Not too long ago, DTC brands were on a tear. The Consumer Packaged Goods (CPG) industry grew at an incredible rate during the 2020 pandemic lockdown – to $933 billion up 10.4% from the previous year. And it wasn’t just the big brands who saw that growth, boutique CPG brands reported revenue growth up 18.3%, compared to 7.5% from large CPG brand manufacturers. But recent changes in digital marketing, along with supply chain issues, have made 2022 more challenging for startup DTC brands. So, given the squeeze they’re experiencing, what CPG marketing trends will give them the most bang for their buck?

 

 

CPG and DTC Brands with Purpose

This first one is a bit of a misnomer because, realistically, purpose-driven CPG brands are an inside-out job, not simply a marketing initiative. And yet, for those CPG startup brands who can find an authentic purpose, the activation opportunities are endless. This isn’t so much a CPG marketing trend as much as it is a brand proposition.

47% of consumers say they’d switched products or services after a company violated their personal values. 

Consumers are increasingly demanding sustainable and natural products in everything from beauty to wellness to food. Searches for “cruelty-free” products increased by 400% between 2012-2022. And it isn’t just consumers. 86% of employees want to know they work for organizations with an environment, social, and ethical business practices (ESG). While we typically think about large brands doing most of the heavy lifting on ESG initiatives, startup CPG brands can create a bigger splash, reduce operational expenses, and increase customer loyalty by doing their part as well.

CPG PR & Influencer Marketing

TV ads are still the first choice for legacy CPG companies, and that’s because they know becoming a household name takes repeated exposure. But ambitious startup brands without the multi-million dollar ad budget are finding excellent success with CPG PR and even seasonal sprint PR programs. From wellness products to beauty products, CPG brands know the value of trusted recommendations, like magazines.

Trust isn’t a CPG marketing trend – it’s a requirement. 

And because of the importance of the trust factor, startup CPG brands are also turning to influencer marketing. But they’re doing it most often with micro-influencers (between 1,000-10,000 followers). While micro-influencer campaigns are considerably more effort to manage, the results can be impressive because micro-influencers typically have higher conversion rates and that’s because they are more relatable and trustworthy than celebrities.  And it isn’t only CPG brands finding success with micro-influencers, consumer tech brands are doubling down on influencer campaigns too.

 

Product Personalization

Consumers are opening their pocketbooks for DTC startups that offer personalized products; 71% of consumers expect personalization. In some cases, consumers are willing to give up product effectiveness to a more tailored product. From personalized product recommendations to celebrating milestones, today’s consumer expects even CPG startups to know them as customers.

Millennials, already spending more on self-care than any other generation before (2X more than baby boomers) are driving the demand for personalized CPG products. Already, 70% of the top DTC subscription brands use product quizzes to help personalize the customer experience. Not only does this increase consumer loyalty, but it provides a pleathora of data that can be used in future retargeting and PR campaigns.

Millennials are also driving another CPG trend: CBD. While 28% of consumers already use CBD, 56% of millennials do. They’re leading the charge that fuels the 4X growth in CBD products projected between 2020-2026. From pets to skincare, CBD is still a very in-demand product.

 

One thing is for certain, CPG startups aren’t going away. The internet has supercharged the consumer’s ability to find and purchase products – and it means CPG products in every category have more competitors than ever before. Brands that invest in savvy CPG marketing and PR will have the upper hand with customer acquisition and loyalty. And that means they’ll have more longevity than ever before.

What is a Purpose-driven strategy? It’s the natural evolution of four converging cultural changes, the first is when social, cultural, and environmental issues became more visible and urgent, followed by consumers who expect brands to connect with nonprofits or social impact, driven by a lack of confidence in government to solve big problems, and finally, institutional investors evaluating environmental, social governance (ESG). Purpose puts a movement and impact first. Purpose-driven companies understand when society, the environment, and our collective well-being are doing well—businesses do better too.

Purpose-Driven Strategies have Three Key Pillars:

Employee and Systemic Engagement, Externally Virtuous, Meaty Measurable. 

These pillars of purpose require a company to be engaged in a systemic way, are independent of sales, and the impact should be both audacious and measurable. While purpose-driven strategies may give way to recruiting advantages, brand valuation, and competitive advantages, those are not the driving outcomes behind purpose. Purpose-driven PR is not the driving motivation behind purpose-driven implementations. The defining commitment of purpose is when it takes precedence over profitswhen internal culture is SO strong, so empowered, that decisions at all levels are made with a purpose in mind.

