Cannabis DTC Strategies That Spark Demand with Ginger Commerce Founder & CEO Roie Edery

{}Why Cannabis Brands Are Looking Beyond Retail

Host: All right give it a few moments here to allow people to log on happy thursday everybody happy thursday how's your week been roy good good crazy we're good yeah crazy is good right now welcome to California yeah happy to be here great well we'll kick it off now so welcome everyone to the cannabis marketing live podcast where we cover the latest marketing strategies and trends that are most effective in growing your cannabis dispensary delivery service or brand I'm your host and today we're discussing the next evolution of cannabis DTC strategies that spark demand so how to future proof your cannabis brand with Ginger commerce founder and ceo roy ettery welcome to the show roy.

Roy Etty: Thank you thank you for having me always looking forward to really diving into some of this topic it's definitely.

Host: Hot a lot of people have been asking for information about going DTC so before we kick it off today I'd like to give a shout out to our sponsor MediaJel MediaJel is the leading cannabis marketing platform helping cannabis brands reach consumers through their compliant ad network with real-time reporting and analytics dashboard and conversion tracking so MediaJel.com if you want to take a look at them online all right rory well let's dive in let's dive into the meat of this so why is it taking so long for brands to.

Roy Etty: Even consider launching a DTC program for their brand well I think in general the industry is relatively new especially the legal industry and I liken it I got into the business around 2013 14 and around that time was really when the industry was moving from the gray market or the medical market in in California into this CPG retail experience world and the industry had to evolve into that learn how to do that really well and I think only now we're at that point where the industry's ready to take a hard look at what other channels exist out there besides retail and delivery services or traditional delivery services and I think now is the right time to be looking at dtc yeah 100 and like what's changed in the.

Market Pressure Is Accelerating DTC Adoption

Host: Market to really bring this wave of the interest in dtc and really implementing this and adding this to your operations for a brand.

Roy Etty: Well I think in general and right now Ginger is only launched in California and I think a lot of our conversation is going to surround California it's the one market we're in and that we know real well there's obviously a lot of parallels with some other and in other markets but primarily in California I think what's happening right now is there's just a convergence of a number of macro and micro trends and dynamics that are affecting the economy as a whole and the industry's specific I think there's no there's no two if and buts about it the industry right now is going through some a rough patch if you will in the up and down or the boom and bust we are certainly on this downward slide and as it relates specifically to brands in the end there probably are maybe a third or even less the amount of retail shops that need to exist anyways so first of all opening dispensaries is a very expensive endeavor it's timely and expensive and there's a lot of cooks in that kitchen there's local rags that limp some bands some limit the amount of retail shops etc so there's just so many complexities to open enough retail shops to meet the demand so I think that right there is creating a situation where there's more brands than there is retail shelf space compounded by the fact that it's really difficult to operate a dispensary especially operate one profitably and so that means that there's a lot of cash flow issues that in the end trickle down to the brand because ultimately the consumer pays a retailer retailer pays the distributor distributor pays the brand and if there's any kink in that supply chain the brand is the entity that receives the dollars last so when you get into a point where there's not enough retail shelf space which means whatever exists is very competitive and there's 10 brands vying for one shelf and the fact that even if you've got into the shelf it's very difficult for you to get sell through and if you've gotten sell through it's very difficult at times to get your money at least if you get your money it's that 60-, 90-, or 120-day cycle so that is causing brands to say okay what other solutions are out there for me and that's where Ginger comes in and says we have a simpler or dtc as a whole it offers a much.

Host: Simpler supply chain and direct access to your customer yeah it's it's surprising when I share this with people that two-thirds of California counties don't even allow cannabis so you're just handcuffing the industry there in addition to 280e yeah inability to write off tradition marketing expenses to your business the forbes article that yeah funny funny enough had burner on the cover but the title is marijuana meltdown so it's really really burner is one of the successful companies that is doing a great job but other people are the tax alone I think it was the ceo truly was saying like after all said and done it's like close to 60 percent which is just absurd and pretty much impossible to be profitable at that type of high tax rate so it's there's a lot there's a lot stacked against anybody in the cannabis industry no matter how good of an executioner you are let alone if you do make some critical.

Building Loyalty Beyond One-Hour Delivery

Roy Etty: Errors or mishaps along the way but I think from a retailing perspective where at least Ginger finds the sweet spot is we're trying to run the balance between helping brands scale but doing it in a way where we ourselves also have sustainability and viability so traditionally when it got to the delivery service segment most delivery services were competing for that sub one-hour delivery and I'm one of the co-founders of ease so clearly have an understanding of how that business model plays out and the sub one-hour delivery tends to draw in a consumer that is looking for convenience for immediacy and quite frankly also for deals so yeah I have 40 bucks in my pocket what can come to me in less than an hour and is the best price and that's an interesting segment of the of the market we find it my own personal opinion is very difficult to be successful running a profitable business offering that because you're essentially buying inventory you're marketing your on-demand service and when you've succeeded all you've done is you've targeted a consumer who essentially is bargain shopping and is looking for convenience they're not necessarily a brand loyalist so our interpretation of direct-to-consumer is one by which we enable the brand to try to unearth and find that brand loyalist that person that is going to order maybe once or twice a month potentially be on a subscription model get a one- to two-week supply and they're there because they like your brand not because in an hour they're going to a party and they need to show up with something.

