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The cannabis legalization movement is certainly gaining steam in the US. 3 states have made recreational use legal with a slew of other states with pending legislation. It certainly seems like the tides are turning. As legalization efforts continue to evolve, the cannabis industry can be looked at as the next gold rush industry. New firms are emerging everyday.
There is still a stigma in the Adtech industry when it comes to cannabis, but there are a handful adtech start-ups catering to the cannabis industry.
Paris Holley - CTO @ Mantis Ad Network
Paris Holley – CTO @ Mantis Ad Network
Todays Q&A is with Paris Holley, co-founder and CTO of Mantis Ad Network and Medical Jane. Paris spoke with Adversed about Mantis Ad Network and the future of cannabis Adtech.

 

Q: MANTIS is one of only a few ad platforms catering to the cannabis industry. How long has MANTIS been in business?

A: MANTIS launched out of beta with select publishers in May of 2014 and has since grown to over 90 websites. Our management team has been involved in the cannabis industry for over three years with a focus on technology since the very beginning. We launched our first digital publication (MedicalJane.com) in 2012 as a philanthropic venture and did not attempt to monetize it until early 2014. After hearing about the marketing struggles canna-businesses were facing and selling out of our own ad space in the first couple of weeks, it became clear that a service like MANTIS needed to exist. 

Q: From the looks of it, MANTIS is a CPC Ad Network. What made you decide to go the CPC route in lieu of CPM? Is this more a function of what advertisers are willing to do?

A: Our choice to launch with a CPC pricing model was based on a few factors. First, assuming fast publisher growth in our space, it is important that ad placement and website quality is always a priority. With a CPC model in place, it allows the MANTIS ad network to operate much leaner and grow without additional complexity. When you put an impression model in place, quantifying the value of each website’s audience as well as ensuring ad visibility requires some additional work. While MANTIS does offer CPM campaigns in certain circumstances (such as rich media creatives), we intend on introducing an additional pricing tier this year that will allow advertisers to expand their reach and capabilities using a CPM model. For us, it is important to strike a balance between providing value to advertisers while also providing our publishers with the revenue they deserve.

Q: A follow up to the last question, are cannabis publishers ok with CPC only or is CPM still more desirable? Do you also do any CPA deals?

A: In general, many of our publishers are not interested in CPA deals (there are many affiliate programs already available in the cannabis industry). Early last year, we explored the idea of an “Affiliate Gateway” which would allow us to participate in CPA programs but still payout to publishers on a CPC model. While there were some signs of success, ultimately it was not a scalable model for MANTIS or our publishing partners. Any publisher (regardless of industry) would certainly prefer to work with clients on a CPM basis, but it can be tough sell as an individual publication. From our perspective, the cannabis industry is still in its “marketing infancy.” Many clients still put heavy emphasis on conversions from their digital spend and are less concerned with branding. As laws change and interstate commerce (for cannabis) expands, we will see more and more marketing initiatives coming from the bigger players in the future.

Q: I think we can agree that there is still a stigma surrounding the cannabis industry, even as the tides start to turn. What do you see as MANTIS’s biggest hurdle with attracting new advertisers? Is it more of a supply issue?

A: One of the largest challenges we face is introducing digital as an option to businesses that traditionally have only done marketing through mediums like events and print. We are not seeing many clients consulting with design agencies on their web presence (if they have one) and the notion of analytics or conversion tracking is a new concept for a majority of our clients. On the other side of the coin, we have an industry that in many circles would not be considered “brand safe” with cannabis still a schedule 1 drug. Until cannabis is more ubiquitous in our culture, AKA legalized for all, we predict some hesitation from larger companies who may not be comfortable associating themselves with a cannabis audience yet; even if they are the perfect demographic for their products and/or services.

Q: In traditional ADTECH, all the buzz is around RTB and Programmatic. Do you see your industry trying to break into the RTB/Programmatic arena?

A: Our industry is prime to hop into that side of Adtech. Unfortunately, as I alluded to earlier, there are still many moral/legal hurdles to overcome for that to take place. MANTIS has reached out to many of the biggest players in Adtech and the responses we receive are very similar. Either the publications we represent are not ideal for their advertiser base, or the products/services our clients try to advertise are considered “too risky.” Many companies have policies in place already that are either very restrictive, or eliminate the possibility for cannabis companies to participate. Even with legalization, there are many organizations that will still have a moral objection to supporting the space, regardless of the revenue potential.

Q:  High Times Magazine is the obvious brass ring in the industry.  Have you worked with mainstream publisher like High Times yet who appears to be using Google as their ad server and very little to no RTB.

A: Our goal is to find ways to collaborate with every publication in the space. While each organization may have their own sales process or pricing model that is more advantageous to them (due to an established internal sales team), we do not believe that model is scalable alone. That being said, many publishers on our network still maintain an internal sales process but leverage our platform for supplemental income. When it comes to print, we find that most publications typically sell their digital space as an up-sell to their print magazine. Additionally, no one publication has enough inventory or broad enough demographics to effectively serve the needs of each advertiser in our space. The additional value an ad network can provide on top of a publication’s offering (such as first-party data, retargeting, etc.) will prove to be invaluable as the industry grows. Over time, advertisers will become more demanding with their digital marketing requirements, and we hope to be best positioned to handle it. 

Q:  Google and Facebook have specific policies against cannabis related advertising. Google specifically calls out pipes and bongs and “coffee shops”.  Do you see this as a huge opportunity or a huge problem?

A: Many of those organizations have policies that are very restrictive and have been a serious problem for companies in the cannabis space. While you may hear occasional stories of success, there are many organizations who simply cannot run an effective campaign without being severely constrained, or having to come up with workarounds. While we’ve done our best to reach out and find ways to work with those companies, ultimately we predict that we are many years out from any mainstream support. Though there may be a huge opportunity for us to fill this gap, the larger opportunity is bringing the Adtech space together and developing a solution that everyone can stand behind.

Q: Marijuana is still a federally illegal controlled substance; the government could still prohibit advertising for it.  In 2011 the Feds threatened to crack down on medical marijuana advertisers in states where it is legal.  Even Colorado post-legalization has tried to restrict certain marijuana ads. Do you see or have you seen any legal wrangling due to your focus? 

A: As with anything in the cannabis industry, there is a risk, but there is also opportunity. In one way or another, all businesses and publications are advocates for a legitimized cannabis industry. While government regulations are still in its infancy, the nation is watching and we have to be respectful of the fact that there is still a major cultural transition that is taking place. If as an industry, we fail to participate in responsible marketing and adhere to some level of conservative standards, we will encourage policy makers to over-regulate our ability to advertise. We hope that our efforts in this industry will stand as proof that cannabis brands can be marketed safely and responsibly.

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David is a 20+ year veteran in the digital space and was a key roll player at digitalNATION, a web hosting company his family started in early 1993, which subsequently sold to Verio in 1999. Since that time, David has been entrenched in the online advertising space as an executive at AdJuggler.

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