Puff, Puff, Post: Cannabis Direct Mail Tactics for Customer Acquisition

{}Introduction

Jake Litke: I am your host, Jake Litke, today we have Andrew McGraham on, and I'm just going to read his bio out here, because there are a few things to cover. He is the founder of Canna Direct Mail, an MBA graduate from USC Marshall School of Business, Andrew is a seasoned marketing executive who helps brands create impactful campaigns by leveraging the latest technologies and approaches. Andrew started his career in direct response advertising, for the Wunderman Thompson agency, while there he oversaw large-scale national direct mail campaigns for clients such as AT&T and DuPont. Andrew then spent over a decade in entertainment marketing, including roles as head of interactive marketing at Magnolia Pictures, they make some good films. Andrew brings extensive experience in direct mail, interactive, and branded acquisition strategies to cannabis marketing teams across the country. Okay, so, now that we've got that covered, welcome — I'm excited to talk to you today, because I am not a direct mail expert, we do digital marketing, targeting people on their phones and desktops, but I'm excited to learn what you've been doing specifically for cannabis brands. I'd like to start by asking, why did you decide to do this, as someone who's been in the cannabis space for a while, there's a lot of challenges — why did you start, how did you get started, and what were the initial hurdles you faced, because there's always hurdles in cannabis?

Starting a Cannabis Direct Mail Company From Scratch

Andrew McGraham: First off, Jake, thanks for having me on, much appreciated, looking forward to this talk. So, as you talked about my background, I started in direct response advertising, so I had a pretty deep background in direct mail, then had extensive experience with digital marketing at Magnolia Pictures, and about five years ago I really started paying attention to direct mail pieces I was getting in the mail, and I noticed a lot for big consumer brands, like Casper and brands like that, and I said, these guys can advertise everywhere they want, but they're using direct mail, and it works for them as an ROI — so I said, well, why do I never see ads for cannabis companies? So I looked into it, spent about a year, talking about initial hurdles, I had to figure out if it's legal, would the USPS even mail ads for a cannabis company if it's federally not legal — and I overcame all those hurdles, figured out the legality, and then launched the company, and, to be honest, right out of the gate it was very successful, I mailed to much of Southern California multiple times in that first year, we were one of the early companies in this space, and really were able to have a lot of success, and it's kind of grown from there, it's been really exciting.

Jake Litke: That's great, that's somewhat of an anomaly for people coming out, especially in marketing, to have initial success — that speaks to the channel, and, obviously, your expertise now. You did direct mail for large companies in the past, so you had some experience in terms of how you craft a message and what you put on it — I get lots of mailers, they still get value, that doesn't seem to ever go away — what were the types of tactics you'd seen working with large brands that you immediately brought over, in terms of best practices, for someone who wants to send stuff to people's houses?

Design Best Practices: Size, Format, and Offer

Andrew McGraham: A couple of things — one is, don't bury the offer, make the key messaging large, make it impactful, make it on both sides of the piece, so, basically, you have a couple of seconds to get somebody's attention. In addition, make the size of the mailer significant, so it's hopefully larger than other pieces of mail people are getting, so it's something they'll immediately pull out of their mailbox and look at — that's why we really guide our customers towards a larger format, 4 and a quarter by 10 and a half, so it'll be larger than bills, it won't get hidden in the mail, it'll be on a nice thick piece of paper, glossy finish. We encourage customers to use appropriate imagery, product shots, and make it very clear it's for cannabis, using the term "cannabis," and making it kind of large and a part of it — you don't want to be too discreet in a general mailing, you want people to see this, recognize it, see the offer, and act.

Jake Litke: That makes sense — are there, and I'm going to translate a lot of this from what I know from digital, offers certainly make a big impact, and we've even found, because we run hundreds of campaigns, some differences just on the offer itself, on engagement, a 15 versus 20 versus 30 versus whatever crazy discount people come up with — have you seen enough data to give people guidance, if you're going to do an offer, what's an appropriate percentage that gets better engagement than others?

