Cannabis Distributors: Make the Most of Your Advertising Dollars

The cannabis industry is growing, offering numerous exciting opportunities for brands to promote and engage with their audience. As we celebrate the strides it has made, it’s crucial to understand the role of digital advertising and cannabis advertising campaigns in propelling this success. Managing your digital advertising budget or securing approval to allocate marketing dollars to digital advertising can be a daunting task, especially amidst the stiff competition and the ever-evolving nature of online marketing. But fear not! This blog helps you understand how-to set an advertising budget and guide you towards optimizing budget across various advertising channels.

Setting Your Advertising Budget: The Basics

When it comes to setting a cannabis advertising budget, there is no one-size-fits-all approach. It largely depends on your advertising goals, resources at hand, and the level of competition in your niche. However, here are some tips to guide you:

1. Understand Your Market Competition: Are you operating in a highly-competitive product category and market, or is your niche relatively unexplored? The higher the competition, the more you might need to invest in advertising to stay ahead. Relying solely on price-based competition can have detrimental long-term effects, such as market degradation and brand erosion. Analyze your competitors’ strategies and ascertain the necessary expenditure required to stay ahead. Unsure of who in your competitive set is advertising on LeafLink? Reach out to your LeafLink account manager. 
2. Define Your Advertising Goals: Are you looking to increase brand awareness, drive sales, or both? Defining your advertising goals will help you decide how much you need to spend, and what tactics or channels you need to achieve these objectives.
3. Evaluate Your Resources: How much can you afford to spend on advertising without straining your business? How much time is your staff dedicating to advertising efforts? It’s crucial to set a budget that is within your means and consider your team’s bandwidth and expertise when choosing which advertising channels to pursue.

Understanding CPC, CPM, and CAC in Budgeting

Cost Per Click (CPC) Cost Per Thousand Impressions (CPM), Return on Advertising Spend (ROAS), and Customer Acquisition Cost (CAC) are critical concepts in digital advertising. They are the two primary ways in which digital advertising platforms charge for their services.

CPC refers to the amount you pay for every individual who clicks on your ad, while CPM is the cost of a thousand impressions (views) of your ad. If your goal is to increase brand awareness, you may want to prioritize reach, and therefore a CPM model might be the most effective. However, if you’re focused on driving sales or actions, a CPC model is often more beneficial. Both models play an important role in shaping your advertising budget and strategy. 

ROAS measures the return on each dollar invested in advertising, showing how efficiently your efforts translate into revenue. ROAS provides valuable insights into profitability and success, empowering businesses to make informed decisions on budget allocation and optimize strategies for maximum returns. Use ROAS to understand which campaigns are performing well and which need adjustments to enhance their effectiveness. 

When analyzing the overall performance and profitability of your business, it’s important to take into account the CAC. This metric allows you to assess the expenses associated with acquiring new customers or clients. By measuring the acquisition cost, you can gain valuable insights into the effectiveness of your marketing and sales strategies, enabling you to make informed decisions and optimize your resources for maximum return on investment. So, don’t overlook the importance of monitoring and evaluating the acquisition cost in your business analysis efforts.

Allocating Your Budget Across Different Advertising Channels

Optimal budget allocation can significantly enhance the effectiveness of your advertising efforts. A recent survey revealed that 50% found B2B channels like LeafLink to be the best for digital ads, followed by B2C platforms (32.4%), Google Ads (19.1%), and LinkedIn (14.7%).

Cannabis businesses should consider these statistics when determining where to allocate their advertising budget. For instance, if you’re a cannabis wholesaler, investing more in a B2B cannabis e-commerce platform like LeafLink could yield better results.

Managing Your Monthly Digital Ad Spend

The U.S. Small Business Administration recommends spending 7-8% of your gross revenue for marketing and advertising. Here are some tips for managing your monthly digital ad spend:

1. Set clear goals and objectives: Before you start spending, have a clear understanding of what you want to achieve with your ads. Is it brand awareness, lead generation, or driving sales? Having a specific goal that ties directly to a KPI will help guide your spending decisions and make sure you’re investing in the right platforms and strategies.
2. Test and track: Don’t be afraid to experiment with different platforms, ad formats, and targeting options, but be mindful about how these platforms overlap and how your messaging will build across multiple campaigns. Use tracking tools to see which campaigns are bringing in the most traffic and conversions. This data will help inform future spending decisions.
3. Focus on targeted advertising: With cannabis still facing restrictions on traditional advertising channels, targeted digital advertising can be hard to come by but often highly effective. Advertising directly on cannabis platforms allows you to precisely target your ideal audience – cannabis retailers and consumers.

Why Advertise on LeafLink?

LeafLink is the leading wholesale cannabis marketplace, enabling cannabis distributors to streamline their operations and reach a wider audience. Advertising on LeafLink offers businesses exposure to a large and engaged audience of cannabis professionals. With its dedicated cannabis business software, LeafLink provides a unique platform for reaching potential customers and growing your cannabis management business.

You have the option to secure a variety of different advertising types, including:

• Search Ads to ensure you show up first when retailers search for your  keywords and product categories. These are CPC ads, so you only pay when your ad is clicked. 
• Display Ads on the three most trafficked LeafLink pages: Shop Products, Shop Brands, and the Dashboard.
• Sponsored Product Ads that give your products an extra boost at the top of the Shop Products page.
• Sponsored Brand Ads that help you show up first on the Shop Brands page. 

After you’ve launched your ad campaigns, LeafLink provides daily conversion reports to help you optimize your investments! With LeafLink’s Advertising Insights, you gain access to your ad data, allowing you to measure the effectiveness of your ad campaigns.

Download our Crash Course in Cannabis Advertising for more on advertising! 

Learn more about LeafLink Advertising here.