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One of the biggest threats facing CBD companies? Survival. CBD is already projected to hit over $16 billion in sales by 2024, so it’s not surprising that there are over 3,000 brands in the market, hoping to ride the wave of success and reap the rewards.
But there is a big problem. While there is a high level of consumer interest, the market has reached a saturation point. And yet, CBD remains a nascent category, and the continuum of consumer knowledge is breathtakingly wide. Yes, there are many consumers who are self-educated and knowledgeable, but the opportunity for brands to scale is to connect the dots for new consumers and bring them along.
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The pace that the industry has scaled has provided oceans of data on millions of potential consumers. Thanks to Big Data, AI, and predictive analytics, we can finally start to make sense of it all, gathering insights that allow us to eliminate guesswork and target the right audiences.
Clutter and confusion
Consumer interest in CBD has grown over 100 percent year-over-year for the last few years, and while the pandemic has slowed industry growth, CBD is here to stay. Search volumes at the beginning of the pandemic for “best CBD for anxiety” showed an increase of 250 percent according to Google Trends.
However, all of this interest also creates confusion for consumers. Many brands market based on the potency of CBD or the process of extraction, neither of which most of the general public understands. Too many CBD websites market with images of sunny landscapes and green fields, all of which feel undifferentiated. Some bad actors go as far as to make false claims of health benefits, or they market products that may not even contain quality CBD. For a CBD-curious consumer, it can be a daunting task to cut through it all.
Understanding the consumer awareness curve
Consumer purchasing decisions are much more complex, particularly when it comes to CBD. Brands that solely market to consumers based on the attributes of their oil (potency or extraction method) are not truly addressing consumer need-states.
“It’s the classic problem of an industry that takes the point of view of a manufacturer or producer—while consumers think and speak entirely differently. CBD is not a ‘category’ in the marketing sense of the word. CBD is an ingredient in a growing array of product categories, each appealing to very different consumer profiles,” said Hugh Duthie, a brand strategist, and market researcher.
For most, it is an emotional driver that triggers the need to look for something to relieve a personal ailment or that of a loved one. It can also be the desire to participate in the cultural conversation they learn about online or from a friend. But, they need to trust the brand, and they need authority to help guide their decisions. Form factors, price, composition, brand authenticity, and depth of their own understanding all play a role.
When consumers do discover a product that meets their needs, it becomes social currency for them to share with their communities. It’s a powerful connection. Brands need to embrace and understand these drivers in order to engage and educate their audience and scale conversions.
The urgency of market research and the power of AI
An entirely new industry has grown out of data mining and research, giving brands access to the tools they need for developing and implementing a strategy for gaining and retaining customers. Now more than ever, we are learning more about what people truly want from a brand based on all of their behaviors exhibited online, in search, and in social.
“We work with many companies in the space and continue to see incredible success (oftentimes 5x ROAS/return on ad spend) with those that want to understand who their current and potential consumers really are beyond arbitrary identifiers and how they engage with their brand across all channels,” said Michael Blanche, Co-Founder of Surfside, a consumer analytics platform that specializes in the space.
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This can include consumers’ fundamental values and attitudes, life stage, financial position, topics of interest, media consumption, social sentiment, and even the size of their social influence.
Smart data empowers the entire organization and plays a vital role in content generation, customer service, Facebook and Instagram advertising, and web design. It provides real-time market insights, from the latest medical studies surrounding CBD to what’s happening in recreational markets. All of these insights contribute to making actionable data that can help companies make better decisions and create a better consumer experience. Simply put, imagine being able to map how your products and services can connect with current and new audiences at the right time.
Making sense of this ocean of data is AI, stitching together these disparate pieces of information to understand the emotion and intent that drives each need state, creates a deeper understanding of consumers across the CBD continuum. AI is constantly learning, adapting, and identifying changes in the landscape. Ultimately, AI becomes predictive—identifying new trends and surfacing what is about to be next, in the present.
Actionable data is only the beginning
Despite the limitations that CBD companies face in running traditional marketing campaigns, there are many ways to effectively connect with consumers. The need for meaningful engagement has never been more urgent for brands. The right content and execution plan across platforms, powered by data and insights, provides a much richer experience for consumers.
As need-states continue to evolve as the industry matures, brands will be positioned to adapt to domestic and international growth. Consumers and manufacturers can gear up for a more transparent regulatory landscape, and we can expect to see more relevant and reputable products staring at us from the shelves and our screens.