THE HIGHEST ROI DIGITAL MARKETING CHANNELS FOR CANNABIS BUSINESSES

THE LEGAL MARIJUANA SECTOR IS GROWING FAST. HOW CAN YOU REACH CUSTOMERS IN THE FACE OF SUCH COMPETITION?

Market analysts at Grandview research expect the market for legal medical and recreational marijuana to grow to $73.6 billion by 2027, a dramatic increase from an estimated market value of $17.7 billion in 2019.1,2

For comparison, this is similar to the dietary supplement market, which is estimated to reach $74.1 billion in size by 2026.3

In other words, the future is bright for operators in the marijuana space, including growers and dispensaries, suppliers, and cannabis-related product developers.

However, the industry and the organizations within it face a unique configuration of challenges that they must overcome to be maximally successful.

For one thing, current operators are facing intense competition due to the “green rush” resulting from such rapid growth.

Then, legal issues continue to dog the cannabis industry. Marijuana is still classified as a Class I narcotic alongside cocaine and heroin under federal law, with the result that advertising restrictions still apply.

On the plus side, these challenges present opportunities for operations in the space to differentiate themselves and build business further.

That, in turn, requires being smarter about their online activities in order to stand out from their competitors in that green rush and to successfully reach a wider audience, including people who may be unfamiliar with the benefits of CBD and THC products.

But what does that mean? Operators in the space should focus increasingly on highest ROI marketing channels.

Here are the top four marketing channels that can produce the best results.

In This Paper...

1. Search Engine Optimization
2. Content Marketing
3. Directory Sites
4. Reviews

Search Engine Optimization

Because federal law prohibits advertising for the sale of cannabis products, organizations in the sector find their hands tied and their options limited for getting in front of potential customers. Pay per click advertising campaigns, for example, are likely to be denied or taken down by search engines like Google.

Yet online discoverability is a key part of finding and gaining new customers. After all, nine out of ten (93%) of online experiences begin with a search engine.”4 But here’s the catch: 95% of web searchers will look only at the first page of results.5

That means that cannabis-oriented businesses that want new customers to discover them online must not only show up in search results for appropriate terms, they have to show up in just the first few listings. Worse, they don’t necessarily have the option of just paying to promote their listings through paid search advertising.

Enter search engine optimization (SEO).

Google’s ranking formula is very complex; it considers over 200 separate factors and, worse, changes 500 to 600 times a year.6,7 But it is still algorithmic, which means that businesses can adapt their websites and online activities to appeal to the ranking algorithm. That’s what SEO is all about.

Fortunately, while SEO can take time to work and requires technical expertise to execute reliably, the effort can yield tremendous results. Leads from search engines offer an average close rate of 14.6% versus outbound leads (e.g., direct mail), which have a 1.7% close rate.8

Understand the legalities

Advertising is a fraught business for companies in the marijuana industry. Because federal law defines marijuana as a Schedule I drug under the Controlled Substances Act, it is a felony to advertise for the sale of cannabis products. And while a patchwork of state and local laws may allow for the sale of medical and sometimes recreational cannabis products, they don’t supersede federal law.

Further, this means major technology platforms like Facebook and Google are extremely cautious about allowing advertising for cannabis businesses and products.

“The whole industry is under a cloud because no one knows to what extent [the Department of Justice] is willing to interfere with the states,” said Keith Stroup, who co-founded the National Organization for the Reform of Marijuana Laws, or NORML, in 1970. It’s just as true today.

Altogether, this makes online lead generation unnecessarily difficult and treacherous; in turn, it increases the importance of marketing channels like search engine optimization.

Content & Content Marketing

Search engine optimization, as the table above describes, is complex and manifold. It requires many different tactics and techniques. But one of the most important is content. Even better, content does triple duty.

First, it speaks to search engines.

72% of online marketers consider content marketing to be the most effective SEO tactic available.12 Remember, Google is trying to connect the web searcher to the information they really, authentically want. If your business is what that searcher is looking for, Google wants to connect you with each other.

But how does Google know if you’re a good fit with that search in the first place? Your content. The more content you have, the stronger the results, and the more often your business can show up for searches for a wider array of keywords. This is called inbound marketing, and it’s extremely powerful in lead generation. For example, companies that regularly blog generate 67% more leads than those that don’t.13

Second, content powers content marketing.

It’s not just Google who has to determine if your business and your products are a good fit; it’s your potential customers themselves. And once again, it’s your content that convinces them. Half of consumers will typically view 3 to 5 pieces of company content before they take the step of talking to a salesman.14 You can use your content to differentiate yourself from your competitors and stand out in an increasingly crowded field. Content is what establishes credibility and builds trust with the consumer.

Third, for companies operating in the cannabis space in particular, content is pivotal in dispelling myths and misinformation.

The confused legal situation combined with not infrequent moralizing can result in a lot of confusion and misunderstanding about what cannabis products are, what they involve, and what they will mean to the consumer. Many consumers – especially those new to the sector – may have a perception of marijuana usage they associate with outdated “pot culture” clichés and tropes.

They might think that only a certain kind of person uses cannabis products, for example. Or they may not realize how well researched medical applications are for both CBD and THC products. They may not understand cannabis products on a fundamental level; for example, many consumers will not understand the difference between THC and CBD in term of psychoactive effects. Content is where you fix all of that.