These Purpose Driven Strategy distinctions are important—because consumers—AND Investors are savvier than ever: They see through cause marketing campaigns with little authenticity. They’re alert to saying one thing, but doing another -greenwashing is so common it had a name.  Distrust in governments continued to decrease, while expectations of businesses continued to increase.

Purpose-driven strategies differ from the historical ways brands engaged with movements and nonprofits.

The Difference Between Purpose Driven Strategies and Philanthropy

The difference between purpose-driven strategies and philanthropy is based on the level of engagement the company commits to. Traditionally philanthropy was a broad term used to describe when a business contributed to a cause – anything from a social nonprofit to fundinga building or a program at a college. This type of giving required very little else from the company outside of the donation. Companies often used philanthropy to attract other monied investors or achive other strategic goals, but on the surface, having a philanthropic donation very often align with a marketing campaign or a PR campaign. Philanthropy also usually had very little to do with employees and customer activism or interests.

The Difference Between Purpose Driven Strategies and Corporate Giving

That gave way to CORPORATE GIVING –programs. The United Way is an outstanding example of corporate giving, this is when an organization encourages its employees to unite behind a single cause to create a greater donation scale. At this stage, companies get more involved as multiple departments such as PR, or HR to create systems and messaging around corporate giving. Companies whose employees give a lot receive recognition in the community. Corporate giving gave employees the opportunity to easily give to an organization; some corporate giving programs allow employees to choose a cause that was important to them, but in the most traditional sense, the executive team partnered with a nonprofit to create a corporate giving program.

The Difference Between Purpose Driven Strategies and Cause Marketing

CAUSE MARKETING are initiatives that tied sales to a corporate donation  – started in 1983 when Amex donated a penny to restoring the Statue of Liberty every time someone used their card—cardholders grew 45% and card usage increased by 28%. By 2013, 76% of consumers thought it was OK for brands to support good causes and make money at the same time. Before we knew it, there was a cause marketing campaign everywhere we looked, from pink ribbons to yogurt lids. Enterprises like Hersheys even had internal positions that combined marketing & corporate social responsibility.

If you’re interested in implementing purpose-driven strategies at your company, check out our free guide to implementing purpose. 

Cannabis Industry Branding Expert Patrick Toste Urges Cannabis Brands to Cherish Your Customers and Rethink Instagram

In an ongoing series this year, we’d like you to get to know some of the fantastic companies and people we’ve had a chance to collaborate with over the years. Our first interview is with an incredibly talented branding expert, Patrick Toste, co-founder of Seattle-based cannabis branding agency, Highopes. 

 

First, a little background about you: 

I’m originally from Rhode Island and graduated from California State University Long Beach with a BFA in Graphic Design. I’ve been designing for over 10 years and have had the luxury of working with both large and small brands nationwide. I am the Creative Director and Co-Founder of HIGHOPES Design. We are a creative studio that focuses exclusively on helping cannabis businesses nationwide unlock their potential through branding, packaging, web design, and marketing services. Our client list consists of over 30 cannabis companies that include Have A Heart, VidaCann, and Nuvata.

 

When did you first start working in the cannabis industry?

Upon moving to Seattle and experiencing the recreational cannabis market for the first time, I recognized an opportunity, and established a passion for, helping cannabis businesses build successful brands. I captured a handful of freelance projects with cannabis clients in Washington and California that I completed some branding and packaging work for. From there, I decided it was best to brand myself as a more established business than just a freelancer to provide more growth opportunities for myself and my clients.

 

What were you doing prior to the cannabis industry? 

Before diving into the cannabis industry, I worked as a designer on the in-house branding team at The Coffee Bean and Tea Leaf which is a nationwide coffee chain based in Southern California. In this position, I gained experienced managing and expanding a large brand through packaging design, digital advertising, in-store marketing, and other similar avenues. 

After moving to Seattle from Southern California, I decided to explore the world of advertising by joining the team at Publicis Seattle as a designer. At Publicis, I was able to work with even larger brands like T-Mobile and assist in a variety of nationwide digital advertising projects. However, my true passion for branding was established there when I led the design team on the rebrand of the locally world-famous radio station, KEXP. 