Host: Yeah I spent some time at smokeland in oakland California yesterday just looking at their operations and they position themselves as a as a value brand right so they have I think like 40 dollar ace and they really just position themselves at the valley brown they know who they are and I feel like that's the challenge with a lot of these brands is they don't know who they are they have too many products in their line and they spread too thin on yeah a lot of fun to be honest with you I think that in our opinion obviously and I'm a big.

DTC as a Source of Customer Intelligence

Roy Etty: Champion of direct-to-consumer but yeah there's so many upsides and possibilities that come with direct-to-consumer it's not just another channel to sell your product it's a channel that comes with insight consumer insight so you can you can basically market your product in different price points to different demographics at different times you can acquire advertise your campaigns on different publications that are known to target different segments of of the market and then with that data you can truly get a profile of who your consumer is what's their price point tolerances etc and that allows that gives you that immediate feedback to make smart decisions as you're running the business versus if you're relying on the retail channel or even on delivery services you're usually not getting that data if you get it comes in onesie twozy little hearsay that a sales rep or a brand ambassador said etc it's just not something systematic and programmatic so one of the advantages of running an e-commerce business is you get very deep intel onto your customer.

Host: Yep yeah you get those insights in your customer and if you go down the route of going DTC you have the ability to monetize your website traffic right so you get to invest in an asset that you own as a brand drive people directly to your brand website and allow customers to shop your entire product catalog not just what's available at the retail partner or delivery services that you work with they can choose to carry only a few products that fit within their product mix this gives you the ability to give the whole suite of business to these potential consumers so definitely monetize that web traffic build these first-party consumer audiences and ultimately increase your profit margins right so there's a lot of value yeah and wanted to see.

A Retail Sale Is Not the Same as Owning a Customer

Roy Etty: I like in it if you're selling in retail you're getting a sale but you don't get a customer and you're you're getting a wholesale sale at that the retailer takes a very chunk of these a very big chunk of the markup it takes the entire spread between wholesale and retail so you're giving up margin there but ultimately you're you're not gaining any insight on the consumer and you're you're subject to the whims of the buyer at the dispensary so like you said they may only want to carry certain SKUs or they may control the retail price in a way that is not favorable to you as a brand whether they you have a good brand so they'll do a higher markup because they can or let's say it doesn't sell through to their liking or for some reason they need to liquidate their inventory to grab cash now your products in the discount bin and you may not want that as well so you basically once you've created that wholesale sale you have zero control or up to zero control sometimes you can exert some control but by and large you basically are leaf in the wind and that's not a good position to be in or at least just to put all your eggs in that one basket to just have one channel and when I have conversations with brands.

Treating DTC as a Sales Investment

Roy Etty: What are you willing to invest in direct-to-consumer initially those conversations go around a marketing budget and I say hey what let's define marketing and let's define sales and in my opinion marketing in California for cannabis brand is typically trade shows general awareness those kinds of things sponsorships of events and things like that swagging that type of thing yeah yeah maybe billboards or just general brand awareness and that to me is what you would invest in the marketing but then when when it comes to the sales team that gets you into the retail source that's still an expense but the output of that is a sale a wholesale sale so I like in the investment that a brand needs to make in direct-to-consumer not as a marketing expense but really as a piece of their overall sales budget so if you take a typical brand that employs five to ten sales reps to cover state like California and their job is to knock on doors and get POS for a wholesale sale so you equate their salary and all the spend that you're putting into retail that's typically categorized as a sales expense well if you just take a piece of that budget take 10 of your sales budget put it in driving traffic to your website because the output of that is exactly the same the expected output of driving traffic to your website once you're doing dtc is that you're generating a sale in in this instance it's a retail sale and all the benefits that come with that higher margin and the connectivity to the consumer which is something you don't get when you spend money in sales in retail you're just getting the wholesale price you could at any point of time be kicked out of the shop for no reason other than some other brand gave them a sweeter deal and I think that's where.

