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Marijuana and CBD companies can't advertise on Facebook and Google, so they're getting creative

David Bozin used to get cuts and scratches on his arms when it came time to bathe his golden retriever, Jax, who rebelled against the prospect of being dunked in water.

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Then he learned that dogs, like humans, respond to the properties of cannabidiol, also known as CBD, a cannabis compound that helps the body relax without producing intoxicating effects. Bozin got to work on a line of CBD-infused dog products, including a dry shampoo and puppy treats, that he calls ZenPup.

But in trying to find customers for his new company, Bozin faces a unique challenge in today's market. He doesn't have access to Google, Facebook or Instagram (owned by Facebook), which have banned CBD and marijuana promotions. The two dominant online advertising platforms account for 57 percent of the U.S. digital ad market, according to eMarketer, and almost all emerging brands today count on Google's search ads and Facebook's precision targeting to efficiently get the word out.

"Facebook is not the end all, be all. Instagram is not the end all, be all," Bozin told CNBC. "Does that mean you're not going to see as much traffic at the get go? Sure. But at the end of the day the most important point is conversion," or getting people to buy your products, he said.

Marijuana is legal for recreational use in 10 states and Washington, D.C., and available for medical purposes in many others parts of the country. CBD is a bit more complicated because the laws are murky.

Currently, 47 states allow some form of CBD sales. The 2018 Farm Bill, which Congress passed this week, allows states to decide if CBD products made from hemp can be sold in their jurisdiction. However, it doesn't protect the products from the Food and Drug Administration, which can penalize companies for making inaccurate health claims.

"We avoid talking about anything too specific about what the product will do," said Cary Smith, senior vice president at agency North 6thAgency. "If you come from an educational standpoint, you skew towards less restrictions, and have a bit of a larger organic reach."

With so much uncertainty in the market, Google and Facebook have shied away from allowing marijuana and CBD advertising, taking a similar approach to how they handle tobacco and related paraphernalia. When it comes to alcohol, Google prohibits companies from targeting underage users or promoting unsafe behavior, while alcohol advertising on Facebook has to adhere to local laws.

In the absence of Google and Facebook, ZenPup has been forced to find alternative ways to launch its products. The co-founders, who worked in marketing and public relations, are spending time building relationships with media companies, high-end dispensaries and pet accessory retailers, along with other brands that might be open to partnering with a CBD provider. They're finding popular social media influencers, who can support the products organically on their accounts.

ZenPup has also focused on clean, attractive packaging so that it's appealing for "shelfies," or staged product photos that people post on their feeds.

"Those younger consumers are looking for something different from an aesthetic standpoint, that also is top quality and at a good price point," said Nicholas Weatherhead, ZenPup's chief marketing officer and co-founder.

Connecting with your customers

Other approaches are available to CBD companies, depending on the specific industry. Hillary Wirth, media director at the agency Noble People, said there are plenty of ways to get your brand in the right place.

To promote Viceland's digital show "Weed Week," in April Noble People bought local and national TV ads with DirecTV and Comcast, as well as on channels like IFC , USA and BBC America, and focused on pornography site Pornhub. There are also digital ad networks like like Traffic Roots that allow marijuana and CBD ads.

"So you can't advertise on Facebook or Google – it's not the end of the world," said Wirth. "There are plenty of other media channels that will get you contextually next to relevant weed content."

Noble People got creative in other ways. The firm organized a Washington, D.C., Viceland event to allow people to "Smoke Weed with Jeff Sessions." But it wasn't the former attorney general — just a man from Wisconsin with the same name.

Another approach is storytelling and finding a narrative that can generate PR.

For example, branding agency Abel told the story of Charlotte's Web, a dietary supplement company named after Charlotte Figi, a young girl who suffered from epileptic seizures. With the help of CBD, Figi was able to to reduce her seizures and improve her health.

Oils containing CBD (Cannabidiol) are seen in a shop in Paris on June 14, 2018.

With "brands like Charlotte's Web, the founders, who are very positive about the cannabis opportunities, have been able able to use PR as a marketing channel," Abel CEO Julian Shiff said. "The word of mouth is so strong they are developing a tribe around their brand."

Sponsoring sporting events and concerts are effective ways to find brand resonance. Smaller gatherings can work as well. Recess, which makes a CBD-infused seltzer, holds information events at places like hip-hop yoga chain Y7 Studio and samplings at Rise by WeWork. The company is based around a beverage, but it's really trying to sell a lifestyle, said CEO and founder Ben Witte, who used to run mobile strategy for ad tech company AdRoll.

Witte said Recess has reached 50 times its projected sales this year, amounting to hundreds of thousands of dollars. The product is mostly sold online, but is also available in New York City stores.

"The most important thing is to have a clear mission and purpose," Witte said. "The best way to communicate that mission and purpose is not through a Google or Facebook ad."

CNBC

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