 

What lesson did you learn BEFORE cannabis that’s been most valuable in cannabis?

I’d say the lesson I learned before I entered the cannabis space that has been most valuable to HIGHOPES and our clients is the importance of knowing and understanding your customers. This methodology was something I gained over the years of working with larger, nationwide brands like The Coffee Bean & Tea Leaf, T-Mobile, and even Under Armour. I was able to realize how these companies were branded and marketing was significantly impacted by what their consumers think, want, need, and feel. 

Something I see all too often in the cannabis industry is a rush to bring a product to the market with the idea of targeting all consumers due to a scarcity mindset. Operationally I understand why these businesses feel this is the right approach, but in hindsight, they realize they do not know who their customer is and what delights them which results in an unfocused and unorganized brand direction. 

 

Is there a particular cannabis branding project you’d like to highlight? 

At HIGHOPES we are extremely proud of all the work we create for all of our clients, but I’d like to highlight the project we did for the California-based vaporizer brand, Nuvata. Nuvata approached our team with only a product and a vision so we assisted in establishing their positioning, messaging, branding, packaging, website, and marketing. Each branding and marketing effort we performed was put through the filter of the established strategy resulting in an immensely focused and concise brand for the market. With the Nuvata team’s help, we were able to identify and understand their target customer and then make every branding and marketing decision with the goal to bring them delight. The end result spoke for itself as within the first year they spread across the entire state of California and gained considerable brand awareness.  


What’s the biggest misconception cannabis companies have about branding? 

I think the biggest misconception about branding in the cannabis industry is that your brand is simply your logo when this could not be farther from the truth. In essence, your brand is actually not controlled by you but rather your customers. A brand is the opinion and feeling a customer has about your company based on a combination of your logo, products, packaging, website, marketing, social media, customer service, and so on. For that reason, cannabis companies can only strive to manipulate the emotional response of their customers with the goal of creating a positively recognized brand. 

 

In your view, what is the biggest branding challenge facing cannabis companies today? 

I think the biggest challenge cannabis companies face today when building a brand is the lack of beneficial advertising and marketing opportunities. As mentioned in my previous response, if your brand is simply the feeling a customer has of your company then it becomes very difficult to establish a positive association with customers when you cannot take advantage of the many ways of influencing their point of view. Additionally, customers cannot begin to create that strong bond with your company when you do not have the ability to raise awareness of your brand through advertising and marketing channels. 

What will be the biggest branding challenge in 2020? 

I believe the biggest branding challenge in 2020 will be establishing and solidifying customer loyalty. Most cannabis markets, both medical and recreational, are seeing a surplus of emerging brands which provides customers with an overwhelming amount of options to choose from. Additionally, product innovation has not kept pace with the number of companies entering the market leaving customers with a plethora of brands essentially selling the same product. These two factors combined prove the importance of understanding your specific customer and catering everything about your brand to what brings them delight. When that emotional bond is created with a customer it creates a sense of loyalty and trust in your brand that becomes invaluable to your success. 

 

What can companies do to alleviate their branding challenges?

When it comes to navigating the regulations around advertising and marketing in the cannabis space companies can look to outside-the-industry partnerships to alleviate these challenges. When a business understands their brand outside the lens of cannabis it allows the possibility of partnering with non-cannabis companies that share the same mission, vision, and values. Through these types of situations, cannabis brands can advertise and market indirectly through their partner to an audience that is similar, if not exactly, their type of customer. For example, Plus Edibles recently partnered with Casper for their line of CBD gummies as both brands can benefit from each other’s audience.

For establishing customer loyalty, cannabis companies simply need to take the time to understand who their target customer base is and either build or shift their branding to align with that audience. The more focused the ideal customer then the easier and more efficiently a brand can market to their wants and needs. Every move a cannabis brand makes should be filtered through the lens of their consumer. 

 

In your view, what is the most under-rated tool in the cannabis branding toolbox for cannabis companies?

I believe the most under-rated tool in the branding toolbox for cannabis companies is their brand website. This goes for cultivators, manufacturers, dispensaries, delivery, and ancillary businesses. With all the regulations surrounding advertising and marketing, your website tends to be the only platform where you can comprehensively communicate to your customer all the details of your brand. Additionally, depending on your business type, it tends to be a major channel in driving sales. For these reasons, the proper investment should be made in creating a website that is aesthetically attractive, engaging with content, and functions as a conversion tool for your business. At the end of the day, no matter who your customer is, people tend to take brands seriously that look like they take themselves seriously and your website is the perfect platform to communicate that. 