First-Party Data and Brand-Owned Growth

Host: The advantages lie with dtc yeah I mean when I when I think of DTC it's it's all about the customer ownership so by having your website and your e-commerce and everything set up correctly allows you to collect retain and activate that first-party data right so you can do retargeting for display programmatic campaigns you can leverage the data to connect with consumers through text message through email through push notifications you can add that audience to retargeting in Google or Bing ads so there's a lot of ways to build deeper connections with your fans and you really want to give them that those opportunities to share their engage with you but then share this on their social media profiles engage with you give reviews right give you those valuable feedback so that you can build improve your product or improve your brand and really third-party reviews are really powerful nowadays everyone's looking they look at a brand they'll look at maybe your website and then they'll go look at Weedmaps Leafly they'll go look at other product reviews and then they'll maybe go on social to do their due diligence see what people are saying if people are doing like smoke sessions online right so there's a lot of ways that people can just do research on you and more than more than ever like people are looking at reviews I mean amazon has just victorious for that right they have thousands of reviews for their products and it's part of not only part of building your reputation but it's really valuable for SEO so if you're able to generate the user user generated content on the SEO front get your reviews boom you're gonna you're you want to show up above Weedmaps and Leafly when you're on Google for your brand like you shouldn't be sharing that traffic to these other third-party vendors and that's another thing to consider is there's there's a there's a lot of opportunity there a lot of consumers are switching from or transitioning away from searching for just like cannabis store dispensary near me now they're starting to look for strains obviously brands as you build that awareness and that brand equity you need to capture that traffic and you should be number one in Google search results for your brand as that's and that should be step one and if you don't have that pay for some Google ads to protect your brand really so you.

Turning the Brand Website Into a Storefront

Roy Etty: Don't share that traffic look I mean let's let's go back again I've been in the industry since say 2013. if you go back to that time and up until recently the typical cannabis brand's website was very basic it was just pictures of the founders pictures of the farm a little bit of an about us and our ethos what separates us from others but very basic and then if if the website was evolved enough there might be a store locator which might be updated and that's the extent of a cannabis 1.0 website in California right that was the extent of it so as a brand there never was a focus into making the website into your storefront it was just more like hey I'm running a business I need a website I'll put a few things up there maybe for investors or partners or dispensaries that want to find out more information but it was less about customers it was less about consumers and I understand that because until direct-to-consumer there hasn't been a massive need to make that investment and even if you made that investment where were you going to send that traffic without dtc you were basically going to send that traffic to an ease a grass door or through I heart jane to some a dispensary then may or may not stock your product even though they say they do and even if they do stock your product now customer came to your website as a brand you sent them to a store there's probably like three or four individuals in between your product and that consumer the person at the check-in the person giving them the little list of specials the bud tender the person that's walking them around all of those people are there to convince that customer to not buy the product that they walked in with intent to because they've got something that's better and half the price or they're pushing a promo or whatever that is so it is so risky as a brand to send a customer from your website to a dispensary and if you send them to a delivery service maybe there's a higher chance that they'll buy your product even though even on the delivery service website you're side by side with your competitor but at the very least you gave that delivery service a free digital customer you they didn't have to spend any money on legitimate all they had to do is buy your product wholesale make margin on retail and on top of that you're giving them a free customer so when you invest in dtc you cut all that out you cut the bleed and now you actually have a justification to invest in organic earned media and paid media because all of that media all that traffic is now funneling solely to you as a brand you're not sending them somewhere to get lost you're not giving them for free to a delivery service you're hanging on to that customer you acquire them whether organically or through paid they legitimately belong to you why on earth would you give your customers to someone selling competing products to you and so that's the distinction and you asked earlier why now I think because when dtc has evolved to the point that it has when we believe that Ginger we're the leaders in the industry and the pioneers we have very evolved technology we've created a lot of top-tier tools to allow brands to run an e-commerce business now that companies like Ginger exists is the right time to make that investment because those dollars are going to go pretty far where in the past they wouldn't have yeah and you don't need much right like you just need your.

Host: License you could either get a license to create your own delivery service or just partner with the delivery service that's that's really all you need to do right it's not.

The Three Layers of a DTC Operation

Roy Etty: We yeah listen at Ginger we specifically try to make it as easy as possible for brands to join and we handle the heavy lifting my personal journey is after ease I did a couple of things but right before Ginger I actually started my own cannabis brand a sublingual oral spray called click spray and it's a the industry labels that as a wellness product wellness products struggle in retail I mean everyone struggles let alone a wellness product which is typically five percent of sales in a dispensary and there's a lot of brands that are in that category and they're all fighting for literally five percent of of retail sales so it's highly competitive and when I decided to build Ginger the idea was I wanted to build a company for brands I always align myself with the brands every time even my team knows whenever they come up with new ideas okay we should do this or we should look into that the litmus test for us is does it help the brands if it helps the brands I'm listening if it doesn't I don't want to hear about it and so part of what we're doing is we want to make it as easy for as easy as possible for brands to get into the dtc game and I say that there's really three things that are necessary for dtc to happen I'll go bottom up because the interesting stuff happens at the top at the bottom layer it's logistics right so warehousing pick pack last-mile delivery Ginger has chosen to partner to make that happen so we have a couple partners our largest partner is High Times who has a lot of depots throughout the state so we have a very large coverage footprint in in primary and even secondary markets in California and so we offer logistics out of the box all under the Ginger umbrella we've built what we think is incredible technology that makes it very easy for brands to create product pages and many other modern methodologies in e-commerce to make their website be future be good for current technologies as well as future proof so that their website is using all the proper modern tools for customer acquisition funnel analytics drip campaigns when someone comes in and doesn't complete a purchase all that's built into our technology that's the software layer that Ginger does but most recently we've also we understood that even if we just give tech and logistics to brands the name of the game here is demand you can have a store all day long be ready to sell no one walks into the door you're not making any money and so that's where Ginger has created these d partnerships with for example MediaJel where we've integrated everything that's necessary for campaign tracking into our solution and essentially now if a brand joins Ginger out of the box we help them with demand so that's traffic to their website we give them the technology to be able to sell on their website and we plug them into the infrastructure that we've already lined up to actually make the delivery so now as a brand there's really no reason not to do dtc anymore you sign up with Ginger or any any anybody else for that matter you're going to be able to get the services that are needed to start to jumpstart your econ business and the last no I hear sometimes when we're on calls with brands is I don't have a marketing budget and my rebuttal to that is well do you have a sales team oh yeah no I have a 10 person sales team okay take some of that budget and put it towards this because this is sales it's just.

