Why CBD brands need an Owned Marketing Strategy
Some industries face heavy restrictions on how and where brands can market and sell their products (cannabis and CBD, for example).
Restrictions can stem from federal, state, or local laws and agencies. Or they can be put in place by ecommerce platforms or third-party marketing and advertising platforms (like Facebook and Google) themselves.
If you run a business in an industry with a lot of restrictions, you have fewer options to market your products and services. You have to rely on different ways to find customers and get them interested in your brand so they visit your website.
That’s why the digital channels you own—your website, your email marketing, and your mobile marketing—are critical and why an owned marketing strategy is so essential if you have restrictions on how you can market your products.
A look at an industry with marketing restrictions: cannabis and CBD
The cannabis market, both legal and illegal, is growing fast. In 2018, it was estimated to be worth $150 billion, according to global ecommerce market research firm PipeCandy. And by 2025, legal cannabis is predicted to be worth $166 billion.
What’s more, the U.S. cannabis industry employs at least 250,000 people and that number is expected to grow to at least 330,000 by 2022—five times the number of people employed in the coal industry, according to cannabis market research firm New Frontier Data.
Closely related to cannabis is cannabidiol, otherwise known as CBD. But what’s the difference between cannabis, CBD, hemp, and marijuana?
Hemp and marijuana are both derived from the cannabis plant. CBD is directly derived from the hemp plant—a cousin of the marijuana plant, according to Harvard Medical School. CBD contains 0.3 percent or less of tetrahydrocannabinol (THC) by dry weight. Marijuana contains more than 0.3 percent of THC, which is the psychoactive strain known for causing a “high,” according to PipeCandy.
While CBD is legal, thanks to the Agricultural Improvement Act of 2018, there are restrictions around how you can market these products.
Regardless of these restrictions, though, the growth of the CBD industry hasn’t slowed.
CBD products are now considered mainstream. You can find them in supplements, beverages, and skin care, for example. And they’re easily accessible in stores like CVS, Walgreens, Ulta, and Urban Outfitters, according to The Motley Fool.
The market will continue to grow. Market research company Reports and Data estimates it’s expected to reach over $16 billion by 2026 in the U.S. alone and it will sustain a growth rate of close to 28 percent each year during that time.
Let’s take a look at some of the restrictions that brands in this space have to be mindful of as they grow their businesses.
Marketing restrictions and more
Here are some of the restrictions brands in the cannabis and CBD industry have to be aware of, according to ecommerce platform BigCommerce.
- Facebook: You can’t advertise or boost any posts for cannabis-derived CBD products on Facebook. But the platform recently relaxed its rules around topically applied hemp-derived CBD products.
- Twitter: You can’t advertise CBD products through promoted posts (paid ads) on this channel but you can post information about your products and link back to your website.
- Instagram: Similar to Twitter, you can’t pay for ads to promote CBD products but you can post about them organically on your own account. Though if you do so, it’s best to focus on sharing educational content that links back to your blog. If you specifically try to sell a CBD-based product on this platform, you could find your account shut down.
- Google AdWords: If you run an ad campaign to promote CBD products, you run the risk of having your ads taken down. What’s more, you may not be able to run ads in the future for other products, even if they’re not related to CBD.
While brands in heavily restricted industries face many marketing challenges, they also face other issues related to running a business. According to Business News Daily, cannabis and CBD brands also grapple with:
- Banking: Banks are often hesitant to do business with cannabis or CBD brands because they fear the risk associated with doing business in this industry.
- Payment processing: Payment processors charge significant fees to brands in the cannabis or CBD industry, and many won’t even work with brands that sell these products.
- Raising money: Lenders are reluctant to fund cannabis and CBD companies since there are no clear regulatory requirements yet, which often forces businesses within this industry to bootstrap their growth.
- Insurance: Insurance prices remain high if you operate within the cannabis and CBD industry. Insurance companies think it’s too risky to sell these products without clear regulatory requirements.
Brands in restricted industries like cannabis and CBD also have to overcome restrictions from ecommerce platforms, as well.
Say you want to open a store on a pre-built ecommerce platform. Some of them have built-in payment processors, and as a result, have restrictions around what merchants can and cannot sell due to agreements they already have in place with those processors.
For brands in marketing restricted industries trying to sell products on specific ecommerce platforms, this can be very difficult. That’s why many cannabis and CBD brands choose to build their websites on an open-source platform like WooCommerce, for example, since it has fewer restrictions around selling CBD products online.
I recently spoke with Georgia Branch, co-founder of the CBD brand Hemple about how she chose an ecommerce platform for her store.
