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Source: elite care
It’s not often we witness the birth of a multi-billion-dollar industry virtually overnight, but that’s what happened with Cannabinoid, commonly known as CBD. Sales of this new product have grown from zero to $5 billion in a few short years, despite unique challenges to marketing and selling CBD products, and the boom doesn’t look like slowing down soon - US sales are expected to reach up to $20 billion in 2024, with a large proportion of those sales online. Since America’s cannabis laws started changing in 2012, thousands of start-ups jumped on the CDB train, we’ve seen some incredible start-up success stories.
For newcomers, there are plenty of opportunities to get in on this exciting growth industry. The key to making it big in the CBD business, as with any other business, is a well-planned and executed marketing strategy, so let’s take a look at the challenges and opportunities in this emerging sector, along with some winning strategies for building a solid customer base through social media.
For those who don’t know, CBD is an extract of the cannabis plant, but there’s an important difference between the high-inducing THC found in certain types of cannabis and therapeutic CBD. For starters, CBD doesn’t have any psychoactive effects- it cannot get users ‘high’.
The most popular CBD product is CBD oil, sold in small bottles, usually with a dropper. Other popular products are gummies, capsules, and topical creams and lotions. There’s a wide range of other products marketed as containing CBD including soda drinks, tea, snack foods, cosmetics, and a range of products specifically for pets! CBD companies tout a long list of the extract’s benefits from pain relief to treatment of epilepsy, and there is some strong science to back up many of these claims.
Among the biggest CBD health benefits are:
- reduced anxiety and depression
- reduced symptoms of PTSD
- help treat opioid addiction
- help treat ALS symptoms
- relieve pain
- relieve arthritis
- help treat diabetes
When people hear the word ‘cannabis’, or ‘weed’, or one of the many other nicknames, they’re most likely thinking of stoners smoking and getting high. For decades, CBD was considered an illegal substance because it is derived from the same cannabis plant. Now that the laws are changing, and authorities are recognizing the difference between THC and CBD, millions of people are discovering its benefits and sales have exploded, but this doesn’t mean there aren’t still challenges to doing business.
Google, Facebook, Amazon, and other platforms have been slow to change their policies when it comes to CBD, partly because the laws differ between states, causing confusion and legal grey areas for what can or cannot be advertised, sold and shipped, and big tech companies prefer to play it safe to avoid any legal issues. This creates frustrating obstacles for CBD companies on their platforms.
On Facebook and Instagram, for example, CBD products are technically not allowed, even though users can easily find and purchase them. Google’s Adwords doesn’t allow advertising of CBD products and won’t list them in Google shopping.
Amazon has similar policies prohibiting CBD from its platform, but a recent study has found 40% of eCommerce CBD purchases in 2020 were through Amazon. That’s hundreds of millions in sales on a platform that sellers are banned from. Confused? It comes down to creative keyword usage and descriptions that sellers use for their products, avoiding the term ‘CBD’ and using terms such as ‘hemp oil’… and the willingness of sellers to be a bit tricky with the rules. At the time of writing, a Google search of CBD shows organic results, with no paid results, while a search for ‘hemp oil’ shows both paid and organic listings.
With so much uncertainty and confusing regulations, why would anyone want to start a CBD business now? Why not wait until the regulations have been straightened out before entering the market? The answer is that many entrepreneurs are seeing huge opportunities because of this uncertainty.
The biggest unknown about the CBD business is the US FDA (Food and Drug Administration). The FDA sets the standards for what ingredients can and can’t be used in the USA, and because the American market dominates global consumer goods, the FDA’s rules and regulations have worldwide influence. As a federal agency, the FDA takes time to approve new products and still hasn’t given the official green light to CBD. That may change soon, but until it does, major corporations like PepsiCo, Nestlé, P&G, and Unilever are still not willing to enter the market which means small operators don’t face the huge competitive pressure of these giant multinationals, and even once the big companies do launch their own CBD lines, the small brands that are prospering now will have a big head start, have carved out their niches and following, and be well-positioned as the market matures.
Caption: Ulu is one of the many companies offering CBD-infused cosmetics. (Source: ULU)
It’s important to note that CBD sales are completely legal in Canada, the UK, the EU, Australia, and many other countries. Meanwhile, consumer interest in CBD itself is growing steadily and the term gets around 1.7 million Google searches per month worldwide. A unique situation – a soon-to-be $20 billion industry made up entirely of small, independent companies. If you’re looking for a new business venture or thinking of selling online but still unsure of what to sell, CBD is just might be the answer.
There are some important things to consider when it comes to marketing CBD products, and the first, as we mentioned, is that you can’t advertise. Many small businesses will invest in ads to get their business off the ground and have their name seen, while they work behind the scenes building organic traffic and reach. Since Google ads, Facebooks ads, or other social advertising are not an option, your strategy will depend entirely on building an organic following, and this means learning some important tricks and techniques.
Caption: Holistapet specializes in CBD pet foods. (Source: holistapet)
As any social media marketer will tell you, hashtags and keywords are critical. We know that the word ‘CBD’ should be avoided (and in some cases will get your posts removed!). You’ll need to do some research on which keywords and hashtags will be most effective at reaching a wider audience on which platforms. Just like with advertising, however, reaching a wider audience is not always a positive and we need to remember that the quality of your audience is more important than the quantity. By using social listening you can identify which keywords are commonly identified with certain other keywords. For example, consumers of CBD may be also searching or engaging with content on related subjects like nutrition, wellness, or perhaps related health problems such as ‘stress’.
Building your brand’s story is important. Whether it’s graphics, videos, or written articles, good content tells the audience not just about the products and their benefits but also gives them confidence in the name behind it. Along with design and packaging, your content is the value-adding that will gain your customer's loyalty. It’s a good idea to research what kind of content gets the most engagement (likes, shares, and comments) and analyze what makes it stand out from other, less engaging content. Identify the channels that are producing the kind of winning content that you’d like to emulate or get inspiration from and keep track of what they post.
Another way you can build a name for yourself without advertising is through influencer marketing. CBD products are strongly associated with health, beauty, and lifestyle niches. This makes it a perfect fit for an influencer marketing campaign.
One of the most impressive CBD business success stories is a family-run operation from Colorado named after a young epileptic girl called Charlotte. In 2012, the founders of Charlotte’s Webb CBD company were contacted by the girl’s mother, who was searching for alternative treatments for her daughter’s condition. Charlotte was only 6 years old at the time and suffered from terrible and frequent epileptic seizures. She had found no effective relief from the medicines prescribed to her by doctors, but soon after she started using CBD, her seizures almost completely went away. Charlotte’s story was so amazing that it was featured in a CNN documentary and the story even helped to move the US government towards fully legalizing the production of CBD.
Two brothers extracting oils themselves and distributing them to trusted friends has turned into a global exporter that brought in almost $100 million in revenue for 2020 without a single dollar spent on advertising. The story of Charlotte’s Web CBD highlights the value of your brand’s story, building trust and finding the right market.
For anyone looking to get started in this exciting new industry, or for existing businesses who’d like to grow their revenue by getting more customers on social media, Mandala Analytics is a great tool that anyone can use to help you optimize your campaigns. It’s easy to use and there are clear tutorials to get you started. Give it a try for free right now.