Balancing DTC With Retail Partnerships

Host: Digital sales and obviously you get all the benefits that I mentioned yeah I know there's a you have to be considerate of your partners right how can you maintain a positive relationship with the retailers that carry the same products in let's say a delivery service area that you are currently selling direct-to-consumer we heavily encourage our brands to be.

Roy Etty: Everywhere I think for a brand to be successful you need to have a healthy channel mix you cannot no business can put all of its eggs in one channel's basket and that's been what's been going on up until now most brands it's all retail maybe peppered in with some delivery services but delivery services from a brand's perspective are pretty much a retailer they're just it's the same dynamic you sell them your product wholesale they do something with it when they're out they call you and they say we want more product so it effectively the same you get the same value which is just a wholesale sale from the delivery service same as you do get from retail so if you bunch that together literally most brands their channel mix is one big pie that says 100 retail that is not a healthy place to be as a business because and there's no consolidation so there's a lot of mom-and-pop so to be there you have to spend a lot of money to stay there you have to spend a lot of money and you're hoping that a bunch of these payers pay you on time so there's complexities with that so I think that as a brand you can justify that to retailers and say hey I want to work with you I want to give you my product no problem but I need to also have a healthy channel list a channel mix and so dtc is one of them but guess what when I have a sale with you that empowers me but when I have a sale online that empowers you because someone could buy online from me come to the store to buy something else see that product and buy it there so there's an for example I would say Best Buy is a great example Best Buy is a company that has really learned how to straddle the online and physical world right there's a lot of retail outlets for Best Buy there's a lot of people that walk into a Best Buy there's a lot of people that just buy online either on Best Buy's website or or any other website and it's it's this immediacy and proximity to the consumer a retail shop makes sense but brand loyalty it may not make sense and you want to capture both those audiences in fact if you've shopped on bestbuy. com as part of the checkout flow there's literally an option that says get it delivered or store pick up at x location so I can see a world where you even dtc or e-commerce evolves into that now it's happening today but only when the retailer owns the consumer right so if the retailer is bringing someone to the retailer website and they have a pickup cart that's fine that works and I think some retailers are doing that really well but in the end that doesn't necessarily benefit the brand because the retailer brought that customer and they own that customer data and that relationship so in this dtc world I totally see a situation where dt the brand acquires a customer the customer comes to their website and then they're being given choices would you like to get it delivered tomorrow at a discount or you get the subscription box or whatever or if you need it now we're going to assemble an order for you from this dispensary a mile down the road and get it ready to be picked up but that's a lead that stayed with you control the experience they were not exposed to competing products you assemble the cart and then just send it to the POS of the retailer and then the customer just does that pick up I think that's fair if if that was the dynamic that was created retailers should be happy because you're passively just generating sales for them that they don't have to work hard for and that's where I see it a healthy relationship between retailers.

Host: And brands in the future yeah and we're at the halfway mark for audience so if you would like to ask any questions feel free to post them in the zoom chat or in the q a in the bottom looks like we already have one here yeah melissa so you can just ask questions in the q a so if you want to go ahead and type your question feel free so I'll take a little break here wait for for some questions to hop in I mean what yeah in the meantime roy like what do you see is the future like what is what does DTC look like in 2025.

What a Mature DTC Revenue Mix Could Look Like

Roy Etty: In in an ideal world I think that dtc ends up being 30 to 40 percent of a brand's revenue mix because in the end it is something that justifies the juice is worth the squeeze and it justifies the investment if you look at a typical mid-size brand they're probably burning about a million dollars a year on their sales team now I ask you a question dear mo if I was a brand and I came to you with a million dollar a year advertising a budget to bring traffic to my website what revenue do you think you can generate for me off that million.