What Kind of Discount Actually Works

Andrew McGraham: It definitely depends on the area, and the level of competition around your store — if you're in a super competitive market, you're going to have to have a stronger offer, if you're in maybe a more rural area, with not a lot of stores, you can get away with a lower offer. But, definitely, the ones that seem to work the best are percentage-offs, whether that's as low as 15, we have people that go up to 40 percent, especially for a new customer. We've had people try to do a free joint, or very low monetary amounts off, and those don't have the same level of engagement — a free joint is almost worthless, and customers kind of know that and recognize it.

Jake Litke: Okay, that makes sense — all right, so let's talk about targeting. You've got a very real cost to putting something in the mail, printing it, all of that, it's a little different than digital, there's no real physical cost, so you can put out a lot more of them from a scale perspective — what are the techniques you use, and work with your advertisers on, in terms of who do we want to target, and who's going to be more likely to engage?

Targeting: Cannabis User Lists and Demographics

Andrew McGraham: We can use very broad targeting across various demos, which is a good thing, we can try a lot of different tactics — there are direct mail lists for anything you can imagine. One of our most successful tactics, we have a data partner that provides 21-plus cannabis user lists, they go out once a quarter, determine cannabis use in the past 60 days through a survey, and then model those people to a broader population, matching about 1,700 attributes — we've had a lot of success with this, it's very similar to a lookalike profile that would be done in the digital space, and this data can also be used in digital campaigns, so we've had a lot of success with this, people were verified to be 21-plus through government data, which is key as well. Another tactic, we can look at first-party data and build custom lists for customers, we look at their top-performing customers and build lists off of those people, and, in addition, there are just thousands of lists you can use outside of those things — I have a client right now that's mailing around retirement communities in New Jersey, doing 55-plus mailings around those spaces, senior citizens is the fastest-growing cannabis segment right now. In addition, we've done Spanish-language creative directed to Spanish speakers, we've done new movers — if you're a dispensary, and a new mover comes into your community, that's a key person, you want to get that person before they go to another store. We've done mailings in the medicinal market around people with chronic conditions, and that's been successful as well, and then we've also done mailings for heavy video game users — the alignment between video game users and cannabis use is very, very high, and that actually performed really well too. So there are a number of opportunities to work with — I'd really, at some point, like to get a customer to go after soccer moms with a very specific creative in that space, with edibles or drinks, because I think that could be exciting, and something that would work well that nobody's tried yet.

Jake Litke: Maybe that'll calm down the soccer-parent friction that happens, mellow them out, it's just a game, it's going to be okay, they're only eight years old, it's not a big deal.

First-Party Data and Matching Addresses

Jake Litke: So you mentioned first-party data — what does that mean exactly? Obviously, dispensaries get different amounts of data from their customers, some are collecting depending on the state and the rules, and what they're collecting — sometimes people have addresses, but frequently they just have an email address or phone number, how does that work, if you just have email addresses?

Andrew McGraham: Our data partner can match email address, phone number, to a physical address, with a very high success rate — that's kind of our process, and we're very lucky to have a good partner in that space that's able to do that.

Retirement Communities and Niche Audiences

Jake Litke: You mentioned retirement communities — the city I live in, Walnut Creek, in California, doesn't have any dispensaries, and there's a rather large retirement community called Rossmoor, and the Rossmoor cannabis community is actually suing the city right now, to get them to allow cannabis licenses, because they don't really want to do delivery very much, and don't necessarily want to drive out to one of the surrounding areas — it's definitely a big community for sure.

Andrew McGraham: No, it is, and we've had a lot of success with it, it's a group where direct mail works very well, they're used to it, they've experienced direct mail messages for their entire lives, and they're very responsive to coupons and offers too.

Jake Litke: What's the breakdown for your clients in terms of how many are putting a QR code or URL with a specific offer versus people actually just walking into the dispensary with the card — kind of a breakdown of online versus offline?

Online vs. In-Store Attribution

Andrew McGraham: I'd say it's about 50/50 right now, a lot of people like to collect them in-store and measure it that way, but then there's also a number of clients using QR codes and measuring web traffic, and pre-orders, or delivery customers engaging with their delivery service online — so it varies, but we see both tactics, and we can also look at first-party data, match it to the mailing list, to see who came in during a 60-day window after the mailing.