 

In your view, what is the most over-rated tool in the cannabis branding toolbox for cannabis companies?

Although still an important cog in a cannabis companies marketing plan, I believe the most over-rated tool in the branding toolbox for cannabis companies is their Instagram profile. Many of the cannabis brands we speak with feel that Instagram will drive a majority of their sales and the data just doesn’t support that theory. Don’t get me wrong, I think it’s very critical for cannabis brands to have a consistent Instagram presence to communicate credibility to customers but I don’t think it requires a premium-level investment. The customer journey from Instagram to purchase is long and complicated resulting in frequent drop-offs, especially for CPG brands. Additionally, with the algorithm changes in Instagram, it’s most likely that only a small fraction of a cannabis brand’s followers are even getting fed their posts. My recommendation to our cannabis clients is to invest in their Instagram as a way to raise brand awareness but don’t throw all their marketing dollars at it thinking it will drive sales.

 

What’s the BEST piece of cannabis branding expert advice you give everyone you work with?

Focus on a target audience. Your brand doesn’t need to alienate customers, but it needs to understand who is going to hear you the loudest.

Should your cannabis company double down on a marketing or PR campaign during 420? It’s popular for marketing firms and PR agencies to develop elaborate campaigns during this famous cannabis holiday. But is it worth it?

Maybe.

Who Are Your Cannabis Customers?

It depends on what kind of cannabis business you have and who your customers are. Today’s cannabis buyers aren’t ALL celebrating 420. Lots of people have to go to work, take care of kids, or have other responsibilities that still happen on that day – but they might view 420 promotions to stock up on their favorites, either before or after the day itself, but they might not be particularly engaged with a 420 PR campaign.

For example, if you’re a cannabis dispensary, your core customer is probably expecting discounts. But they’re also getting discounts from every other dispensary, and probably a few brands. Would you get more bang for your buck with a “prepare for 420” campaign, or maybe a “replenish your stash” campaign AFTER 420?

In 2021, the Eaze Cannabis Report identified several days that were bigger sales days than 420 – and a lot of those holidays are all but ignored by many cannabis brands, while journalists are still looking for holiday gift guide inclusions.

If you’re a 420 B2B company, you probably know better than to run any kind of promotion to your B2B cannabis customers – it’s a time of year that is particularly stressed for cannabis brands with consumer customers.

Can You Create a Splash?

What about CPG cannabis brands? A lot of cannabis brands will use 420 as an opportunity to create a word of mouth or cannabis PR campaign. But is that the time for your brand? If your idea shows an incredible understanding of your community, or is truly newsworthy, then it very well may be a great time to grab that coveted coverage, but it probably comes at a diluted share of voice against your competitors.

Does Your Budget Compete?

Is a 420 PR campaign even in your budget? If you don’t have a budget that competes with your aspirational competitor, then you might very well be better off developing an omnichannel or a PR campaign at a different time of year, that gives you a great share of the attention. Think about what Amazon did with Prime Day, and consider ways you could own a day when no one else is looking.  It’s one way you can make your PR budget go further.

Or you could look at 420 to open the conversation with a whole new audience through a guerilla marketing or word-of-mouth PR stunt that creates buzz.

Activism and impact are a core part of the 420 culture. 420 might be the start of a year-long purpose-driven initiative for one of the many social and cultural causes important to your community.

There’s no right or wrong answer to whether of not a 420 PR campaign is right for your brand. It’s more a matter of whether 420 fits in with your strategy.

 

 

Meet Allison Disney, for Receptor Brands, Allison serves as Partner and Business Strategist for cannabis brands who want to stand out from the “sea of sameness.”

First, a little background about Allison Disney:

I love my job. At Receptor Brands, we transform relationships between cannabis brands and their customers. As Business Strategist, I help define the field of opportunity for my clients’ businesses in this exciting new economy.

I’ve spent almost two decades leading global teams to produce award-winning advertising and marketing campaigns for some of the world’s most beloved brands, including M&Ms, Ziploc, Bacardi, YouTube, Special K, Cheez-It, and Johnson & Johnson.

After working in highly regulated and nuanced markets my entire career, I’m excited by the opportunity to work alongside our client partners and build culturally relevant, attention-getting brands in cannabis.

