Digital advertising platform AdLoop is targeting the legal cannabis scene in North America with its online tool AdLink, which sends ads only to consumers who have visited legal dispensaries that are tracked with geo-targeted technology.
Rigid marketing regulations in Canada make advertising cannabis products a delicate endeavour as the government restricts traditional methods in order to keep pot away from minors, making it difficult for companies to establish brand recognition and differentiate themselves in the competitive industry.
AdLoop, a five-year-old company in Toronto and Los Angeles that started taking U.S. cannabis clients in January, 2018, uses a software that targets consumers who have visited legal cannabis dispensaries in the United States by using geo-tracking. Though the company has not yet established cannabis clients in Canada, it has made this sector its primary focus, said AdLoop Founder and chief executive Josh Segal.
“AdLink is a unique tool that will aid advertisers and the brands on our platform to safely and efficiently conduct digital ad-campaigns, while ensuring that their advertisements never wind up in the wrong hands,” Mr. Segal said.
“AdLink provides these advertisers with this exact tool to be both effective and compliant.”
By geo-targeting potential readers who have visited legal cannabis outlets, the advertisements target adults who have already expressed an interest in using marijuana. They will see the ads on their smart phones when they use their apps, such as while reading an article.
Companies that advertise through AdLink pay monthly subscriptions rather than per click, Mr. Segal said.
Mr. Segal said he has consulted with Health Canada and that there are ways to advertise within the country’s advertising restrictions, such as placing the company name without the word “cannabis” or its image on the ad to inspire clicks.
Canadian cannabis companies are struggling to establish their brands, and some marketers have projected this could cause consumers to make their purchases based on preferred strains rather than brands, posing a challenge to companies seeking to establish repeat customers.
Several cannabis companies have expressed an interest in targeting women due to the wellness component of some products, and are doing so through e-mail signup lists rather than traditional advertising.
Ipsos data show that about a fifth of Canadian adults who were surveyed in 2018 use cannabis, and of the monthly users who were asked what brand they use, 64 per cent cited a strain rather than a brand. Additionally, the data showed that 43 per cent think cannabis product advertising should be the same as for alcohol – permitted but not allowed to target children, or be associated with high-risk activities, personal success or social acceptance. This compares with 37 per cent in 2017.
“Retail is going to be increasingly competitive in cannabis going into the new year because of advertising restrictions,” said Michael Rodenburgh, Ipsos executive vice-president for Western Canada.
“It’s an open question about how cannabis brands will progress. A lot of the cannabis on the market is highly substitutable, which is a problem for branding.”