Jake Litke: Oh, so you can do a post-campaign look at the POS system and say, these people came in, and we know we sent them mail.

Andrew McGraham: Yep, and then we can see what those people were buying, and build custom lists off that, going into the future — "this is a valuable customer, they're spending a lot of money, let's build lists off this group," or "these people are coming in and buying flower or vapes," and we can tailor messages to those lookalike profiles too.

Typical Response Rates and ROAS

Jake Litke: There's probably a range you see of ROAS, right — for us, obviously dispensaries very much care about how many dollars they're putting out, how many dollars they're getting in — we see digital campaigns on average kind of somewhere around 5x, it goes up and down depending on what else is happening — do you have a range you kind of publicly speak to when talking to a new advertiser, low end and high end, dollars-in versus orders-driven?

Andrew McGraham: It's definitely similar to what you mentioned, in that 5-ish area, and we know we're competing against not just other direct mail companies, but all other types of advertising mediums out there, so we make an effort to really keep our costs down, and use our economies of scale of printing and techniques to limit postage costs, to really make sure it's a competitive vehicle compared to other tactics out there.

Jake Litke: Does that mean you get economies of scale because you're operating at a bulk level, and the individual advertisers are getting the benefit of that?

Andrew McGraham: Yes, and that applies to both the printing and the mailing.

Creative Turnaround and the Onboarding Process

Jake Litke: What's the turnaround time — let's say I'm ready to go, let's do a campaign, and let's assume the creative process itself, that's sometimes the biggest delay in a campaign, is getting the creative done — is that out of your hands, or do you do that for them?

Andrew McGraham: We do it for some clients, most people have their own design teams in-house, or working with them on other creative, so I'd say about 90-something percent are submitting their own creative to us, we help guide them in terms of the process, what it should look like, placement of things, offers, those kinds of things.

Jake Litke: So, let's say I've got my creative ready to go, I come to you and say I want to send these mailers — I'm assuming there's an intermediate conversation of who do you want to send them to, how big of a radius — let's say I've opened a new dispensary, the first one in Walnut Creek, that doesn't exist, and I come in not knowing anything about mailing, what are the first steps you walk me through, in terms of helping me be successful?

Andrew McGraham: We look at your store locations, figure out what kind of list you want to mail to first, and what kind of mailer you want to send — we look at your store locations, our minimum quantity is 10,000 mailers, so we'll tell you what radius it takes to hit those 10,000, and give you a sense of how you can scale beyond that. Then we walk you through the creative process, you submit that to us, we turn around the data for you, we turn around a proof in about 24 hours, and that's what we'll actually go to print with — from that point to being in homes is, depending on where it is, roughly about three weeks, could be as little as two, we're kind of beholden to the USPS and their schedule and how they deliver mail, seasonally there are impacts there, but roughly about three weeks. We do have a lot of rush campaigns, I'm sure you do too, it's cannabis, there's some groups that plan really far in advance, and others are like, "we got to hit this in two weeks," and we can do it, we can move real fast if the stars align, and get things into homes pretty quickly.

Jake Litke: Okay, great — I'm going to ask some of these questions, we've got some coming in, I'll bring them in as they come up. We've got a question from Neha — for direct-to-consumer mailer, are you using cold traffic, or targeting people who've purchased before? This gets into segmenting, coming from the dispensary itself.

Live Q&A: Cold Traffic vs. Existing Customers

Andrew McGraham: I think the question is, are we going out to a new set of customers — or the question said "cold traffic," which I guess would be everyone, and we're not really doing that, but there's a question about purchasers, do you have instances where you send something different to existing customers versus someone who's never been a customer?

Jake Litke: I haven't asked you this question, let's walk through how you approach segmenting those.

Andrew McGraham: Our recommendation for interacting with existing customers is to actually send a different type of mailer — we prefer to send a folded piece, the outside would be pretty generic, just a logo, a little tab on top, not folded completely in half, and that tab will have the offer on it, some kind of CTA, and then inside will be the broader messaging. The reason we do that is, not all of your customers live in homes where everybody knows they go to cannabis shops, so you don't want to upset people, it's a more discreet way to interact with them — we've had a lot of success with this kind of mailing, it costs a bit more than our standard 4-and-a-quarter-by-10-and-a-half approach, because it's a bit more involved, but they perform really well, and it helps avoid any uncomfortable situations with existing customers who might be upset you're sending something to their home.