Building the Customer Acquisition Engine

Host: Dollars just to compare apples to apples it should it should be at least I mean like a 5:1 like industry industry average outside the cannabis industry is like a three we're averaging about 11:1 on programmatic but it just there's things that you have to take into consideration for the brand number one what what is their product fit and price point like is that is it a value product because value product is going to really drive a lot of sales and high conversion rate are you offering discount codes right so are you offering some type of discount to incentivize people and you really need to make sure you have everything set up right you need to have your omni channel marketing experience implemented so you need to have e-commerce built out on your website you need to have your menu set up you'd have a web developer to ensure that everything is going to ready to go you need to have a pixel and analytics in place so you can track everything so that's going to phase one you're making it sound so daunting no but that's all been figured out yeah so that's all been figured out you need to get your menu up website your pixel and then once all the tracking everything's in place then boom it's like make sure this message is everywhere right so you want to make sure that we make the vision the mission the if you have a great story from one of your founders make sure that content is distributed everywhere social media paid earn cetera you really want to invest in customer acquisition right so number one place for that is going to be SEO as far as traffic you also want so that's going to be organic you also want to invest in some paid advertising campaigns for customer acquisition so I would put a big budget behind a programmatic display ads campaign so for example if I have if I'm wild and I sell gummies in California at MediaJel we have first-party consumer data on who's bought edibles their gummies in California so what do you do create a programmatic campaign targeting everyone who's bought gummies in the last six months show them the wild ad get them to come to your your website and purchase from you same thing with paid search right so you can go Google ads you can do Bing ads so Google ads is more like 21 to 44 mobile mobile users lower average income Bing is 45 and up higher income and desktop users so really knowing your audience so that you can activate advertising campaigns in the and the channels that have the most relevant audience members to your brand so a lot of customer acquisition campaigns there SEO paid search display ads like all those work really well you can also advertise in like a marketplace like jane or some of these other platforms that allow brands to advertise so just getting the word out there and then once you actually once you have all the technology in place with Ginger so you can capture that customer information they register they check out boom their con their customer have them opt in your marketing messages and then you can send email text messages and push notifications to those users so there's a lot of ways that you can nurture those existing customers if they go to your website or they're in your database do retargeting campaigns make sure that they're always top of mind right so marketing rule seven is a little outdated it's probably more like 12 to 20 now given all the distractions of social media and all the all the different feeds that you need to scroll on a daily basis like it's pretty much endless so you really just have the infrastructure in place get the message out there to the masses track the results and then optimize the campaigns based on which has the best return on ad spend so have a million dollars try to do a lot of channels try five channels you can measure the results for every channel tall I just use it as I think of it as like levers like on a mixer and you this one has a high return all right I'm gonna throttle this one up this one does I'm gonna throw this one down and just continue to adjust your your marketing spends basically I would say.

Understanding Acquisition Cost and Lifetime Value

Roy Etty: I would a couple of points on that so first of all on the conversion and I would say when you start when you first start a an online campaign or your online presence you're you're going to have the worst case scenario you want to establish the baseline of what your acquisition cost is the data that I've seen the worst case scenario and it's really high is probably like 120 to 150 CPA which is terrible but it's if you did nothing and your website sucked and your pricing was too high and your packaging wasn't attractive you're looking at like about 150 dollar customer acquisition cost and then your target is to optimize that to somewhere I don't know you tell me but I would say somewhere in the 20s would be a good number 20 25 acquisition costs you should be that's really really generous like that's that's a great that's a great number to shoot for and anything anything that's 350 anything that's three he's good to go right but let's break it but let's break it down the average cart size on Ginger is and this is the real real life data and we've done so many deliveries that I think it's statistically significant the average card size on Ginger is 145 okay and you as a brand own 145 of those dollars because you're not competing it's not a mixed basket with other other brands so that sale that you got from that customer is 145 gmb or top line now typical revenue split between Ginger and its brands happy to share our publish rates are 60 40. so the brand keeps 60 percent of the sale so they're they're keeping about 55 60 of that 145 more or less so now if your acquisition cost is 50 bucks literally you made your money back on that customer roughly on that first sale that customer already became a break-even customer maybe if you added cost of goods you could be a little bit ahead a little bit behind but you're not losing your shirt on that first customer then some percentage of those customers are going to come back now they're in your system so you can directly market to them email campaign SMS what have you and now they're free once you own them that's the second time they came back and placed an order again it's literally a free bought and paid for customer and if they come back a third or fourth time you can ask them to be a referrer so they bring friends for free or maybe you give them 20 bucks to refer friend and you start to drive a typical e-commerce funnel so you take that ad spend money and it's not just going to general awareness like a black hole which a lot of the marketing dollars in canada especially to support retail seemingly go into a black hole you're just paying for ambassadors you're paying for banners or billboards they do a bogo and something comes out of it just wishes and hopes and dreams and prayers is a lot of what this industry right now is built on but with with e-commerce everything is data driven and you like you said it's dials and you make the investments where where necessary so that's what we're enabling.

