Shaun Hekking, SVP of national sales at Newsweek, has blunt words for publishers that don’t accept cannabis advertising: “There’s no reason we can see not to work with cannabis advertisers.”
“We’ve been covering cannabis editorially since before Woodstock and writing about the business side since the early 2000s,” said Hekking, who joined Newsweek early last year after stints at Reuters, Pandora and AcuityAds.
Newsweek, which first started making its inventory available to cannabis advertisers on the open exchange in 2018, sees cannabis as analogous to the vitamin business.
“Vitamins started off niche, a little crazy and then evolved into a multibillion-dollar business from an ad sales perspective,” Hekking said. “Cannabis is on the same trajectory, and it’s only going to continue to grow.”
Compliance is key for any publisher getting into cannabis, but there are partners for that. Last year, Newsweek began working with CannaVu, an ad exchange for compliant cannabis and CBD advertisers. CannaVu works directly with publishers and recently inked a partnership deal with Centro for geotargeted cannabis and CBD advertising.
Although Hekking declined to share specific numbers, he’s banking on canna-biz in the year to come.
“We see this as one of our largest vertical growth opportunities,” he said. “We’re counting on 2020 to be a very green year.”
AdExchanger spoke with Hekking.
AdExchanger: Why did Newsweek decide to start accepting cannabis ads?
SHAUN HEKKING: It’s simple. We’re a publication supported by advertising, and cannabis is a regulated industry.
I do understand why there’s still reservation and hesitation on the part of some large publishers, but the question I have for other publishing colleagues who aren’t doing this is: What is your main objection? We’re getting to the point where the stigma is going away and cannabis becomes just another product that can be bought and sold.
All in all, close to 70% of the country is legal from a state perspective, and we’re starting to hear talk about national legalization.
What about potential brand safety concerns for your non-cannabis advertisers?
I won’t argue that there aren’t people with moral objections to cannabis, but we’re responding to the will of US consumers and abiding by regulations. Some publishers are dicey about alcohol, tobacco, even politics, and that’s fair. But our feeling is this: Are you a brand that wants to advertise a legal product on our site while also checking all of the compliance boxes? If the answer is yes, we’ll entertain that conversation.
That said, we do know we need to exercise some caution and think about compliance. CannaVu is our main technology partner for that.
What are some of the rules you need to follow in order to accept cannabis ads?
Canna-ads fall into three categories. There’s CBD/hemp, which CannaVu runs in 47 out of 50 states; medical cannabis; and adult-use or recreational cannabis. Cannabis or THC campaigns are regional and never cross state lines. For a multistate operator, each region is set up individually.
Understanding which states allow what and where is key, as is respecting the audiences and the media where the ads are running. CannaVu and Newsweek work on maintaining strict compliance at all times. Brand safety and compliance are always paramount and critical to maintaining our leadership position in this space.
Are most of these deals programmatic or direct?
I can’t speak about pending deals, but I can say that when I joined Newsweek last year it was open exchange. We still do that, but now we also try to get these brands into a managed-service environment and do more programmatic direct and programmatic guaranteed, because that way we can give them better access to data and help their campaigns perform better. This is something we do every day with every other vertical, and cannabis is no different.
What kind of targeting can you do while still making sure your inventory is compliant?
Through CannaVu, we’re focusing on attracting new mainstream, adult prospects via LDA [legal drinking age] environments. While there’s an ability to add myriad targeting and opt-in first-party data, there isn’t an established model of success in terms of what works or not. We take a cautious approach that respects user privacy.
What sort of audience engagement do you see with cannabis ads?
At Newsweek, we think a lot about situational appropriateness and how to be aligned with the right environment. Digital canna-biz advertising performs at or better than other health and wellness products. CannaVu has some extremely dynamic creative units, especially for mobile content, that are generating CTRs of well over 1% when deployed to the right audience in the right context. That’s the type of hyperengagement we think will really expand this business in 2020.
What kind of feedback are you getting from your cannabis advertisers?
They’re excited about new audiences. There are endemic publications, like High Times and Rolling Stone, which are fun to sneak home when you’re a teenager, but now we’re talking about businessmen and women who are serious about making money. We’re in a position to help these businesses scale. The cannabis business is here to stay, and we want to help it grow.
Are we about to start seeing cannabis ads in more mainstream publications?
I hope so. You can’t put the toothpaste back in the tube. I think we’re past the point where there’s any shock value in seeing cannabis ads. That stigma will only continue to be stripped away. We’re looking at a business that is at its inflection point. Newsweek is invested in covering cannabis as a business from an editorial perspective, and cannabis advertising is just a natural extension of that.
I mean, why not serve ads that are legal for a product people want to buy?
This interview has been edited and condensed.