Jake Litke: So you need to include some plausible deniability.

Andrew McGraham: Yeah, yeah, "I don't know why we got this, they must be mailing to everyone."

Dynamic QR Codes and Variable Printing

Jake Litke: All right, we have another question, specifically about QR code tracking — do you do dynamic QR codes, is it possible to print a unique code on each mailer, so you know who it was sent to?

Andrew McGraham: Yes, you can do all of that — when we're using our data partner, and matching the send list to the POS system, that works in the same fashion too.

Jake Litke: So, just to be clear, let's say I'm doing 10,000 mailers, I can effectively have 10,000 different URLs in the QR code?

Andrew McGraham: Yeah, variable printing, it adds to the cost of the piece, but yes, there's variable printing you can do.

Jake Litke: Okay, that gets pretty granular, then, if someone clicks on it, you know this address is the one that engaged with the mailer.

Mailing Frequency and Campaign Scale

Jake Litke: How do you do sequential messaging, in the sense of, how many of your advertisers are sending something every month, every couple weeks, once a quarter, what's a common frequency?

Andrew McGraham: It really depends on the client — I have delivery customers who'll do a mailing every two weeks, but they're hitting different areas, they service a large area, so if you're trying to target the very same population, we'd recommend spacing those out by probably once a quarter, but if you're in a dense area, the list is very robust and large, so you can mail for the cannabis users list every two weeks or every month, and not hit the same people twice, with a pretty reasonable budget.

Jake Litke: In terms of scale, you mentioned 10,000 pieces is the minimum — what would you say the average size is, and what's the largest one you've ever done, in terms of one large batch?

Andrew McGraham: I'd say the average is in the 25 to 30k range, and the largest is in the hundreds of thousands at once, and you do get savings for something like that — we also have clients who plan things out ahead of time, for the next couple of quarters, and commit, and say, "we're going to print 250,000 or 500,000 today," and then send batches out over the following months — if you're printing everything at the same time, that's where you really get good volume savings.

Jake Litke: Oh, so you can print the whole batch at once, kind of bank them, and change your mind on what you want on the mail art?

Andrew McGraham: Yeah, that way, but we do, especially with large MSOs doing annual budgets, being a little more forward-thinking, knowing what they're able to spend over the remainder of the year, they're able to do that process and be okay with it.

Personalization and Anonymity

Jake Litke: That makes sense — we've got a question about how you personalize if you print in bulk, we mentioned variable printing for QR codes, and we also talked about maybe wanting to keep things somewhat anonymous — do you have customers putting someone's name on the mailer, like "hey Bob, we love you, come back"?

Andrew McGraham: Not actually on the mailer itself, in terms of "hey Bob," but it'll be in the address section, addressed to a person — we have some customers who don't want to do that, and just keep it generic, "resident," or whatever, in the address box, but that can provide some cover for you, verifying that this is a 21-plus person receiving the mail, so there might be some advantages around that with cannabis control boards.

HIPAA and Medical-Only Markets

Jake Litke: Great, got another question here from Chad Arundel — a while back we used to work together at a mobile ad network — he's asking, does Protected Health Information, PHI, compliance play a role in how you're able to target, especially in medical-only states, one could argue that's a medical customer, how do you deal with that?

Andrew McGraham: We've done some campaigns for medicinal-only customers, and for their existing customer base, and we have to abide by HIPAA rules with something like that — we actually use a printer that's HIPAA-verified, with secure data transfer, so all their information is protected, but, yes, that does come into play, especially if you're dealing with their first-party data, which is their actual patients.

Jake Litke: Do you ever run into situations where people just choose not to use their first-party data, because they're concerned from a legal perspective, or just don't like doing that?

Andrew McGraham: Yeah, yeah, and we have a number of customers who aren't comfortable sharing that information, and, honestly, our general 21-plus cannabis user list performs extremely well, so it's not even required, it's just nice to have, and you'll get a slightly better response, but you'll still get a very strong response just with the more general 21-plus cannabis user list, that's not modeled off first-party data.