Why Cannabis Brands Need Digital Commerce Teams

Roy Etty: And just to back back backtrack to an earlier point when I started in this industry it was just mom and poppy and then as legalization came about and we built this rec world I remember a time where there was there were like a cannabis brand was typically just growers or extractors that was the level of talent that worked at a brand was people who were touching the plant the owner or the ceo or the founders were oh I have a grow oh I know how to make turn cannabis into a great chocolate those were the people and then as retail shops started opening up when you had recreational cannabis then those brands needed to build teams that worked in a CPG world and typically we drew those people from the outside right ahead of CPG at walmart or this or that and brands upscaled and upleveled and brought on teams of people that worked in their company to learn how to operate in a world where your products are sold in a competitive retail landscape they didn't have those people they didn't work for you as a brand in 2013 and 1450. now what I urge everyone on this podcast to do if you run a brand think about it now is your responsibility to build a digital marketing team just like you did it five years ago where you had to build a CPG team whatever came with that spend the time and energy hire three or four however many people or work with agencies like MediaJel and divert your attention and some of your capital towards building an effort for e-commerce it isn't just about buying ads and sometimes I hear this and maybe you heard this the host as well with brands they're like and we tried we gave you guys a budget and it didn't really work I gotta sell like no sales out of that well a as a brand it's a relationship you can't just leave your media partner alone to hunt for you because they can get traffic but if the offer isn't good if the experience of your website isn't good yeah so so someone at the brand needs to manage the inbound traffic and optimize it that's the responsibility of the media company and again if you did that three or four years ago without dtc well I'm sorry to say you wasted your money because what were you doing you were paying an ad agency to bring people to your website and then sending them to ease or to a dispensary who was just going to take your customer and they were going to monetize them you weren't even going to get the direct tracking on whether you got a conversion so the fact that in the last couple of years companies like MediaJel have evolved have created so many intersections of data where now you get footprints I think tj asked a good question which is dispensaries are a good place to find customers but companies like MediaJel what they do is they get that foot traffic data so they're able to run banner ads for people who have walked into a dispensary in the last 30 days and overlay that with data around age gender income etc so when you're doing these programmatic ads the idea is you're hyper targeting them to a segment that is very likely to be open-minded to your product and so if you start doing that and then you lead them to a website that has an optimized flow that you're constantly monitoring and then you have a dtc partner like Ginger that takes those orders and executes them well it gives you the tools to re-target those customers now you're running an e-commerce business and to the extent that's successful is the extent that you can dial back some of your investment in the crazy world which is retail or at least have a hedge against it so that you're not overly exposed in one segment of the market yeah and just to your point you.

Host: Know the once you get the customer in and they're loyal to you have to really consider the long term and lifetime value of that customer so just based on your 140 average order let's just say the customer or 145 140 oh sorry so one for it so I just posted this in the chat so let's just do 145 145 times one order per quarter which should be reasonable for three years is what you typically use as a measurement point so that's going to be let's see here that is go so 145 times four orders per year times three years that's one thousand seven hundred forty dollars for one customer so you spend fifty dollars to acquire that customer over the life of your relationship at least for the first three years you're generating over 1700 so the return is there you have to look at long term you can't just don't look on the short term and slide and just look at the first transaction the real value of this is long term because that compounds right you're investing this money your cut number of customers you have in your database is growing the number of people that you can engage with grows and the revenue compounds over time so quarter over quarter you're going to start to see that revenue growth and that's that's how I look at things if this is my brand honestly I would just spend as much if I had a edibles brand in California I would spend as much money as possible if I can get the right cost me a customer acquisition and when I'm thinking long term if I can generate 1800 off this customer over three years I'm willing to pay a hundred hundred fifty dollars for that I don't care right I think I'm willing to take a loss on that first order yeah let's take a look gonna say let's take a break let's start looking at these questions here so.

SEO, User Experience, and Influencer Marketing

Host: Alexi how SEO and how important is SEO and UX dtc that one so UX is important right you need to make the ability to check out in and just go through the product list on your website easy that's pretty much done jinger's done that so check that out the list next is SEO I believe jinju has all that taken care of so all the elements that you need to ensure that your website is SEO friendly boom it's already plug and play on Ginger the only thing that I would recommend is to get as many reviews as possible on your product on individual products because that's going to help increa increase your reputation it's going to help with the reviews which will help with SEO and positioning each individual brand higher in the search engine results list so when someone searches for jeter boom jeter indica infused pre-roll boom this that specific product page on jeter should rank number one above everyone above Weedmaps and everyone else so take that into consideration let's see what about influencer marketing is it worth pushing or pursuing yeah I mean I would do influencer marketing but more for the to increase the followers and engagement of your brand on social and then you can convert those followers into users on your website so have a website link on your Instagram profile or any of these other channels leverage the story functionality right so you can have a link in your stories that you can send people to your shopping cart so activate them you can also have like a phone number where they can text you to join your loyalty program and in the text message that they receive thank you for joining boom order online all that stuff's automated orders are coming in and that's the best way to monetize your social media following and most people don't do that let's see anonymous do you think cannabis has a lot to learn from boutique elevated apparel CPG brands when it comes to retail partnership sales and marketing I'll let you take that one.