I live in Chicago with my botanist husband, Ryan, and, tiny boss, Maxine.

When did you first start working in cannabis?

2019

Do you sit on any industry boards or associations that you’d like to mention?

NCIA Marketing Committee – Officer

What lesson did you learn BEFORE cannabis that’s been most valuable in cannabis?

I didn’t expect my experience managing global brands to be as relevant as it has been. Particularly when working with multi-state operators, understanding how to develop strategic brand communications that travel well, while taking into consideration local nuance and regulatory guidance, enables us to deliver more effective solutions more quickly.

Is there a particular cannabis project you’d like to highlight?

One of my favorite projects continues to be the art program we’ve developed for Cresco’s Sunnyside dispensaries. As a creative agency, having the opportunity to collaborate with local artists to create an inclusive and welcoming space for shoppers is a dream assignment.

What’s the biggest misconception cannabis companies have about marketing?

The biggest misconception is that “marketing and advertising aren’t possible in cannabis.” It’s simply not true. Brands must comply with regulations, but there are lots of ways to engage customers if you’re willing to think creatively and be innovative about how.

What were you doing prior to cannabis?

I was an SVP, Client Service Director at Energy BBDO in Chicago, and before that a Client Parter at AMV BBDO in London.

In your view, what is the biggest cannabis marketing challenge facing cannabis companies today?

I see too many cannabis brands getting lost in a “sea of sameness” because they believe, or more often hope, that their product experience will be enough to convince consumers to choose them. The competition in the industry continues to increase and consumers are becoming more familiar with shopping in the regulated market.

As companies look to sustain early business success, the role of their brand and how they connect people with it through marketing and advertising activities is incredibly important.

I applaud every operator who successfully gets their product or service to market; that is a particularly difficult task in cannabis. Getting that product or service into people’s hands, lots of people’s hands, and having them come back to buy or use it again is the next, biggest challenge that will determine the success of cannabis companies.

What will get easier in cannabis marketing? What will get harder?

As cannabis becomes more mainstream, companies will have to do less-and-less to educate people on the positive impact of an increasingly complex industry. It won’t be a fast change, but the need to explain the benefits of cannabis to consumers, the positive impact to regulators and the opportunity for potential business partners should get easier. Although, I acknowledge, the [cannabis] industry will inherently become more complex as it grows.

Increased competition will make it harder for companies operating in the industry. Obviously, the struggle for investment capital, the retention of talent, and the fight for customer attention all get harder with increased competition.

What can companies do to ease their cannabis branding challenges?

Get help from capable agency partners, specifically those with cannabis experience and a commitment to staying on top of the rapid changes within the industry. Faster, more creative, and more effective solutions are much more likely when your agency partners are actively engaged in the industry every day.

In your view, what is the most under-rated tool in the brand marketing toolbox for cannabis companies?

Talking to consumers. Cannabis companies are finally getting access to a meaningful volume of consumer data, but purchase data is a backward-looking view of WHAT people do.

Understanding WHY people do what they do is important for building brand strategy, marketing plans, and advertising or PR campaigns. If you’re searching for ways to create a more innovative product, attention-grabbing campaign, or compelling promotion, meet with your core customers and listen to why and how they use this category.

In your view, what is the most over-rated tool in the branding toolbox for cannabis companies?

A brand logo. Don’t get me wrong, I appreciate a well-designed visual identity, but what good is a fantastic brand mark if no one ever sees it, remembers it, or has any attachment to it? Building a great brand takes more than choosing a great name and designing a beautiful logo.

What’s the BEST piece of advice you give everyone you work with?

Choose good partners. Nothing will be more costly to your business than time, energy, and capital spent with a poor-fitting partner.

What’s your advice for people who want to get into cannabis brand marketing?

Be clear about why you want to work in the cannabis industry. There are a lot of opportunities to work in marketing and advertising at incredible companies where you can get a much more structured introduction to the field. While there are many advantages to working in cannabis, you won’t find a playbook for how to do your job. If you’re not clear why you’ve chosen to work at a cannabis company, you may get lost in the ambiguity that is inherent in the industry.

How can someone contact you, Allison?

receptorbrands.com
Twitter: @apark_disney
Instagram: @allisondisney
LinkedIn: @allisondisney

Thanks for sharing your cannabis branding insights with us today, Allison.