By Brett Konen on March 11th, 2020
The Ultimate Guide to Programmatic Advertising for CBD & Cannabis
Imagine being able to show ads for your dispensary to any cannabis shopper who visited your competitor’s store in the last three months.
…or get your audio ads heard on Spotify by yoga enthusiasts living in a certain zip code.
…or target your B2B campaign at in-state business owners most similar to the contacts in your CRM.
Sound like marketing superpowers? These are actually things you can already do with programmatic advertising technology. The thing is, most cannabis and CBD marketers don’t even know what programmatic means yet—so before we start talking superpowers, let’s jump into the basics.
What Is Programmatic Advertising?
As MarTech Advisor defines it, “Programmatic advertising is the real-time buying and selling of ad inventory through an automated bidding system. Programmatic advertising enables brands or agencies to purchase ad impressions on publisher sites or apps through a sophisticated ecosystem [which] includes ad slots for digital out-of-home (DOOH), online, streaming, TV, video and voice ads.”
Back in the day (i.e., a few years ago), ad buying went like this: A brand like Gatorade would call up a platform like ESPN and say, “Hi, ESPN. We’d like to run an ad on your website.” ESPN would request a lot of money; after a little back-and-forth, Gatorade would pay. The ad would run, Gatorade would hope to see their sales increase, and when the prearranged time was up, the ad would come down. The next time Gatorade wanted to run an ad, the whole process would repeat itself.
Following this process at scale is no longer feasible: Over the last decade, digital ad spending has jumped from $26 billion to $151 billion per year, due in part to programmatic technology. Today, about 70% of digital ads are bought and sold using programmatic ad tech, which automates the negotiation and purchasing process to let sales happen in a matter of milliseconds. Rather than having to purchase ads individually ahead of time, programmatic platforms now connect advertisers with hundreds of thousands of available ad slots instantaneously, and algorithms help purchasers decide where to run ads, when to show them, and how much to pay.
These platforms also aggregate data from a huge array of providers, which lets advertisers choose their exact audience by attribute—long-distance runners ages 21 to 30 living in Colorado with a known interest in CBD, for instance. Modern ad buying technology is why you might see ads for a sports team’s merchandise on a different website after visiting that sports team’s homepage. The good news is that whoever bought those ads isn’t somewhere out there watching you: They have a programmatic ad campaign running, and they checked a box saying they wanted to advertise to known fans of the team. That information about you is part of an anonymized data set alongside data about other people who have shown interest in that same team in some way on the internet. The ability to facilitate data-based decisions is what makes programmatic ad buying efficient and cost-effective: With programmatic, marketers only have to pay to advertise to people who might actually be interested.
Programmatic buying has become the new normal in digital advertising in just a few years. This rapid transformation explains why many people—even among professional marketers—still don’t quite understand it yet. Even full-service agencies often outsource their programmatic ad buying to specialists like PrograMetrix. But for any brand looking to get a leg up on the competition—particularly in a competitive and fast-moving industry like cannabis—the potential benefits of leveraging programmatic are numerous. (MarTech Advisor)
Programmatic Advertising for Cannabis & CBD
For cannabis and CBD marketers, the easiest way to reach any digital audience is through a programmatic platform. Huge numbers of high-traffic, mainstream sites will accept programmatic cannabis ad buys—sites like USA Today, HuffPost, Newsweek, Politico, The Chive, and yes, ESPN. The benefits of programmatic are particularly relevant to cannabis and CBD for a few reasons. For one, cannabis and CBD shoppers represent a huge audience, but the endemic sites most frequently used to target these consumers—like High Times and DOPE—only reach a small subset of them. To expand a campaign’s reach beyond those niche demographics, ad placement on mainstream platforms is necessary.
Cannabis advertisers in legal states are also required by law to ensure that their marketing campaigns target adults 21 and over—something programmatic platforms are more able to demonstrate. Furthermore, cannabis business owners are unable to deduct marketing expenses on their taxes, which means that data on ROI is instrumental to keeping a business afloat. Programmatic ad buys offer this data by tracking conversions; ad buys in print outlets, for instance, cannot.
