How much should you use for cannabis marketing budgets?
You can see the cannabis market changing daily and yet we haven’t even reached anywhere close to a zenith in cannabis purchases. It’s easy to be lulled into thinking that a growing market allows you to limit your marketing budget. Unfortunately, no. Despite the growing businesses, success in the cannabis industry is no sure thing. So how can you take advantage of this growing market by really developing a foothold?
Establishing your brand and investing in marketing is going to be the difference between success and failure in the cannabis industry.
The cannabis industry is growing, but you need to establish your brand and foothold now to ensure you’re able to withstand the inevitable maturation and consolidation of the industry as regulations ease.
Fundamentally, the wine market is a great comparison to the cannabis industry because it’s an industry built around an agricultural product that’s highly regulated. There’s one glaring difference between the two: wine is a mature product, the market is educated about it and those who drink wine, know they like drinking wine. Drinking wine carries with it a certain life-style sophistication that some people aspire to, in other words, it’s a lifestyle product. Wine companies know investing in branding can make all the difference because the market is highly competitive and they generally budget 15%-20% of sales for marketing, this is a mature product with an established brands. You’ll notice in the below infographic that recreational cannabis is larger than wine sales, but cannabis sales haven’t even remotely become mainstream or moved past the “stoner” lifestyle image. If you’re marketing to a “stoner” culture audience, then perhaps you can develop a budget that’s on the low side, but if you see only 10% sales growth, you’ll know what to expect.
But if you’re hoping to capture some of the market that lives beyond the “stoner” audience, then you’re going to need a bigger budget and you’ll need to think like a lifestyle marketer. You can bet that the cannabis industry is going to get incredibly competitive as time goes on. Establishing your brand and investing in marketing is going to be the difference between success and failure in the cannabis industry.
What should my cannabis marketing budget be?
Setting cannabis marketing budgets is no easier (in fact, it may be harder) than doing so for other industries and this is because of the multiple variables impacting this decision-making. We present these stats to you as a guideline to determining your marketing spend vs. sales growth.
Basically, ask yourself how much you want to grow and allocate an according percentage of your budget to the growth. You can’t expect sales to grow 100% with a 10% marketing budget. It may happen, but the more likely scenario is that by the time you realize it isn’t going to happen, you’ll be boxed into a budget that doesn’t support the other expenditures you made in anticipation of growth.
Your mileage may vary and we’re happy to talk to you about your specific niche in the industry to help you develop a plan if you don’t have one at all. Keep in mind if you’re in launch mode, your PR and marketing budgets should be on the higher side, which pretty much applies to almost every cannabis brand today.
Something else to consider are the advertising limitations facing the cannabis industry. Depending on your actual product, you may not be able to buy ads on Facebook and Google. Does that mean you shouldn’t have an advertising budget? No, it actually means you’ll need to reallocate what would be an ad budget to something else, perhaps social media marketing and community building or content marketing or public relations.
Understand this: if you don’t feel comfortable allocating this kind of percentage to marketing, it doesn’t mean you should pack up your bags and quit-it just means your progress will go slower and you should have realistic expectations.
How Long Will It Take for Marketing Efforts to Deliver Results?
There are numerous variables in the answer to this question. Including your customer, your product and your previous efforts. Let me assure you, with the right budget, all things are possible.
Marketing, PR and branding efforts all work together and they tend to compound, especially in the early days. The more marketing you do, the earlier the ball will start rolling. You can do yourself some favors by tracking metrics along the way so you know you’re hitting the right mix of marketing and that your marketing dollars are being optimized. Consistency is key in marketing and PR, so plan for consistency with bursts of activity around your strategic sales times.
All that to say this, the bigger your budget as a percentage of sales, the faster you’ll see sales grow, so if you’re in a hurry, budget accordingly.