There are a few key reasons why companies literally stopped spending their money on print advertising, rise of the internet, decline in readership, and lack of transparency.
Nine out of ten retailers we talk to have no idea what their ROI is on a campaign.
When talking with a salesperson at one prominent publication, I was told we should advertise our app because dispensary apps “will kill it.” No metrics, no benchmarks and certainly no quantitative ROI was spoken about on the call just quotes for ads ranging in the hundreds of dollars per day. At Baker we don’t sell qualitative vibes like “killing it” we believe in hard metrics that increase your bottom line.
So why are retailers still spending precious dollars on these ads?
The most common reason we hear for why these companies continue to advertise in their local newspaper or industry publications is because it’s a “necessary evil.” If you are still advertising with print ads, you are not alone. It seems as though the cannabis industry is extra keen on keeping the print industry on life support.
We’ve surveyed our clients on local publications and we found that local newspapers have an average viewership of 17,000. In addition, ads that were considered mid-tier, cost $650-850.
We did some quick calculations using a handy CPM calculator. CPM (cost per thousand impressions) is the most common metric marketers use when running an ad – what is my cost per thousand viewers? We found on average, print ads have an average CPM of $45.
To put that into perspective, here are some other CPMs for various mediums of advertising:
$5 million dollar commercial on Super Bowl Sunday: $30
A direct mail pamphlet: $26.5
TV during primetime: $17.78
YouTube ad: $14.72
Display ads on Cannabis specific networks: $10
Radio advertising during rush hour: $8.61
Those annoying Pandora ads: $7.61
Highway billboard: $3.5
Google Adwords: $2.80
But it gets trickier – 85% of daily paper readers do not consume cannabis, so right away 85% of the viewers who see your ad will ignore it. Now, your CPM is based on a true audience of 2,250, but you are still paying $750 for your full page ad – all of a sudden your CPM is at $333.
By running a print ad in your local newspaper, you are effectively running a campaign that is 10x less effective than one of the most expensive ads in the world – every day.
How about a cannabis-specific publication?
While they are a great start for your target audience, even they get distributed in places like hair salons, or restaurants. Around 80% of the readers are cannabis consumers. Running a CPM analysis for the most prominent weekly cannabis publication in Denver looks like:
Weekly distribution: 63,000
Cost for a full page: $3000
The numbers speak for themselves. This is just one example of why it is 6x more expensive to acquire a new customer rather than retaining an existing one. Not only are new customers more expensive to acquire they spend less, are less likely to return, and 90% of coupon cutters will only claim the deal in your advertisement. This is why Baker is all about helping you turn your daily foot traffic into loyal customers.
So what should you do?
Every business needs to have a budget dedicated to acquiring customers. There exists a delicate dance between figuring out how much you should spend on acquiring customers vs. retaining ones that come in your door. While it might be difficult to assess if you should be more focused on acquisition (startup) or retention (Amazon) – it’s important think about the most cost effective investments you can make today – capturing and retaining the customers that visit your website and walk in your door everyday.