New contexts are redefining the potential of cannabis

April 2, 2020

Perceptions are changing daily, as consumers begin to realize that cannabis, and cannabis-based products, can relate to their lives in new and unexpected ways.

New contexts are redefining the potential of cannabis

The cannabis industry is growing up—and fast. Perceptions are changing daily as consumers begin to realize that cannabis, and cannabis-based products, can relate to their lives in new and unexpected ways. This has become even more relevant during the current COVID-19 health crisis, as many government officials are deeming cannabis ‘essential’ to people’s well-being and ordering dispensaries to remain open.  At the same time, cannabis brands are fighting over a pie that, while growing, is still perceived in very conventional terms. Companies are cannibalizing market share in a zero-sum game—with diminishing returns as the inevitable outcome—without fully exploring the many opportunities that lie elsewhere.

There’s no question that go-to-market strategies are evolving. But especially now, as consumer perception around cannabis begins to shift, cannabis brands, even those founded on meeting the demand for recreational cannabis, know that much of their future lies in the distribution of a broader array of products. When it comes to finding non-endemic consumers, however, brands cannot afford to focus exclusively on existing customer cohorts.

Since federal passage of the U.S. Farm Bill in 2018 made hemp, another form of cannabis, legal to grow, the interest in CBD has exploded. CBD is a cannabis component that doesn’t instill a high—but it does have a number of uses as an anti-inflammatory, a sleep aid, and a pain reliever, among other uses. If anything has become evident for the cannabis industry, there is potential not only in cosmetics, beverages, fitness, even health and wellness but also in identifying and addressing consumers who might not otherwise think of the relevance of CBD or cannabis in their lives. This means brands must expand their thinking by examining lifestyles and attitudes as defining consumer characteristics.

New approaches are critical

CBD-infused products are just one—though most definitely not the only—example of how cannabis is appealing to non-endemic market segments. Perhaps it’s a wine lover who is curious about the relaxing effects of cannabis and wants to learn more. It might be a working mom looking for effective relief for sore knees after a long run. It might be the mountain biker who wants a more invigorating and restorative sparkling water for a day on the trails.

The context of cannabis is changing and so should the marketing behind it. Innovative audience segmentation opens the door to many new and lucrative markets and messages: fashionistas, luxury connoisseurs, wellness warriors, organic enthusiasts, even pet lovers. All are potential targets for courageous cannabis brands. The goal should be to convert and cross-sell these consumers by reaching them with messages related to their chosen lifestyle and interests. It’s possible to do this in an organized and assured way by using a well-known technique that, thanks to cutting-edge technology, is undergoing a resurgence: contextual targeting.

Finding net-new customers

Anyone who has used a web browser is familiar with cookies—small bits of data that are used to track online activity and, for marketing purposes, interpret purchase intent and buying behavior. Cookies have their place—but changing regulations impact the value of cookies as a reliable customer predictor and identifier. A more enlightened answer—one that is ideal for identifying the kind of net-new customer cannabis brands must have—lies in contextual targeting, a technique that “scrapes” web page content to derive insight.

Contextual targeting is not new. But due to the move away from cookies, it’s having a resurgence and can be effectively applied for cannabis marketing purposes. An article about the best hydration after intense exercise or skiing at a high altitude, for example, can be an ideal place for an ad about CBD-infused water because the benefits of the product match the article content. Young women visiting a website for information about eczema, psoriasis, or other skin conditions will be interested in serums and creams containing CBD. Subjects like music, food, and art have long been conflated with the cannabis industry—but with contextual targeting, they can be addressed in a fresh and innovative way.

This strategy also helps to overcome a second challenge—how to communicate cannabis in a way that removes its longstanding stigma. To repeat, the market for cannabis products goes far beyond recreational use. That approach is well known and defined. But amid the current pandemic, the validity of cannabis use is more relevant than ever. By seeing cannabis in terms of lifestyle-based cohorts, however, it’s possible to express the appeal of cannabis in terms that are acceptable, perhaps even surprising, to new mainstream audiences.

Technology is key

Contextual targeting is just one of the digital methods available to expand the cannabis audience base. Machine learning and AI allow brands to build customer profiles using millions of user segments such as age, gender, demographics, zip codes, products consumed, reviews written or read, web searches and more. In the aggregate, these behavior traits will help to create user profiles in a much more granular fashion.

For most cannabis brands, a remaining hurdle—and a not insignificant one—is to target online messages to not run afoul of cannabis regulations that vary down to the municipal level. With virtually every state—and sometimes local—government setting its own cannabis legislation, it’s critical that ads not be served in places where laws haven’t changed. This is vital to marketing both effectively and legally. Only now are the right and technologies becoming available to deal with these complexities.

Currently, cannabis brands have two choices: eke out slow growth by competing for the same customers in the same channels as dozens of their competitors…or identify new categories of customers and grow their market base. By shifting their thinking to a mainstream and lifestyle context, cannabis brands can gain net-new customers and expand not only their potential customer base but also their revenue model. It’s evident that the cannabis industry is moving from emerging to essential. Still, with the right technologies and go-to-market strategy in place, cannabis brands can mature as well—and assure their long-term growth as a result.

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