> See also: The State of Cannabis & CBD Advertising in 2020
The availability of certain programmatic platforms depends on whether you’re a plant-touching or CBD-specific business: Both types are able to run display ads on mainstream websites, they just use separate platforms to do so. Hemp, CBD, and ancillary brands can use mainstream programmatic technology: At PrograMetrix, we help our CBD clients run ads through The Trade Desk, an industry-leading buying platform with a massive selection of inventory. The Trade Desk curates data segments of CBD shoppers, which allows CBD brands to build campaigns around their ideal customer with a few clicks.
For all other cannabis brands, it’s currently best to use a cannabis-specific ad buying platform, since platforms like The Trade Desk do not yet offer data sets catering to cannabis. At PrograMetrix, we’ve partnered with Safe-Reach to help our cannabis clients access a wide range of mainstream websites through a platform built for compliance with the legal cannabis industry’s regional regulations.
Each programmatic advertising channel offers unique benefits and capabilities for marketers. Learn more about advertising CBD or cannabis programmatically through the individual channels below.
Cannabis & CBD Display Ads
Even more so than with digital in general, display ads are transacted almost entirely through programmatic ad tech: This year, 85% of display ads will be purchased programmatically. If you’re running display ads for cannabis, programmatic ad buying is a must, either on your own or through an agency.
One of the best things about running programmatic display ad campaigns is the ability to A/B test distinct ad sizes, reallocating resources in real time to the ones with the highest likelihood of conversion. Through a process called real-time bidding, businesses can adjust how much they’re willing to pay for a display ad impression depending on the space’s dimensions. For example, if early campaign results show that your vertical banner ads are twice as likely as horizontal ones to drive clicks, you can adjust your bid factors to let the platform know you’re willing to pay twice as much for a vertical banner ad impression, and only half as much for a horizontal one.
Sample display ad campaigns for CBD or cannabis:
- An awareness campaign for the new dispensary location you’re opening, targeting visitors to your website over the last six months.
- A promotional campaign offering $4.20 off online CBD orders in the month leading up to 4/20.
Mobile CBD & Cannabis Ads
According to Inc.’s review of data from Nielsen, Pew Research, comScore, and several more, the average person spends more than four hours per day on their mobile device—which means mobile ads are a must in any industry.
When building programmatic mobile campaigns, CBD and cannabis businesses are able to target based on mobile activity—for instance, ads can be shown only to people who’ve downloaded cannabis apps like WeedMaps, Leafly, or Eaze. Another popular mobile marketing technique is known as geofencing: Using mobile data, cannabis and CBD advertisers can target adults near certain locations that may be relevant to their ad campaign.
Sample mobile ad campaigns for cannabis or CBD:
- A geofenced campaign for CBD capsules, targeting visitors to a local yoga studio.
- A same-day campaign to increase attendance at your cannabis conference presentation, with a geofence drawn around the conference’s convention center.
Native Cannabis & CBD Ads
Native advertisements are ads that blend into the surrounding content of the platform they’re shown on. Sponsored content is a more complex form of native advertising, while Facebook’s News Feed ads are a simpler example. A few basic creative elements—ad copy, an accompanying image, and a click-through link—are all it takes to run native advertisements for cannabis or CBD in a wide variety of locations.
Running native ads on mainstream websites can work well for cannabis and CBD brands because the surrounding content normalizes the ad and helps destigmatize its subject matter. For some potential customers, clicking on a cannabis ad will feel less intimidating when it’s surrounded by other high-quality links having nothing to do with cannabis.
Sample native ad campaigns for CBD or cannabis:
- A campaign to increase ticket sales for a pop-up event sponsored by your brand.
- A campaign to increase the reach of your recent feature in a local news outlet, targeting readers of five other similar news outlets.
Digital Audio Ads for CBD & Cannabis
Digital audio represents an up-and-coming ad format in the programmatic landscape; with the proliferation of podcasts and streaming radio services in recent years, the market share of digital audio ads is expected to increase significantly in the foreseeable future. Benefits of digital audio advertising include a high likelihood of an engaged audience (think commuters sitting in traffic on the way home) and 100% share of voice during your audio spot (no one else’s advertisement is playing during those 30 seconds).
