cannabis or CBD digital advertising strategy.
Connected TV/OTT Ads for Cannabis & CBD
The IAB defines connected TV/OTT as “content transported from a video provider to a connected device over the internet outside the closed networks of telecom and cable providers. It offers the power of digital advertising combined with an engaging, big screen user experience.”
The term connected TV refers to the device actually used to watch the content, while OTT refers to the delivery of the TV content “over the top” of traditional TV, but for all intents and purposes these terms are used interchangeably in the advertising realm.
Connected TV differs from traditional, or “linear,” TV because viewers can create their own viewing experiences on demand through the TV’s internet connection and available apps, rather than needing to tune into a specific channel at a certain time in order to view that particular content. This creates a great environment for advertising, because viewers are choosing to engage with the content of their choice at a time that’s convenient to them, meaning they’re more willing to consider the content of your ad as well.
Unlike traditional TV, where advertisers purchase airtime for their commercials up front (which can mean several months in advance), programmatic video ads can be inserted into connected TV programming as it’s being streamed in real time. This allows for precise ad targeting based on viewer demographics, location, time of day, context, and other data-based targeting tactics used for programmatic campaign optimization.
Connected TV is a form of digital video advertising more generally, so many of the things we shared in our guide to digital video ads are relevant to both channels. That said, CTV inventory is generally available at a higher price point than other forms of digital video ads, and the consumer’s journey advances in a slightly different way.
Whereas digital video ads viewed on websites around the internet include a click-through link that will take the purchaser directly to their corresponding website, connected TV audiences are streaming content on their smart TV, gaming console, or OTT device, so these ads primarily offer brand awareness benefits in a highly engaging and immersive large-screen format.
How to Run Compliant Streaming TV Ads for Cannabis
According to Digiday, connected TVs have overtaken mobile devices as the screens on which most digital video impressions are served. Connected TV ads can be run programmatically through streaming devices and services including Roku, Hulu, Sling TV, Apple TV, Amazon Fire TV, and many more.
While traditional TV ad inventory available through cable or satellite services has remained largely closed to cannabis and CBD advertisers even as legalization has taken hold, CTV’s ad targeting capabilities ensure that these ads can be shown to compliant audiences, and thus CTV/OTT advertising platforms offer a great way for cannabis and CBD brands to reach specific viewers with their compliant ad messaging.
In general, the main difference between digital video ad creative and CTV ad creative is in the formats accepted and quality required. If you intend to create your own connected TV or OTT ads, we recommend working with a professional contractor or a creative agency to develop them. Check out our recommendations for types of footage you may want to capture, as well as best practices to keep in mind when creating video ads (and don’t forget signed video releases for any customers or brand representatives who may appear in your ad footage).
Note that the same creative can be used for digital video ads and connected TV ads as long as files are 1080p. Programmatic platforms generally support the following CTV ad specifications:
- File type: MP4 (MOV, FLV, and WEBM are not supported). Files must be 1080p.
- File size: 15–50 MB (preferably compressed at 1.5 mbps).
- File tag: VAST (VPAID and MRAID tags are not supported).
- Bitrate: Minimum of 1500 kbps (1.6–3.2 mbps preferred).
- Length: 15 seconds and/or 30 seconds.
Cannabis, CBD, hemp, and dispensary brands can all run legally compliant CTV ads using programmatic ad tech. Most CBD brands use mainstream programmatic ad tech; most cannabis and dispensary brands use cannabis-specific programmatic ad tech. Through either, ad compliance is ensured by targeting viewers 21 and over in places where the products advertised are legal. Like programmatic video ads more generally, CTV/OTT ads leverage the same audiences, data sets, and ad tech as other programmatic ad formats.
- No suggestion of health or medical benefits
- No elements that could appeal to children (cartoon characters, etc.)
- No false or misleading statements, including those made about competitors’ products
- No testimonials or endorsements
- No product consumption
- No pricing, potency statements, or promotional offers
- Ads for infused products must state “For Adult Use Only”
Cannabis businesses in Alaska, Arkansas, California, Maryland, Massachusetts, Nevada, Ohio, Oregon, and Washington must also include their own state-specific disclaimer copy in their CTV ad creative. Business in Florida will need to submit their creative for review through a state-specific approval process as well.
For a state-by-state list of additional advertising information, check out our roundup of cannabis ad compliance guidelines.
Benefits of CTV Ads for CBD & Cannabis
More so than any other format we’ve covered in this series, CTV/OTT ads let brands stand out simply by the fact that most cannabis and CBD marketers aren’t using them yet. They offer 100% share-of-voice and an immersive, engaging viewer experience with high-quality video content that allows brands to show rather than simply tell their story.
“Cord-cutting” is most popular with younger generations, making connected TV ads a great way to reach Gen Z and Millennial demographics in a format that combats ad blindness. With high quality requirements for ads as well as for the CTV content itself, these commercials are a way brands can show their professionalism and appear next to other professionally made, brand-safe content.
Since CTV is a subset of video, there is less CTV ad inventory available than there is digital video inventory, but again, fewer brands are vying for those spots, particularly in the cannabis and CBD markets. Still, prices are higher for CTV ads than for digital video, due in part to this more limited availability: In our experience, the cost per thousand impressions (CPMs) for CTV ad placements tend to run about four to five times as much as other digital video CPMs, and high-demand OTT ad providers such as Hulu can cost five to six times as much.
Unlike display, mobile, digital video, and native ads, CTV ads are less focused on driving an immediate action by the viewer: While many ad campaigns through the channels mentioned above are focused on conversion metrics (e.g. purchases, orders, signups, revenue driven, etc.) or engagement metrics (e.g. click-through rate, cost per click, etc.), CTV viewers are not interacting with the content using a mouse, and thus cannot be taken directly to a website to learn more, pre-order, or make a purchase. While all ads, including CTV ads, should include a call-to-action (e.g. “visit our store” or “ask your budtender about our products”), it’s a softer sale than other ad formats use. This makes CTV advertising great for cannabis and CBD brand-building and awareness.