One digital media area the duopoly isn’t dominating: Cannabis ads

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The duopoly may be soaking up all the growth in digital advertising, but not the ad dollars of one growing category: weed marketers.

That’s because Facebook and Google won’t accept marijuana ads. A Google spokesperson said the company doesn’t allow marijuana ads on either the display or search side because the product is illegal on the federal level, while Facebook’s ad policy prohibits sales promotions on cannabis. ​That’s opened the door to smaller programmatic ad marketplaces, in particular, to grow their cannabis business. Six agency and programmatic executives report that their weed business is expanding, thanks in part to less competition. (Holding company agencies also swear off marijuana accounts.)

“Cannabis advertising really started picking up in programmatic buying over the past year because more and more people are getting into the business, and legit marijuana brands are also growing bigger,” said Jeffrey Finch, co-founder and chief product officer for Denver-headquartered demand-side platform Choozle. “They realized that they need more advertising.”

Programmatic buying for marijuana clients requires more human supervision and technological sophistication due to the legal complexities. After all, weed is not legal in every state in the U.S. Because of that, Finch said his team only runs managed programmatic campaigns for marijuana advertisers, although 90 percent of Choozle’s clients use self-serve. “Cannabis is still considered as sensitive content, so we have to be extra careful with the creative and the targeting,” said Finch. “Those ads will show up on publishers who have no aversion to cannabis content.”

Vendors must go through several validation points to make sure weed ads are compliant with laws. For instance, Finch said that in addition to targeting people who are over 21 and in states that legalized marijuana based on ZIP code, his team also uses keyword targeting to find the right content to serve cannabis ads against. For instance, a marijuana chocolate brand can target web pages with the phrase “weed chocolate.” If “weed chocolate” appears on one page over three times, the page would probably be a good fit for the brand.

Meanwhile, Darren Roberts, co-founder of High There!, a dating app for cannabis consumers, is also seeing this uptick in programmatic buying. He said his company is integrating Twitter-owned MoPub to serve display, interstitial and video ads programmatically. “We have a community of individuals who happen to enjoy cannabis, but they are like anyone else,” said Roberts. “That means advertisers can target based on people’s interests like food, culture and outdoor activities. We don’t set the goal of advertising to marijuana brands only — we want to bring mainstream advertisers to our community.”

Despite cannabis advertisers’ growing interest in programmatic, ad tech is nascent in cannabis. Olivia Mannix, CEO and founder of cannabis marketing agency Cannabrand, said her clients usually spend a small part of their marketing budget, like around $10,000 a month, on programmatic. “Cannabis brands are still more interested in earned and owned [media] than paid media because of ad platforms’ limitations,” said Mannix. “When we created ads, the content tends to be more educational and less recreational-focused.”

Meghan Larson, CEO and co-founder of Adistry, an ad network specialized in cannabis advertising, said that although the number of publishers her company works with has doubled to around 300 over the past year, overall publisher traffic for the cannabis industry is much lower compared to other industry verticals. This is because major exchanges like Google, AppNexus and Rubicon Project all declined marijuana advertising, according to Larson. “We can’t move forward yet. It would be great if we can work with Google and Facebook to run device ID tracking,” she said. “But it will come eventually because cannabis advertisers are looking for alternatives to traditional advertising.”

Finch also believes programmatic ad spend in cannabis is too small to interest the likes of Google and Facebook. His brand and agency clients in this category usually spend somewhere between $5,000 and $20,000 a month, and cannabis advertisers make less than 1 percent of Choozle’s overall revenue, he said.

“The only reason why we are doing programmatic for cannabis advertisers right now is someone has to do it — and do it right,” said Finch. “It’s a legit industry in Colorado, and I personally want to make it work.”

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