Typical Response Rates

Jake Litke: We talked a little about ROAS, but just from a high-level aggregate data perspective, what's the percentage engagement rate for a mailer, either online or walking in?

Andrew McGraham: It can be as high as 10 percent, so it can be a really effective tactic that rivals a lot of other advertising mediums out there, and we have clients who are just blown away with the initial response, and then bring us into their annual marketing budget, and we're doing mailings every two weeks.

Combining Direct Mail With Digital Campaigns

Jake Litke: Okay, great, and now I want to talk a bit about something we've discussed in the past, we haven't really executed it, but we have the technical capabilities to do it. There are two big categories for us as a business — one is getting cannabis companies to go more into video advertising, there's a lot of opportunity there, it's a less crowded space, we now have channels that will take cannabis ads, but it's been a struggle to get advertisers to produce the videos, it's not as easy as just getting a banner. But, back on topic, the other thing is combining physical direct mail with a digital campaign, because we work with the same data partner you do for some of our audiences, so there's a Rosetta Stone there — you've got a customer, you're going to send them something in the mail, and we can be sending display ads or video ads to the same household, before, during, and after a campaign, to support it.

Andrew McGraham: I know we've talked about it a little, and I think this is going to be the year we're really able to take that to the next level, because everything should be connected, it makes sense, we're both using the same data provider — obviously there's a bit more cost that goes into sending direct mail pieces, so we can do an initial wave, bring people in, and you can do follow-ups with either the people who didn't come in or the people who did, and send different unique messages to try to motivate them to either come back or come in for the first time.

Expanding Beyond Cannabis: Ketamine Clinics and Local Businesses

Jake Litke: That makes sense — your name is Canna Direct Mail, so it's obviously right on the cannabis button — do you find, for us, one of the things we found is, we work with agencies a lot that need help supporting cannabis, they get a client because someone opens a dispensary, and they come to us with cannabis clients, but then the next question is, "we have these other clients," like an auto repair place, or a bank, or a restaurant — we absolutely, it's the same machine, we can run campaigns for anything — have you run any stuff for non-cannabis clients that have come in at all?

Andrew McGraham: Yes, a few local businesses we've done campaigns for, and then another area we've been focusing on is another somewhat regulated industry, ketamine treatment facilities, that's been a big push for us and will continue to be this year — we try to focus on regulated industries where we have expertise and can provide great value. For ketamine treatment facilities, same kind of process, but it's more aligned with the medicinal space for cannabis, where there are HIPAA rules involved, and you have to be careful about patient confidentiality, but we're able to target very specific lists, there are great lists for that around people who may display anxiety or depression, or targeting veterans for PTSD, so there are a lot of avenues we can explore there too.

Jake Litke: Curious, a little bit of a sidebar, but the ketamine treatment industry as a whole, I don't know a ton about it — is it only in certain states, how large is that market, what does that look like?

Andrew McGraham: We've done campaigns in a number of states, it's pretty broad, it's considered kind of an off-label treatment — basically ketamine is a drug used in medical procedures all the time, but this is an off-label application — I've actually gone into a facility here in Los Angeles, it's a full medical facility, they have an anesthesiologist administering it, it feels like you're going into a doctor's office, and, in some cases, insurance pays for it, but not a lot, so it is a very expensive treatment, and our customers are always seeking people over 100k household income — it's been successful so far, and a nice offshoot, but we aren't focusing on anything else in the psychedelic space, because it's very questionable about the legality of those things, so we try to keep it somewhat safe with what we do.

Jake Litke: Are there any other ways you've worked with your dispensary customers on the cannabis side, to help them better leverage — because you're helping them with first-party data, right, and once you start using first-party data, that opens up some new thinking and strategies — what are some of the other ways, if any, you're helping make people aware of what they can do with their first-party data?

Andrew McGraham: I think one avenue, this year, is really working with people like MediaJel, combining efforts, and showing that we can use this data to build lookalike profiles and then do direct mail or digital campaigns, and really segment well — you can send specific messages for the soccer moms who might be buying more edibles and drinks, or the younger consumer who might be more interested in flower, you can do different deals for heavy users versus lighter users — there's a lot of avenues to explore once you dig into your data and figure out how to reach those people efficiently.

