Google and Facebook can’t stop the digital marketing of cannabis
By Christian Valdez, CEO, Traffic Roots
As much as the cannabis industry doesn’t agree, the world sees recreational of marijuana as a vice. This puts it in the same category of other vices like tobacco, alcohol, and pornography when it comes to public perception and governmental oversight. This negative impression, justified or not, along with the ambiguity of federal laws has made many large internet companies uneasy and unwilling to take money from questionable products.
This has created a huge disadvantage to cannabis companies that are trying to advertise their products and build their brands. The internet has become the most powerful tool for the entire advertising industry. 2017 was the first year that internet ad spend surpassed television and the domination of digital ads are only predicted to increase for the foreseeable future.
Like other “vice” products, federal, state and local governments have passed laws limiting how cannabis can be marketed. California, for example, requires that, “any advertising or marketing placed in broadcast, cable, radio, print and digital communications shall only be displayed where at least 71.6 percent of the audience is reasonably expected to be 21 years of age or older, as determined by reliable, up-to-date audience composition data.”
I am not sure why they chose 71.6 percent instead of, say 70 but either way the regulation falls flat when regulating digital advertising since it is difficult to determine the age of a person seeing an ad on an internet browser. That leaves the publishers at least partly responsible for the who may or may not have seen prohibited advertisements, a place where they would rather not be.
When studying the digital ad ecosystem you start to realize that there are really only two companies. Google started as a search engine, but it is really an ad network. Facebook is a social media platform but its business model is built on being an ad network. These two companies, number two and six of the biggest public companies in the world, have been able to capture an unprecedented part of the worlds ad spend. In the U.S., the biggest digital ad market and four times bigger than the U.K. in second place, Google and Facebook have been estimated to be 73% of all of the digital ad.
The reason that each company has been able to insert themselves as a dominant force in the global marketing landscape is that both of them get better with size. As they understand more and more about the audience and the ads that they can price placements and direct ads better than any other company in the world. For brands big and small, anywhere in the world, they offer an easy, pay-per-view digital marketing campaign. For publications, they are a way to monetize their precious traffic without having to make one sales call.
Neither of these two internet giants wants to wade into the murky waters of promoting controlled substances. Neither allows ads for other “potentially harmful” products like tobacco, guns, alcohol or pornography. It doesn’t seem like either will be getting more lenient any time soon. Google has staked its claim on its revamped motto, “do no harm” (formally “don’t be evil) even though it cost them access to the entire mainland Chinese population. Facebook is already in the hot seat for its controversial sales of bulk data to companies like Cambridge Analytica.
While Google and Facebook are THE ad networks globally, they are by no means the only option for digital advertising. Many publications are fine with having cannabis ads on their websites but having to find out which ones are a daunting task. The disconnect between cannabis companies looking to pay money for their ads to be seen online and publication trying to best monetize their traffic has created a space for niche ad networks to service the cannabis community.
“Facebook continues to pursue their digital raids and shutting peoples accounts and pages that are cannabis-focused. I don’t see that changing any time soon,” said Christian Valdez, co-founder of digital cannabis ad network TrafficRoots. He sees this as an opportunity lost for the big networks. “Average cost per thousand impressions on Google AdSense is between seventy-five cents to a dollar. For cannabis ads, it is closer to five dollars.” The market for profitable cannabis companies that want to participate in the digital ad world has collided with the small number of outlets for them, driving the prices up.
Savvy marketers have found creative ways to work around Facebook and Google’s direct ad band. Some are using social media influencers or generating educational content that can be easily shared. These strategies have their downsides as Christian sees it, “There are brands that are using influencers to reach an audience, but that approach can’t be scaled and there is no analytics to show if there is an ROI. Educational or awareness content might be able to squeeze through Facebook but content sometimes needs manual approval so companies run the risk of getting flagged and placed on their radar.” Even educational content has seen a crackdown lately. YouTube recently shut down a number of popular educational cannabis channels.
The internet has empowered content creators. It allowed them to broadcast their message to the world without having to go through the traditional publishing funnels. But being able to have a nearly unlimited amount of people go to a website and being able to make money off of that traffic are different things. To do that websites have had to succumb to the two de facto gatekeepers of digital advertising. But the same decentralization that has led the internet to be the most profitable medium in the world also provides ways for cannabis companies to find an audience.
Digital ad networks are the most scalable, targeted and cost-effective ways to advertise. Even though the bulk of the worlds marketing budget goes through two powerful aggregators, there is still space for small networks to work with industries that can’t find promotional outlets any other way.
The future of the cannabis industry will not be like the one we see today. Strong brands will be established and will want to use ads to jockey for position against their competitors. These ads will need to be where the eyeballs are and increasingly that will be the internet. Even though it might be a while before cannabis producers can have the same types of marketing campaigns as other consumer products it looks like the emergence of industry-specific ad networks can now help the stake out a presence online.