What Cannabis Can Learn From Leading Consumer Brands

Roy Etty: Yeah I mean I would say of course and in general I would also say look at look at Nike for example there's tons of articles where they're just showing this the success of their dtc I believe I've seen a recent statistic that now in the us something like 40 percent of Nike's revenue is dtc if you can imagine and think about it who wants to walk into a Foot Locker and Foot Locker is the most competitive place because there's maybe 10 brands and they'll only have like four or five shoes and shoes is actually a good example because right Nike is so good with I mean I don't know how many SKUs they have now probably thousands millions or maybe tens of thousands no I mean just like a jordan yeah there's exactly there's so many color variations inside it just it's endless right so there's no way in the world that a typical that one retailer or one Foot Locker would stock what what what people want and so ultimately I do think that brands can learn from what other apparel or micro brands or even influencer driven brands can do I think that you need to maintain a retail presence don't get me wrong I'm not anti-retail I think they need to get their act together in terms of payments and everything else but a lot of it is just because they're trying to operate a business with one hand tied behind their their back but in the end it's as a brand it is good to maintain some level of retail presence but at the same time you can rip a page from what everybody else outside of cannabis is doing in e-commerce and dtc and if you just implemented what they did because in the end it's not rocket science there are tried and true methods on how to acquire customers there's plenty of books and services and media companies and people you can hire into your team that have done this for the beverage industry or alcohol or you name it just like you hired that CPG person that used to stock brands in walmart and you brought them into your brand to help you stock your brand in dispensaries find that person who was a ninja digitally marketing their brand online and bring them into your company one thing that I hear a lot and I wanted to spell this rumor right now and the host backed me up on this I hear the complaint I was like well but we can't advertise on Instagram we can't do Facebook ads we can't like whatever man by the way there's there's ways to be successful today as as a retailer doing online marketing and as a brand online marketing and that's in today's world where you can't do these things I would advise brands to get in a game today get your feet wet optimize your website build the team and a year or two or whenever from now when you can advertise on Instagram and all of that you'll already be in position it's just literally one more source of traffic but everything else will already be built so now's the time to actually make that investment and I don't like to hear when people say either hey I've tried it and I waste the money I didn't get anything well you probably tried it too early because you're sending that traffic to retail or well I just can't advertise on on Google or doing Instagram campaign and it's like I mean for MediaJel alone how many web properties can you guys run your programmatics on youtube 75 000 yeah so so yeah it's pretty much endless yeah it's it's a broken record at this.

Advertising Options Beyond Social Platforms

Host: Point like it's it's actually embarrassing when I when I'm reading these articles on these mainstream publications when everyone talks about the same thing that you can't advertise cannabis when that's completely false it's just people on your team that can run advertising campaigns and Instagram Facebook like cool those are social media platforms but just focus on organic on those do you pay it on other platforms yes yes we can get ads approved on Google on Bing we can get ads approved on 75 000 players and when publishers I'm saying where is everyone on all the time they're on their cell phones what are they doing they're I'm playing sudoku I'm playing words with friends boom they don't like the people are cheap they don't want to pay for ads or pay for apps so we put we put your cannabis brand in those apps you're on grinder you want to date boom go ahead or you want to check the weather weather app boom you're getting hit another time with ads you're looking at 9gag looking at some memes boom you get hit with another ad like it's follows you around where wherever that you are active and the great thing about programmatic is that you can you can target cannabis consumers with precision so we draw a fence around any any dispensary anytime someone walks in there they get put in the audience and then we target them with ads and it's just so relevant yeah I agree with that and I see some of the questions happy day yeah go ahead and take a crap I think megan's question so.

Why Wellness Brands Can Benefit Disproportionately

Roy Etty: We don't disclose numbers of deliveries etc but I will tell you this wellness wellness brands are ones that do disproportionately well with us or dtc as compared with retail and disproportionately in in a good sense if if Ginger was the wellness brand's retail store we would be their largest retail store that they do more with us than any other retailer and by far and maybe even an aggregate of the amount of revenue wellness brand does with us would be the equivalent of what they do in 20 or 30 dispensaries with all the overhead and headache that comes with with that and the reason for that is specifically for the wellness segment wellness brands require a lot of education and introduction and information and there's no way in hell the bud tender is going to articulate that as well as you will if at all bud tenders are geared towards selling flour concentrate vapes edibles probably in that order and it is the thing that they consumed personally and the thing that they know the most and if you come in and you and if you have a retiree aged customer walking in looking for a joint pain cream and a mid-20s bud tender is there to give them the advice it's unauthentic they don't have the information they might walk you to the wellness section wait for you to make a selection answer any questions around pricing and that's about it so with dtc you can basically run a clean website educate people get them walk them through a funnel get them to understand what the product does and then just embed your buy now's everywhere so I think with company with specific categories like the wellness category dtc should be you should be all over it if that was a brand that you had because ultimately.

Reducing Payment Risk for Brands

Roy Etty: That's something that is really going to be beneficial for you and then I see gabrielle's question so what are the terms for payments to brands sounds like.

Host: A lot of retailers are not paying brands can dtc companies guarantee that they will pay their brands on time so.