Monetizing Dispensary Bag Inserts

Jake Litke: Do people ever use the same sort of mailer creative for doing bag inserts, is that a thing?

Andrew McGraham: Yeah, I had a client recently, and I think this is fairly common in cannabis, where they'll have a successful small business, whether that's a pizza chain or whatever, and then they open a cannabis store — I have a customer in Illinois, we did some flyers, they did a mailing, and then we had some leftover, because it's never a precise science, you're not printing exactly what they need, there's always a bit of an overrun, and we sent those to them to insert into their pizza deliveries, so they were driving their pizza customers to their cannabis store. And there's another approach we're doing, essentially helping dispensaries monetize that real estate they have in dispensary bags, for non-cannabis brands — I saw with, like, a subscription box package, there'll be inserts in there for other brand partners paying for that real estate, and I hadn't seen any ads for, say, Carl's Jr. or whatever, in a dispensary bag — so I have a number of partners lined up, and we're going to be launching it in the coming months, essentially selling that ad inventory in dispensary bags for non-cannabis brands, things like fast food, video games. The challenge with that is there's obviously a big stigma around cannabis, and some brands can get scared about working with cannabis brands, but that's going away in a number of places, people are getting more comfortable, experimenting with special campaigns or products around 4/20, that's a big thing you see out there, and there are a number of big companies interested in reaching this market — these are customers most likely going to be consuming cannabis pretty soon after getting that bag, and you're getting a message to them, "order a pizza," "get a burger," "use Postmates," it's a very captive, targeted audience that can work really well. And then I've also partnered with a street team company in LA, we're doing an initiative next month where we have a large streamer already signed up to help build a mini booklet for a series they have going, with cannabis brand partners coming in, helping distribute some of these booklets in their dispensary bags, in exchange for some free real estate in this booklet that's going to be with street teams outside LA, for the course of a month, being handed out to about 20,000 to 50,000 people — so there's a lot of interesting partnerships that can happen in this space, and people are now exploring ways to work together, it's exciting.

Jake Litke: We have a lot of conversations with our advertisers about remembering that your cannabis consumer, that you're so focused on that they consume cannabis, has a whole rich life outside of cannabis, and participates in all kinds of different activities and interests — finding where those intersect can be a pretty powerful strategy.

Andrew McGraham: Yeah, and we just think this is a great way — we know, in some markets in particular, it's hard out there for cannabis companies, and this is a way to really have an additional revenue stream coming into your store, and also give your customers relevant offers, so it's not just going to be a bunch of trash, it's things highly connected to the synergies of a cannabis consumer and an extra brand, providing real value with the offer.

Educational Content in Mailers

Jake Litke: Have you seen — because frequently we'll drive traffic for cannabis companies, especially DTC ones, to educational material, because there's still a big education gap with lots of people about what cannabis is, how it works — how often are your advertisers trying to include some level of educational tidbits in the mailer, is that a thing that happens?

Andrew McGraham: That definitely exists, they'll talk about the effects of different strains or whatever, but I'd say most customers are really more generic with the messaging, it's more about getting somebody in the store with a very strong offer, and not crowding the piece with too much text — it's really just, throw it out there, make it large and in their face, and then get people in, and you can educate customers when they come into the store.

Segmenting a Single Print Run

Jake Litke: I'm bouncing around here, bear with me — back to dynamic or variable printing, let's say I want to do 20,000 mailers and I have five different segments, a senior segment, a gamer segment, a power-user segment, am I able to take the 20,000 mailers and break that up into five different creative executions and send those to different people?

Andrew McGraham: Yeah, for sure, you can do that, that's an easy one, trying to come up with harder questions for me.

Jake Litke: We do have questions coming in from Zoom, so maybe we can find some harder questions for Andrew, since he seems to have easy answers for all of mine.

What Makes a Mailer Succeed

Jake Litke: All right, I'll ask a bit more about things you've seen that have been very successful — what are some examples of campaigns you've run that really knocked it out of the park, and in that cohort, are there common threads in the types of creative or offers people could use for inspiration?

