Advertising company engage:BDR (ASX: EN1) has taken a bold step in serving the cannabis industry by confirming that it will provide digital solutions for several North American-based cannabis and cannabidiol (CBD) brands.
The move into the cannabis advertising ecosystem was first announced in February this year as a means of contributing to the company’s incremental revenue growth.
Engage:BDR is currently trying to build up steam following a recent capital raising and after implementing a range of parallel strategic changes to its operations.
In a market update, the ad company reported that its business “continues to exceed revenue expectations” and said it plans to inform the market further once more data is available and capital for the second phase of publisher activations has been deployed.
Furthermore, the company says that engaging the cannabis industry enables it to leverage its core-competencies in technology, publisher-direct relationships and digital media expertise for new, significantly higher margin clients targeting “margins in the 55-60% range”.
One of the new revenue drivers identified by its co-founder and executive chairman Ted Dhanik was cannabis and CBD advertisers that have requested engage:BDR’s brands for digital advertising solutions to aid in targeting their audiences online.
According to engage:BDR, as of last week, its proprietary programmatic exchange offered private marketplace opportunities with the top 1,000 US websites and apps via personalised advertising solutions for niche cannabis clients.
The company’s management anticipates the cannabis industry will serve as a growing niche market that is expected to generate revenue and ultimately become a significant portion of ad inventory and advertiser demand in the months to come.
A key product engage:BDR plans to offer within the cannabis sector is custom curated inventory packages.
The company said that in response to insatiable demand, it has launched packages within its programmatic ad exchange, specifically designed to enable cannabis advertisers to access display, video and native inventory.
Advertisers would also be handed access to engage:BDR’s current offering for cannabis advertisers through IconicReach, a recently added third-party platform.
Engage:BDR’s other key platform, AdCel, is also exploring the possibility of expanding cannabis and CBD advertising to include mobile ads through a self-serve marketplace, specifically segmented for cannabis advertisers.
The prime reason why engage:BDR wants to capitalise on the growing cannabis market in North America (as well as globally) is the fact that up until recently, cannabis advertisers had very few channels to acquire digital ad inventory, since the vast majority of demand-side platforms (DSPs) do not allow cannabis advertising.
Due to industry limitations, advertisers would often utilise endemic advertising methods to place ads on cannabis websites for cannabis retailers. This method is considered to be “severely limited” and most of the sites used are highly saturated, thereby yielding poor performance with severe reach limitations.
Engage:BDR says its programmatic and digital approach can serve cannabis advertisers particularly well on the back of its IconicReach platform that provides access to highly engaging influencers who are “subject matter experts” to help create and distribute content across their social media channels.
The ad company has vowed that its new programmatic distribution channel will allow brands to syndicate their influencer content across programmatic media channels and provide engage:BDR with a unique differentiator over and above its competitors, as well as providing tremendous value to the advertisers leveraging these services.
According to engage:BDR, it now offers cannabis advertisers the ability to connect with “premium comScore top 1,000 publishers” to reach their audiences.
This includes household names such as Gannett who represent USA Today and the Detroit Free Press, as well as access to Generation Premium and Bandsintown.
With the help of these publisher networks, the programmatic ad company plans to enable cannabis advertisers to efficiently and effectively expand their reach and target audience size.
A key consideration in serving the cannabis sector will be advertising guidelines and compliance. Engage:BDR has confirmed that it has worked closely with its publishers to establish creative guidelines for cannabis advertisers, eliminating the guesswork related to creative compliance.
This will mean that it will mitigate ad quality, formatting, and content issues to ensure the production of high-quality advertising content. The presence of these predefined guidelines will also streamline the onboarding process for new cannabis partners to engage:BDR’s various platforms.
Engage:BDR also intends to shorten advertiser learning curves and reduces waste during test phases, after announcing that its managed services team will handle all of the “heavy lifting, performance optimisation and negotiations with suppliers”, thereby eliminating the need for the advertiser to have their own internal resources dedicated to manoeuvring within the advertising ecosystem.