Kinds of content

• Advertorials
• Apps
• Blogs
• Brochures
• Case Studies
• Checklists
• Comments
• Contests
• Diagrams
• eBooks
• Games
• Handouts and Fliers
• Illustrations
• Infographics
• Memes
• Newsletters
• Photos
• Podcasts
• Polls
• Presentations
• Press Releases
• Quizzes
• Quotes
• Reports
• Reviews
• Social Media
• Static Web Pages
• Surveys
• Technical Papers
• Testimonials
• Training Courses
• User-Generated Content
• Videos
• Webinars
• White Papers
• Wikis
• Worksheets

Directory and Review Sites

Thanks to the legal limitations of advertising discussed above, discoverability remains a perennial challenge for cannabis-oriented businesses – and that’s as true for consumers as for the businesses themselves. Where can they go to find cannabis businesses since they don’t see many ads?

Answer: outside of search engine searches, directory and review sites help them find what they’re looking for.

Notably, these types of sites also show up for related Google searches, so it’s doubly important for businesses in the cannabis sector to take these sites seriously.

Start with industry-agnostic directories, like Yelp, but also include marijuana-specific directories and review sites

as well. There are four reasons why you want to include multiples sites.

1. TO STRENGTHEN SEO STANDING
   First, you don’t want to neglect the big directories and review sites, because they have a disproportionate impact on Google’s search ranking algorithm.
2. TO GO WHERE THE CUSTOMERS ARE
   Focus on review and directory sites that your customers are the most likely to actively use. That can mean a variety of different sites.
3. TO SUPPORT THE IMPRESSION OF BEING A MAJOR PLAYER IN THE INDUSTRY
   If your business shows up over and over again across multiple directory and review sites, it builds an impression that you are a major operator in the space. That boosts credibility.
4. TO EXTEND DISCOVERABILITY THROUGH GOOGLE SEARCHES FURTHER
   These sites have a lot of ranking power of their own, so they are likely to show up in Google search results for related key terms. If your business is listed on these sites, Google users can still potentially find you – even if your own website didn’t appear in the search results, as long as one of these did.

Review Management

After a potential customer has discovered your business, they still have to make the decision to actually buy from you. Reviews are pivotal here. In fact, reviews can make or break a business, why would they choose you over a better-reviewed competitor?

Once the customer is researching your products and your business to make a buying decision, they are going to look at reviews. In fact, it takes reading an average of 10 reviews before consumers feel able to trust a local business, according to BrightLocal’s Local Consumer Review Survey.15

Similarly, an overwhelming number of consumers – nearly nine in ten – say that online reviews influence their buying decisions.16 Good reviews drive genuinely beneficial business outcomes: Positive comments online from happy customers produce an average increase in sales of 18%; even better, research has found that consumers spend 31% more after reading positive reviews.17

By contrast, bad reviews drive business away. A single negative review can push away approximately 22% of customers, and three negative reviews can lose businesses as many as 59% of potential customers.18

Get help

Almost everything we discussed in this paper – SEO, content marketing, review management, etc. – requires some degree of technical expertise to execute effectively and cost efficiently. Having an expert at hand to help with or undertake these tasks will not only save time, energy, and effort, it will strengthen results.

Yes, dispensaries and other cannabis-related businesses can do a lot to promote themselves online without outside help. But to really stand out in an increasingly crowded field, getting help, making use of third-party tools, and leveraging services like paid search and review site listing promotion can make all the difference in turning ordinary marketing channels into high-ROI engines for business development.

References

1 https://www.grandviewresearch.com/press-release/global-legal-marijuana-market
2 https://www.grandviewresearch.com/industry-analysis/legal-marijuana-market
3 https://www.globenewswire.com/news-release/2020/02/06/1981100/0/en/Dietary-Supplements-Market-to- Reach-USD-74-14-Billion-by-2026-Introduction-of-OptUp-by-The-Kroger-Company-to-Boost-Growth- prospects-says-Fortune-Business-Insights.html
4 https://www.searchenginejournal.com/10-stats-to-justify-seo/36762/
5 https://www.theleverageway.com/blog/how-far-down-the-search-engine-results-page-will-most-people-go/
6 https://backlinko.com/google-ranking-factors
7 https://searchengineland.com/3-things-major-google-algorithm-update-260828
8 https://www.slideshare.net/NewsCred/50-best-stats-presentation
9 https://backlinko.com/search-engine-ranking
10 https://backlinko.com/search-engine-ranking
11 https://www.wordstream.com/blog/ws/2015/10/06/smx-east
12 https://www.hubspot.com/marketing-statistics
13 https://cdn2.hubspot.net/hub/53/blog/docs/ebooks/120-marketing-stats-charts-and-graphs.pdf
14 http://blog.breezyhillmarketing.com/10-helpful-seo-stats-for-2017-planning
15 https://www.brightlocal.com/research/local-consumer-review-survey/
16 https://www.zendesk.com/resources/customer-service-and-lifetime-customer-value/
17 https://smallbiztrends.com/2017/04/importance-of-online-reviews.html
18 https://www.brightlocal.com/2017/03/15/the-impact-of-online-reviews/