Andrew McGraham: When we're first onboarding a customer, we'll send them creative examples of past campaigns we like, that we think performed well but also look good and check all the boxes — but it's just, making it big, impactful, easy to read on both sides of the piece, is key, you don't want somebody who just quickly glances at one side and doesn't know what it's for — we really hammer that home with our clients, it needs to be very clear on both sides what you're selling, and what the offer is, and what you want people to do with this mailer. Another thing is the imagery people use — we use a nice UV coating, so it has a very glossy, shiny appearance, and images really pop and look good, so you need to find, whether an assortment of product shots, or a beautiful shot of flower, something that really takes advantage of that, it helps a lot with engagement and getting people to interact with the ad. Our worst-performing campaigns are when somebody says, "no, no, we're just going to send it as is," and the offer is buried and small to read, and those don't perform well, so we try to guide people as much as possible — you're going to spend a certain amount of money just getting these things into a home, you want to make sure you make the best impression when you're there.

Pricing a Direct Mail Campaign

Jake Litke: Let's talk about spend — you don't have to get into specifics, but a general range, what are people looking at, price per piece, or however you price it, what's someone getting into if they want to do a minimum order of 10,000 mailers?

Andrew McGraham: The cost is around 61 cents a home, all-in, for 10,000 homes, at one creative, so it's $6,100, for the 4-and-a-quarter by 10-and-a-half-inch mailer. Costs vary — you can do a smaller piece, you can do pieces on 16-point paper, which is thicker, thinner paper saves you a little money, pieces without the UV coating save a little money, pieces half the size save a fair amount. We have some clients who do saturation mailings, essentially not using the 21-plus cannabis use list, but mailing to every home along a postal route, which is cheaper because the postage is a lot cheaper for something like that — but those can be very effective, especially around new store openings, cannabis use is pretty broad. Our approach for that, to provide some degree of targeting, is we look at zip codes, and we have data showing cannabis use at the zip code level, from a company called Distillery, and we're able to find the right areas to mail around your dispensary. The way we make sure those are 21-plus, the Census does an annual survey called the American Community Survey, that gives you age composition for a zip code, so, in states that require it to be 21-plus 100 percent, you can't do this tactic, but if they say it's 85 percent or whatever 21-plus, you're able to figure out areas that can meet that.

Compliance and Imagery Rules by State

Jake Litke: We have different rules in different states, there are literally thousands of laws in the US around digital advertising — for digital, you can show different things in different states, from a creative perspective, some states you can show a picture of flower in a digital ad, others you can't, almost nobody wants you to show pictures of consumption, and sometimes you can use product photography and sometimes you can't — how does that vary for you, or is it not covered, is it kind of a free-for-all, from the actual imagery you can use?

Andrew McGraham: Same rules that apply to other advertising tactics would apply to direct mail, to be honest, direct mail isn't specifically called out in a lot of rules, we just go by the guidelines of other advertising tactics. In terms of avoiding certain imagery, for the most part, in a lot of states, we've been fine showing flower and product shots, it's more the basic things, like nothing appealing to children, which could be anything from a cartoon-type character, or, some states have even had issues with certain fonts people use. The other thing is a lot of states will have specific warnings that need to be put on ads, and we encourage clients to always put "offers for people 21-plus," even if we're sending to a 21-plus person, just to cover yourself — the other thing is having opt-out messaging, creating an email so people can opt out of future mailings, is another big thing to include. And some states also don't allow couponing and offers — Massachusetts and New York are big ones for that, we do a lot of mailings there, and do them very successfully — there are some workarounds, in Massachusetts you're allowed to advertise pricing, as long as it's matching what's in the store, so you can advertise a certain price and match that in the store for everybody, using that as an incentive for people to come in — you can also give offers for people in loyalty programs, encouraging them to sign up to get an offer, so there are different workarounds, and we help clients achieve that.

Jake Litke: Do you run into it, I know we have to deal with in some specific states, like Minnesota, Pennsylvania, and Florida, where we actually have to get the creative concepts approved by the government agency — do you have to do the same thing?

Andrew McGraham: Yep, we've done that in Pennsylvania, and they approved it.

