Digital marketing regulations make it harder for companies to get the return they used to on ads. It’s a fast-changing field, especially as users have more control over which cookies they allow websites to use.
Cookies are bits of code that lodge in peoples’ browsers and follow them around the web. They allow advertisers to target people with ads for websites they visited and track which ads finally induced a purchase. But as web privacy and digital marketing regulations become more important to the everyday user, companies are ditching forced cookie tracking. And retailers are trying to ensure their ads garner clicks and subsequent sales.
Still, some retailers have it harder than others when it comes to digital marketing. Happy Valley, which sells cannabis products only from its own plants, faces additional digital marketing regulations and restrictions.
How Happy Valley handles extra industry restrictions
Heather Lovett, Happy Valley’s marketing director, says it can be challenging to keep up with the regulations on cannabis sales, let alone digital marketing regulations. Although federal law still deems cannabis use, sale, and possession illegal, Massachusetts allows recreational cannabis/marijuana purchase and use for people 21 and older.
“I thought alcohol and spirits was a tough field to navigate from a marketing perspective,” Lovett says. “But cannabis really does take the cake. Given that it’s so new and there’s a lot of gray area, it’s an ever-changing landscape of what we can and can’t do.”
So, Lovett focuses on what she can do. That includes close work with the company’s compliance officer.
“It’s really how we can market,” Lovett says. “We can communicate to customers we know are 21+ and have raised their hands to say, ‘I want to hear about your products and your services.’ It’s a big focus for us to get people into our marketing-communication channels that have opted in because we have a little more leeway.”
Users who go to Happy Valley’s website get a pop-up. Those who click to confirm they’re 21 or older receive another pop-up that suggests they sign up to be a Happy Valley Insider. That puts them into Happy Valley’s email communication platform.
Almost all of Happy Valley’s website sales involve buy online, pick up in store. Its customers can select everything they’d like from the website, but they must go to the store to show identification and pay for it. Still, to get results, Happy Valley has to go beyond navigating phrasing restrictions and focus on understanding more about its target audiences.
Working with data specialists
Companies like Apple and Google limit the cookies their browsers track, and tech regulations limit data privacy. Thus, retailers like Happy Valley need to capitalize on the data they are allowed to track.
Retailers can’t analyze data they don’t collect, says Surfside co-founder Michael Blanche. Surfside is a customer-acquisition platform that uses first-party data for marketing, insights and measurement. Retailers should build a strategy that maximizes data collection because the business needs will evolve over time, he says.
“It’s not enough just to have ecomm data coming through or website data,” Blanche says. “You really want to tie into the point of sale, the CRM [customer relationship management], all of the different touch points that a customer has with the brand or retailer.”
Lovett says her highest spend on brand awareness is with Surfside because she has seen results attributable to its work. In GDPR- and CCPA-compliant ways, Surfside utilizes phones’ tracking features to help target specific users. This practice helps ensure the data Surfside picks up comes from users who want to or might buy from Happy Valley.
Understanding key digital marketing regulation points
GDPR stands for General Data Protection Regulation. It went into effect in May 2018. CCPA, or the California Consumer Privacy Act, also went into effect in 2018. Both give consumers more control over the personal information businesses collect about them.
The GDPR website says although the European Union drafted and passed the “toughest privacy and security law in the world,” it imposes obligations on organizations everywhere. That is, so long as they target or collect data related to people in the EU.
“The GDPR will levy harsh fines against those who violate its privacy and security standards, with penalties reaching into the tens of millions of euros,” the website says.
GDPR focuses on:
- Personal data.
- Data processing.
- Data subject (the person whose data is processed).
- Data controller (the person who decides why and how the retailer will process personal data).
- Data processor (third-party that processes personal data on a data controller’s behalf).
Its data protection principles prioritize lawfulness, fairness and transparency and storage limitation, integrity and confidentiality, accountability and more.
Similarly, the CCPA focuses on the following rights it guarantees:
Geofencing as a digital marketing tool to serve better-targeted ads
Happy Valley has three main communication methods with its customers: email, text messaging, and push notifications from its app. But app notifications are only available for those in Massachusetts, where Happy Valley’s two stores are.
Because Lovett lives in Maine and commutes to work, she can only get app pushes when she’s in Massachusetts. She knew about that location service on a broad level. But she says she learned more about how to utilize it from working with Surfside.
“What I find really creepy, and maybe I never realized this was a thing, is the trackability,” Lovett says. “Utilizing the advertiser ID on your phone, and the fact that we’re able to really dial into the folks that come into our location that have been served one of our ads. That was new to me. I didn’t realize it could get that granular.
“Obviously, that helps us understand what the return and attribution is from the medium versus just a clickthrough or a view-through conversion, which back in the day is all I knew of. … I didn’t realize it could get tracked down to them actually walking into our location.”