Mainstream audio companies like iHeartRadio are slowly beginning to dip their toes into running cannabis ads; that said, they aren’t all proclaiming this fact to the masses yet. For CBD and cannabis brands interested in getting into the audio space, it’s a good idea to start developing digital audio ad creative now, as most brands don’t have these assets ready to run yet; this way, you can start running your ads in more places as inventory from new platforms becomes available.
Sample digital audio CBD and cannabis campaigns:
- A B2B audio spot aimed at business owners who subscribe to a certain cannabis podcast.
- An informational audio spot explaining the process by which your CBD extract is derived from organic hemp.
Connected TV Ads for CBD & Cannabis
Another up-and-coming channel for programmatic advertising, connected TV offers many of the same benefits that streaming audio channels do, including an engaged audience, 100% share of voice during your ad, and the ability to leverage this channel early while many other brands have yet to invest in video creative.
Connected TV ads allow advertisers to reach potential customers in the comfort of their own homes, often in the evening or over the weekend when other ad formats may be comparatively less effective. These TVs are not governed by the same cannabis restrictions as standard broadcast television, because information is available on whether account owners are over 21.
Sample cannabis or CBD campaigns via connected TV:
- A high-res showcase of a newly renovated dispensary location, aimed at past customers of your other stores.
- A pre-roll video featuring your sun-grown cannabis, aimed at viewers who have watched Planet Earth.
Programmatic Search & Social for CBD & Cannabis
As we’ve noted earlier in this series, search and social platforms including Facebook and Google have policies of rejecting CBD and cannabis ads. That said, some do get approved by the platforms’ algorithms or moderators. There are also certain steps you can take to increase your chances of approval, particularly if you’re working with an outside agency: If your brand’s social account has been flagged before, ads managed through your agency’s account may have a better chance of approval.
Ultimately, the decision to advertise on these platforms depends on your goals, the audiences you want to target, and your marketing team’s risk tolerance. If your ads are approved, these platforms offer the same types of programmatic capabilities that platforms like The Trade Desk do, including audience segmentation and ad retargeting.
Sample search or social campaigns for CBD and cannabis:
- A Google Ads campaign targeting “best online vape shop” and related keywords searched by Canadian adults.
- A Facebook News Feed retargeting campaign reminding your previous website visitors to purchase the abandoned CBD products in their shopping cart.
Emerging Channels for Advertising CBD & Cannabis: Voice & DOOH
Programmatic’s share of online advertising dollars is increasing steadily year over year, to the point that in a matter of years, programmatic may be the only way to buy and sell online advertisements. That said, a few key channels are trending faster than others at the moment. Brands we’ve worked with are currently interested in the emerging capabilities of digital audio, connected TV, and geofenced mobile advertising. The measurability of campaigns across all channels is also becoming more important: For instance, clients using geofencing technology to increase foot traffic to their retail locations want to understand not just how many impressions their ad yielded, but how many of those impressions resulted in store visits, purchases, and above-average revenue.
In the next few years, we expect cannabis and CBD brands to begin focusing on digital out of home media, or DOOH: Increases in DOOH inventory will result in the ability to transact advertisements on digital billboards, buses, and in-store monitors. Voice advertising is also expected to become a major channel as virtual assistants gain traction: For instance, if someone asks Siri for a dispensary recommendation nearby, she might soon be able to suggest your location.
As the ad industry continues to advance in unprecedented ways, we can be certain of one thing: As long as programmatic predominates, businesses who’ve been leveraging programmatic technology from the beginning will have a huge head start.
This blog post is part of a series on digital advertising for cannabis and CBD businesses. Additional installments include THE STATE OF CANNABIS & CBD ADVERTISING IN 2020, HOW TO BUILD A DIGITAL MARKETING PLAN FOR CANNABIS OR CBD, and THE ULTIMATE GUIDE TO PROGRAMMATIC ADVERTISING FOR CANNABIS & CBD. For more on the latest in programmatic advertising, bookmark OUR BLOG HOMEPAGE and check back soon. Want to learn more before anyone else? Get in touch HERE.