Jake Litke: We did that too, and I think we were dealing with the HIPAA rules there, it was medicinal, so it was a bit of work to navigate everything.

Andrew McGraham: The Pennsylvania control board had no issue with a direct mail piece, or that tactic, or our approach to measuring 21-plus, or any of that stuff.

Jake Litke: Yeah, the bummer is when that person goes on vacation though, which has happened to us, trying to run a campaign, and it's "back in two weeks."

Andrew McGraham: I didn't have that happen.

Jake Litke: Never a shortage of surprises — I'm sure alcohol companies aren't having to approve all their ads for this stuff, it's insane, special treatment.

A Scratch-and-Sniff Mailer

Jake Litke: What's an example of some potentially more creative things people have done with their mailers, like scratch-and-sniff, tear-off coupons, cutouts, has anyone gotten creative like that?

Andrew McGraham: We're actually working with a customer doing a scratch-and-sniff — I thought I made that up, legitimately, they're doing that, they're a vape company, and, when we work with products, a lot of times we'll encourage them to partner with a dispensary, and we'll figure out an area around that dispensary, and there'll be a co-op relationship where each contributes to the ad — but, yeah, they're doing a scratch-and-sniff, my first one.

Jake Litke: What are they putting in it, is it like a raspberry, what is it actually?

Andrew McGraham: It's more a fruity flavor — my recommendation to them was, do not have this smell like cannabis, because we're still using a federal agency to deliver these pieces of mail, so it's like orange and strawberry.

Jake Litke: But, legitimately, they're doing a scratch-and-sniff, and I thought that's genius, a good way to stand out.

Andrew McGraham: Some people do perforated coupons too, that's another aspect, it'll add a little cost, if you want to put coupons where you're requiring people to bring the whole thing in, or cut it out along a dotted line, that's standard cost, but when we have to start die-cutting things, there's an added cost. But we do have customers who like that tactic — mainly, the most out there was that scratch-and-sniff, a lot of the creativity is more about the placement of content, whether, instead of going horizontal, using a very large image going vertically — we had a customer use a large, beautiful shot of their flower that went vertical across the whole 10 and a half inches on one side, which was really impactful and stood out.

Jake Litke: That's cool — have you seen anyone do, with some of the generative AI now, you can say, "this is my QR code, I want it to look like a snowy mountain," or whatever?

Andrew McGraham: No, we have not had anybody do that.

Jake Litke: I'll recommend that though, I think that would look cool.

Closing Remarks

Jake Litke: All right, great, well, we're running up on time here, we've answered some questions, if anyone has any last questions, speak now, while we're wrapping up — what's a good way for people to get a hold of you, if they want to ask questions, or see if it would be a good fit?

Andrew McGraham: My email is andrew@cannadirectmail.com, and our website is cannadirectmail.com, two best ways — you can also find me on LinkedIn, under my name, Andrew McGraham, I'm the only one, there's not a lot of McGrahams out there — although someone did connect with me with my exact name recently, it was like another Jake Litke.

Jake Litke: There's more than one of me out there, I'm pretty much directly related to and know whoever is named McGraham.

Andrew McGraham: So you'll find me under Andrew McGraham, I don't think there's another one on LinkedIn, and you can just DM me, I pride myself on turning things around very quickly, being super responsive, and, small business, we work long hours, and each client is vastly important to us, whether it's a small mom-and-pop or a big MSO, we treat you guys all the same.

Jake Litke: That's great, yeah, we also have a range of customers, people with one small store in a rural area, to large MSOs — and I can attest, your responsiveness, in the handful of email exchanges we've been on, you're Johnny-on-the-spot with the response.

Andrew McGraham: Yes, thank you, absolutely.

Jake Litke: All right, well, thanks everyone for taking the time to listen to us talk about mail, which was an interesting topic for me, I learned a lot, coming from a primarily digital background — this has been a fun episode of Cannabis Marketing Live, I'm Jake Litke, your host, CEO of MediaJel, if you have questions about digital advertising, I can be found at jake@mediajel.com, pretty simple. Once again, Andrew, thank you for your time.

Andrew McGraham: Thanks, Jake, I appreciate it, thank you everyone for paying attention, bye, cheers.

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