Prime opportunities for geotargeting
Surfside helped Happy Valley use tracking for more than just shoppers who stepped into their retail locations.
Lovett says Happy Valley was the first cannabis sponsor for the Boston Calling music festival. She says Surfside’s team suggested they use geofencing to capitalize on data collection to market to folks at the festival. They geofenced the area so Happy Valley could serve ads to those who might’ve learned about the company for the first time at the festival.
“The one place I can attribute to an increase in spend, because I’ve decreased in others, particularly in billboards, is with my digital media,” Lovett says. “I know it is helping get my name out there.”
Omnichannel and the cannabis space
Lovett says Happy Valley has seen a $3 to $5 monthly return for every dollar it spends on ads. She says the company is “constantly toggling” based on the impressions it delivers geotargeted around its locations.
She says she can’t attribute it all to digital advertising. However, she is able “to target directly to folks who are in the four walls of the Logan Airport.” And that’s a big deal for the Happy Valley location within two miles from that airport.
“Our folks will see an out-of-state driver’s license and ask them, ‘How did you hear about us?’” Lovett says. “And they’ll tell us an ad popped up to them when they got onto their phones in the airport.”
Blurred lines and correlations
Blanche says he has seen different shopping experiences for stores close to a state line, where one state allowed recreational cannabis use.
“There’s far more activity on the ecomm store but far lower transaction rates,” Blanche says. “What actually ends up happening is people are browsing that ecomm store purely as a way of getting the dopamine fix for what they’re going to purchase.
“They go and they search the catalog and they add items to cart. But they still come and transact in-store. They don’t place it as an order and pick it up in-store. They just purely browse the menu and then come and pick up in-store.”
He says there’s a strong correlation between the actual point-of-sale data he sees when shoppers add to cart, and the ecommerce activity that comes with it. But the missing link is that shoppers are not converting through the ecommerce experience. He says he thinks this is a legacy behavior that will change over time.
Blanche says there’s “still too much friction” in a lot of ecommerce stores. He says platforms like Shopify are getting better at minimizing the number of clicks it takes for shoppers to complete an order.
“Every time you have to interact with a button is a chance that you opt out,” Blanche says.
Applying regulation-compliant data collection to digital marketing
Blanche says Surfside enriches every data point it collects with additional context.
For example, Surfside goes beyond behavioral, on-site-type analytics and uses its proprietary software development kit (SDK) to identify users cross-device.
He says that allows Surfside to pair mobile IDs and email addresses together and get to an “individual-level identifier.”
From there, the technology allows his team to add context like lifestyle, behaviors and demographics. They then have automated machine-learning pipelines that do feature reduction.
Blanche says Surfside’s machine learning can take an estimated 20,000 to 23,000 different attributes and reduce them to what the team decides is an acceptable threshold to develop regression models. That’s what they then turn into A-B testing and optimization.
Essentially, the technology reduces all sorts of factors that include gender, household income, if the user has children, and more data to determine a Happy Valley shopper’s propensity to buy a specific product. And although that data can’t fully determine if or what a shopper buys from Happy Valley, it helps the retailer focus on what ads to serve each user.
“To make it so you can actually track these metrics … if you don’t have a strong understanding of who your customer is across channels, can you ever calculate lifetime value?” Blanche asked, rhetorically. “You can’t, so we help reveal that underlying identity of who the customer is so that then you can start calculating these metrics.”
Data-centric customer acquisition
Blanche says retailers will see more sales growth — “move the needle more” — by acquiring new customers than by getting incremental dollars out of an existing customer base. Retailers will want to optimize toward lifetime value, but nothing will beat bringing in new people, he says. That’s because retailers can have lower-funnel remarketing strategies that help optimize LTV.
And a byproduct of digital marketing regulations and traditional retailers moving to ecommerce is companies “airing their dirty laundry,” Blanche said.
“They’re pushing their entire product catalog online under public-facing websites,” Blanche says. “If you’re a savvy marketer or someone that’s hyper competitive, if you can actually go and understand what stores have what products available, and if, say, your nearest competitor suddenly runs out of cannabis beverages, that’s an opportunity for you to push a promotion in order to help attract their customers and bring them over.”
He added that that’s another lens through which Surfside looks at its clients. It doesn’t just optimize its clients’ businesses, he says. It also helps them learn about the market based on how available competitors’ data is.
From a company structure, he says, there’s often one warehouse that holds all the products. The ecommerce site becomes a digital representation of the company’s store inventory.
“And that’s the opportunity that I think you can exploit,” Blanche says. “How do we use the digital catalog and what you’re putting out on your ecomm site as a lens into what you actually have in store? [And thus,] what you can make available.”
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