Roy Etty: Essentially when you're working in the retail model you're there's there's many hands in the cookie jar right because the retailer is ordering typically on net terms sometimes a brand can command COD not always not most often so you're giving them product on that term and then if you're in a hundred stores that's a hundred payers that may or may not pay you and there's a lot of complexities with that and when they pay they don't pay you directly typically unless you're doing self-distribution they're really paying your distributor and then you're at the whims of your distributors cash flow to then pay you there's a lot of risk there with Ginger specifically the way we do it I can't speak of other dtc companies we really have one large statewide partner and as we scale to other states that's our model and that partner is committed to Ginger clients the banking is separate for all the dtc transactions to built the system that way so we have oversight and there's no intermingling of funds between whatever other operations our partners have and what operations exist on on Ginger so that gives us the comfort level that the payment is going to be done as as is advertised and also our our contract calls for a payment on the 15th of every month for the fo for the previous month net-30 though it could be less just depends on when your transactions occurred versus as we've heard recently some of our competitors are one of the largest competitor has just now shifted their their net terms to net-120. so you get a transaction today you get your money in four months so we try to get you paid as quickly as we can and there's really only one payer so there's a bit there's just not less hands in the cookie jar and hopefully that provides some of that coverage for you yeah exercise that whole process yeah and then we got another question.

Making a DTC Website Easy to Buy From

Host: Here how difficult is it for my brain to optimize the website for DTC it's not that difficult we can if you set up a call with us we'll send a link after the call or after the session I'll take a look at the website see if there's any basic improvements but the main thing is that you need to have a shop now link and then you need to have your e-commerce on and you need to make that as simple as possible so when someone's impaired and wants to order some weed they should be able to use it on their phone with when they're impaired right so it should be really easy for them to use it so yeah reach out to us and we'll definitely help you on that and.

Why Consumers Identify With Brands, Not Stores

Roy Etty: To your point I was just thinking about the yeah as you said with Nike I was at union square yesterday and I went to the apple store and I went to the Nike store right I didn't I prefer to go to Nike then go to footlocker and these other places because they have all the custom drops right so they have all this all the kicks that I want they have the they have the actual jordans I want in stock I don't have to wait for two four weeks all right so that's another thing and it just cuts out consumers consumers want to identify with the brand do you care if you bought your can of Coca-Cola at a 7-eleven or a chevron gas station or a target no you care about the Coca-Cola not where you bought it so I think the dispensaries their value and I'm not saying they don't have value but their value is proximity and convenience nothing else in my personal opinion meaning yeah you might have a little bit of a nicer flow a little bit of a nicer experience but if your sign is bigger and nicer does that mean that's your value add as a dispensary not really not in my mind you're you're you're there because you have proximity to the consumer you provide a good price and a good experience that's it but no more than that if they're not I'm not gonna walk around loving my dispensary and wearing their hoodies and wearing this and where that cookies is the rare exception and they broke through and created a lifestyle brand I don't see any more I mean med men wasn't even trying to go for lifestyle they weren't doing too well so I just don't see people long-term identifying with the store and even if they do so what I think that's going to be minuscule compared with the brands consumers want to identify with the brand and if that's the case where else can you tell your story better than on your own website where you get to own the customer it's gonna take work it's not about just oh let me sign up with Ginger send them the product and sales are just gonna start streaming in not at all but what is going to happen is if you sign up with Ginger you are now enabling yourself to justify building a digital marketing team spending money on digital and starting to build your own online business that no one can take away from you're not going to get a call from a buyer saying hey sorry we're not going to stock your product anymore yeah that's it's.

DTC as an Investor-Ready Growth Asset

Host: Tremendously important and what second that is definitely prioritize DTC set yourself up for long term right not only is this good for your retail sales but if you're raising money with investors if you have a DTC arm you can say hey we have a database of 50 000 customers and we already generate this much revenue from them and this is how much we can forecast on our revenue just from d to c how sexy that is for investors another talk.

Roy Etty: About something sexy for investors we actually just started offering financing for cannabis brands to be able to finance their ad spend so if you join Ginger we can provide you financing for that ad spend so now if you're in front of an investor you're like hey this is where my money is going to go and by the way I can even borrow it and pay over time and that money is being put towards growth measurable digital growth that translates to sales that's something that makes it that makes investors very excited because they don't want to invest in some of the less predictable pieces of a typical cannabis brand business but when it's just like hey these dollars are gonna go here we're expecting this CPA it's gonna start here over time it's gonna go down and by the way we can finance the marketing that becomes a very valuable.

Closing Thoughts

Host: Proposition it's a win-win well thank you roy for joining today and sharing your your insights with our audience here and thank you everyone for joining us on the cannabis marketing live podcast we covered a lot today we're really talking about DTC and how to really spark demand with dtc strategies and really future-proof your brand I mean future proof your brand and accelerate your growth right so thank you roy again for for thank you anyone else that's on the call feel free to reach out to us I posted the calendly link in the in the chat here schedule a call with us there I'll invite roy to that call and we can we can dive in deeper into these different opportunities and shout out to MediaJel again who's the sponsor MediaJel is the leading cannabis marketing platform helping cannabis brands reach consumers through compliant ad network of 75 000 publishers as a brand you have access to real-time reporting analytics dashboard and you can track every sale from all the marketing campaigns that you run so definitely check out MediaJel.com and thank you for logging in today and I'll catch you next thursday same time same place and we'll be talking about something else fun so catch you later bye bye.

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