“Hemple is on WooCommerce since it’s the best option for most CBD companies,” said Georgia.
The tide may be turning, though, with ecommerce platforms that have previously been more restrictive than others. Yesterday, for example, Shopify announced their platform would now support merchants that are selling hemp and CBD products in the U.S.
While marketing restrictions exist, new brands and entrepreneurs continue to pour into this industry due to consumer demand. But how can they effectively market their products and grow their businesses when in the wake of so many restrictions?
Why owned marketing matters most for brands in industries with marketing restrictions
Brands in heavily restricted industries have to take ownership of their marketing beyond advertising on third-party channels like Facebook and Google. Those channels simply aren’t a viable marketing option. These merchants have to grow their businesses by using the channels that are within their control—their website, their email marketing, and their mobile marketing.
“We’re very limited with what we can do marketing-wise, so email marketing is massive for us. As long as we’re emailing good quality consumers, we’re getting great response rates. Our email marketing is responsible for over 40 percent of our online sales in the last 90 days,” said Georgia Branch of Hemple.
With email marketing, you can grow your list of customers by having people subscribe to your emails. These people have given you consent to communicate with them, which gives you more opportunity to create a highly personalized experience for each and every one of your customers.
Beyond email marketing, you can also execute your owned marketing strategy by tapping into the power of your website.
For example, you can use your website, and your blog in particular, to create relevant content for people who are searching for your products online or for those who are looking to learn more about a topic related to your products. By optimizing this content around certain keywords or popular industry topics, you can help your current and potential customers find what they’re looking for and drive more traffic to your website.
Another important way you can leverage your website: ask customers to leave product reviews on your site as well as on social media. These authentic testimonials provide trustworthy validation for your brand and your products, and you can in turn use them in your email marketing and organic social media campaigns.
More marketing strategies brands in restricted industries can use to grow
Word-of-mouth advertising is a valuable marketing strategy for a brand’s growth, as well. In fact, 92 percent of people trust recommendations from family and friends, according to Nielsen.
“Word of mouth is a huge factor in choosing a CBD product because a lot people trying it are first time users,” Georgia added.
Ecommerce brands benefit from the power of word of mouth marketing in a few ways, according to BigCommerce.
First, it helps brands grow sales without having to spend money on ads. Second, it helps them build a community of engaged fans who are more likely to buy and recommend products to friends and family. And finally, the money they save on their advertising spend helps them ultimately have more freedom.
“Brands with high customer lifetime loyalty and therefore repeat purchases receive more angel and venture funding. Why? Because CAC to LTV, or Customer Acquisition Cost to Lifetime Value, is considered one of the most important aspects of a healthy business model in the early days of a company’s lifecycle,” the author states.
If you run a business in a heavily restricted industry like cannabis and CBD, here are some additional ways you can think about marketing your products:
- Influencer marketing: Reach out to and engage with influencers in your space. See if you can get them to talk about your brand or your product. This can help you create more awareness for your brand, leverage the credibility these influencers have with their communities, and drive more traffic to your site.
- Content partnerships: Strike up a content partnership with other sites that operate in your industry. You could write a guest post for another relevant site (for example, an industry or lifestyle publication) and you could offer to feature content from others on your site if they’re willing to share it across their networks with a link back to you site.
Why owned marketing should be the cornerstone of any brand’s marketing strategy
Brands that run businesses in heavily restricted industries can grow fast with an owned marketing strategy and by effectively using their own digital channels. And you have to look no further than the rapid growth of the cannabis and CBD industry for proof that this strategy works.
While brands that don’t face such heavy marketing restrictions do have the option to do paid advertising through third-party channels like Facebook and Google, many find an owned marketing strategy to be more effective for sustainable long-term growth.
Third-party sites can change their rules, their algorithms, and anything about how things work at a moment’s notice, leaving brands with little control over how their products are displayed to potential customers and with no real ability to deliver a highly personalized customer experience that ultimately drives long-term value.
If you run a smaller up-and-coming brand that’s not in a marketing restricted industry, be mindful that paying to advertise on rented channels like Facebook or Google isn’t the only way to build your brand.
Take notice of brands that operate in a restricted industry and start building your name through some of the tactics they’re using. They’ll save you a lot of money and they’re ultimately powerful, effective ways to grow your business.
For brands of any size, building your email list and using your own digital channels to develop relationships with your customers is one of the most effective revenue-driving levers you can pull for long-term, sustainable growth—whether you work in an industry with marketing restrictions or not.
Watch Ready, Set, Grow to learn more about how brands are using owned marketing strategies to grow thriving, sustainable businesses.
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