CELLULAR Goods, alongside a coalition of other CBD brands, is leading the charge against rules put in place by the world’s leading big tech companies which all but ban CBD companies from advertising online.
The ‘CBG and CBD Brands Coalition’ launched a petition last month calling specifically for Google and Meta, which owns Facebook and Instagram, to prevent CBD companies being classified alongside recreational cannabis brands by their algorithms.
Now Cellular Goods, which says its sales have been ‘significantly hampered’ by its inability to advertise online and on social media, has doubled down on more traditional marketing activities with the launch of a new deal with its media partner Condé Nast.
Anna Chokina, Cellular Goods CEO told BusinessCann: “Unless there is a public voice that’s being raised about an issue, I think there is very little incentive to change that.
“This is exactly what we’ve done with our petition, we started this discussion, we’re going to continue to accelerate it, we’re hoping this will provoke some very serious conversations.”
Barriers to Advertising
Alongside securing banking and insurance, advertising is one of the major barriers many cannabis-related companies face when operating in the UK.
Matt Clifton, former Facebook Head of Business Product Marketing and CEO of Milk & Amber, one of the few advertising companies in the UK cannabis industry which has helped companies like Drug Science navigate the online advertising space, recently explained the extent of the issue to BusinessCann.
“All the things you want to say, all your USPs for CBD products, are all of the things you can’t say. You can’t even say CBD without risking being called down by artificial intelligence.”
These AI algorithms utilised by Google and social media giants like Facebook, are exactly what the CBG and CBD Brands Coalition, which also includes Chanelle McCoy Health, Voyager Life and CiiTech among others, hope to change.
Ms Chokina, who joined Cellular Goods as CEO in December, explained that as a young publicly listed company, its goal was to reach its audience in the ‘most effective, easiest places with the highest ROI, which is social media and search engines’.
“If a person wants to get high, or if they want to buy a face serum with CBD, effectively, they’re gonna get the same response from Google, which is hugely unfair I think.
“When you’re a global company, it’s very tempting to have global rules and usually those are the most conservative rules that you would have.”
She added that while more traditional media like television and billboards are more accessible, these are not in the financial reach of many young CBD brands.
Not only is online advertising cheaper, but it allows companies with tight budgets to accurately track the effectiveness of their advertising spend and adjust accordingly.
As tech giants like Google and Meta continue to shun cannabis companies, the likes of Ebay and Amazon, where an estimated 60% of shopping journeys now begin, are both running pilot programmes for CBD brands in the UK.
Though Ms Chokina believes this signals progress, she argues that Ebay and Amazon, the latter of which Cellular Goods launched its products on in February, have a far greater motivation to embrace the industry than their non-sales focused counterparts.
“One key difference of course, Ebay and Amazon are sellers. They can see how many people are searching for the term CBD oil and that’s not small.
“I think Google and Meta don’t valorise the searches for them, it’s only advertising spend that they are losing as a result of their policy, and they don’t think it’s meaningful enough to change their global policy.”
Impact On Sales
After launching its inaugural product range in December just days before Ms Chokina replaced Alexis Abraham, one of her first tasks was the launch of a “comprehensive omni-channel marketing campaign”, initially set to commence in February 2022, to drive sales of its new products.
At the end of February, the company updated investors, informing them that this omnichannel marketing campaign had been pushed back, and that ‘total revenues had been below internal forecasts’.
It attributed this to the ‘unexpected’ ban on online advertising, which forced the company to ‘overhaul the original campaign… resulting in a deferment of the full marketing launch’.
In its most recent financial statement, Cellular Goods reported revenues of £13,058 for the six months to February 28 2022, which included three months of its products being available to purchase.
Though Ms Chokina said she was ‘very pleased’ with the results of the company’s ‘outdoor’ marketing campaign, launched in mid-March in London and Manchester, some investors have questioned why the company was not aware of the online advertising blockade, suggesting it pointed to inexperienced management.
Ms Chokina responded to these concerns, stating: “I can only speak about me personally, my background is classic FMCG and I had no idea coming into this role in December that cannabinoids, which are legal ingredients, were going to have such a hurdle with these two media providers.
“I think it’s a known industry thing, I don’t know if this is such a well known fact, to be honest. Keep in mind that this company only went public in February 2021, so it’s still very new.”
While this is likely to do little to assuage investors’ concerns, Ms Chokina’s recent boardroom reshuffle may, which saw a shift in focus away from figures able to bring in new investors and towards those with the experience to build and sell its product offering.
This included the departure of star investor David Beckham’s personal friends David Gardner and Ross Connolly, alongside Argo Blockchain CEO Peter Wall, seeing FMGC veterans Gill Whitty-Collins and Misha Sher take their place.
“I have been quite busy building the talent in the last six months. On the board, we have people who between us have probably the best know-how of how to launch a brand.”
