How Cannabis Customer Lifetime Value Impacts Return On Ad Spend

Key Insights

• The LTV:CAC ratio is one of the most important metrics cannabis marketers can track because it frames whether a marketing program is structurally profitable over time - if it costs more to acquire a customer than that customer will ever spend, no amount of campaign optimization at the execution level will produce a healthy marketing program.
• Campaign pacing requires both a current-state view and a forward projection: knowing that spend is on track today is less useful than knowing whether the campaign is on pace to deliver its full planned budget by the end of the flight - and the pacing formula (spend to date divided by days elapsed, multiplied by total campaign days, divided by planned spend) gives operators a forecast rather than just a snapshot.
• The "with or without" method is how MediaJel's team tests new placements and audience segments within an active programmatic campaign: by comparing overall ROAS with the new element included against ROAS without it, the team can determine whether a new placement is improving or diluting campaign performance - enabling data-driven decisions about what to scale and what to cut.
• Average order value is an underutilized cannabis marketing KPI: understanding AOV by channel, segment, or campaign type helps cannabis operators evaluate which traffic sources are bringing in buyers who spend more per transaction, not just more buyers, and allows for smarter budget allocation toward the highest-revenue customer segments.
• Correlation coefficients help cannabis marketers move beyond surface-level reporting by clarifying what a metric is actually measuring and whether two variables are meaningfully related - a critical skill in a measurement environment where multiple KPIs can appear to be moving together while the underlying drivers are entirely different.

Webinar Highlights

00:00 – Why Marketing Metrics Matter for Cannabis Operators

Jake Litkey and Jenny Shei open by framing the webinar around a practical problem: cannabis marketers are often looking at numbers without a clear framework for what those numbers are supposed to mean. The session is organized into two main pillars - business-level metrics like CAC, LTV, and ROI that evaluate marketing program health over time, and live campaign KPIs like ROAS, CPA, and pacing that evaluate execution performance in real time.

08:00 – Customer Acquisition Cost and Lifetime Value

Jenny walks through CAC (customer acquisition cost) and LTV (customer lifetime value) as foundational business metrics for cannabis operators. The conversation explains the LTV:CAC ratio as the structural health check for any marketing program: if the cost to acquire a customer exceeds what that customer will spend over their lifetime, the program cannot be profitable regardless of how well individual campaigns perform. Understanding this ratio is the starting point for making sound investment decisions in cannabis marketing.

16:00 – Live Campaign KPIs: ROAS, CPA, and AOV

The webinar moves into real-time campaign metrics - ROAS (revenue over ad spend), CPA (cost per acquisition, which can mean cost per purchase, cost per lead, or cost per another defined action), and AOV (average order value). Jenny explains that each metric answers a different question about campaign performance, and that the right KPI depends on what the campaign is optimizing for. She also covers how correlation coefficient analysis helps teams understand whether the relationships between KPIs are meaningful or coincidental.

24:00 – Campaign Pacing: Current State and Forward Forecast

Jenny shares the pacing formula she uses at MediaJel: actual impressions divided by planned impressions gives a current-state view, while the spend pacing formula - spend to date divided by days elapsed, multiplied by total campaign days, then divided by planned spend - projects where the campaign will end up by flight completion. This forward-looking calculation identifies under-delivery risks early enough to make adjustments rather than discovering shortfalls at the end of the campaign.

30:00 – The With or Without Method for Placement Testing

The conversation covers the "with or without" testing framework that MediaJel uses to evaluate new placements and audience segments in active campaigns. When testing something new - such as a placement on a Condé Nast publication - the team compares overall ROAS with the new element against ROAS without it. If ROAS improves, the placement is worth scaling. If it dilutes performance, it gets pulled. Jenny describes this as a continuous, incremental optimization process that compounds over a campaign's lifetime.

36:00 – Macro and Micro Optimization Together

The webinar closes with Jenny's framework for thinking about optimization at two levels simultaneously: macro tests that evaluate whether a new channel, placement, or audience is worth pursuing, and micro details that identify small inefficiencies within existing placements. The combination of both levels of analysis is what drives the sustained ROAS lift and revenue improvement that cannabis marketers are looking for from their programmatic programs.

Frequently Asked Questions

[ {What is LTV:CAC ratio and why does it matter for cannabis marketing?}

The LTV:CAC ratio compares customer lifetime value (how much a customer spends over their entire relationship with a brand) against customer acquisition cost (how much it costs to acquire that customer through marketing). For cannabis brands, this ratio is a structural health check: if CAC consistently exceeds LTV, no amount of campaign-level optimization will make the marketing program profitable. A healthy ratio means the business can sustain and grow its marketing investment. An unhealthy ratio signals that pricing, retention, or acquisition cost issues need to be addressed before more budget is allocated to campaigns.

{What is ROAS and how do cannabis brands use it?}

ROAS stands for return on ad spend and is calculated by dividing revenue generated by ad spend during the same period. For cannabis brands running programmatic campaigns, ROAS is the primary measure of campaign-level revenue efficiency - how many dollars of revenue the campaign produces for every dollar spent. It is used to compare the performance of different channels, placements, and audience segments, and is the core metric in the "with or without" testing method used to evaluate whether new campaign elements are improving or diluting overall performance.

{What is campaign pacing in cannabis programmatic advertising?}

Campaign pacing is a measure of whether a programmatic campaign is on track to deliver its full planned impressions and spend by the end of the campaign flight. A current-state pacing check compares actual impressions to planned impressions. A more useful forward-looking pacing formula projects where the campaign will land at flight completion based on current delivery rate: spend to date divided by days elapsed, multiplied by total campaign days, divided by planned spend. A pacing projection below 100 percent signals that adjustments are needed to avoid under-delivery.

{What is the with or without optimization method?}

The with or without method is a framework for evaluating new placements, audiences, or creative elements within an active programmatic campaign. When a new element is added to a campaign, the team compares overall ROAS with the element included against ROAS without it. If the new element improves blended ROAS, it is worth scaling. If it dilutes performance, it is removed. This approach replaces subjective judgment about whether something is working with a data-driven comparison that measures actual impact on campaign-level revenue efficiency.

{What is CPA in cannabis marketing?}

CPA stands for cost per acquisition and measures how much it costs in ad spend to generate one desired customer action. For cannabis brands, that action is most commonly a purchase, but it can also be defined as a lead, a newsletter subscription, an email capture, or an add-to-cart event depending on the campaign objective. Tracking CPA by channel and placement helps cannabis marketers identify which parts of a campaign are generating conversions most efficiently and allocate budget accordingly.

{How does average order value factor into cannabis marketing measurement?}

Average order value measures the typical transaction size generated through a campaign or channel. For cannabis brands, tracking AOV alongside acquisition volume helps identify which traffic sources bring in higher-spending customers, not just more customers. A channel that delivers more conversions at a lower AOV may be less valuable than one that delivers fewer conversions at a significantly higher AOV, depending on margin structure. Incorporating AOV into campaign reporting gives a more complete picture of revenue quality rather than just conversion quantity. ]