Jake Litke: [00:00:00] The advertising landscape as a whole is a system that is designed to take your money from you as fast as you're willing to give it to it and provide as little value as possible in many cases, unless you are very specific about how you use that system.
Intro: Welcome to the Kaya Cast, the podcast for cannabis businesses looking to launch, grow, and scale their operations.
Tommy Truong: Jake, thank you so much for joining me today.
Jake Litke: Thanks for having me, Tommy.
Tommy Truong: So you've founded and sold a mobile media company advertising platform. What got you started in thinking that, "Hey, cannabis, I'm gonna solve cannabis advertising"?
Jake Litke: Yeah, so I halfway joke when people ask me this and say that I got tricked into the cannabis industry which is, partially true. What happened was in twenty eighteen, I was working on a advertising platform that I'd been building for a couple years, and I met some of [00:01:00] the early investors in the cannabis space, right?
This is back when people were more excited than they currently are about cannabis futures. And they had a project they were trying to bring to market, and I have, it was an app, and so I've spent a lot of time in the app industry and launching apps and doing advertising marketing around that.
And so I offered to help them bring that to market because it had not launched yet. And what I discovered is you could not do advertising for cannabis. So I had to-- I was trying to build a GTM plan, and I was like we can't really do that without being able to advertise effectively."
And so I said, what might be a better idea is to create a marketing platform because there isn't one." Several conversations and weeks later they agreed that was a good idea and then asked me to come on as the CEO of the company and that's how I ended up in the cannabis.
That's the short version, but that's how I ended up in the cannabis space.
Tommy Truong: Oh, wow. It's indicative, though. There's a problem and entrepreneurs you run towards that.
Jake Litke: Yeah, like a moth to the flame, and hopefully [00:02:00] you try not to catch yourself on fire too much on the way there. It'll Be almost eight years since we embarked on that journey and it's been it has not been boring
Tommy Truong: So tell me how does MediaJel tackle the problems we-- I think advertising in the cannabis industry is one of three biggest problems this industry faces.
Jake Litke: Yeah. So we had two big problem sets to deal with when we started off. One was that no one would take the ads, right? I have a background in working in programmatic advertising. Just if you don't know what that is, it's like the stock market. But when you see an ad show up on your phone or your desktop, you're on a news site or something, what has actually happened is an auction took place, and it completed in about 150 milliseconds.
So your website launched, it sent a signal to this auction house and said, "I'm this phone. I'm in this person. Here's some information that we might know about this individual. They like dogs," whatever it is. And then the advertising system is-- And what we do today is we bid on behalf of the advertisers, right?
So [00:03:00] we're trying to find the right people or devices or houses to serve ads to. Now the problem is that we wanted to buy advertising, but no one would take our dollars ' cause cannabis, right? Most of the ad platforms are controlled by large publicly traded companies, Google, Facebook, et cetera.
And even today, those types of companies, the risk/reward situation for them doesn't make sense. Even if it's tens of millions of dollars, Meta is not gonna risk their Nasdaq listing for taking that money, right? So those avenues were just closed. so we had to solve that problem first, and we solved that by going to Europe and finding a independent European-owned supply side platform, the people that actually work with the publishers that write the checks to the publishers, meaning, the apps, right? And they were trying to get a foothold in the US and do things and get into verticals where Google wasn't necessarily as dominant. And they agreed to sort this part out for us, and that took a while. We had to go through and explain that [00:04:00] we understood the compliance and the laws and where we could serve ads and not serve ads.
And we had to go and have them pull all the publishers and ask, "Will you take CBD ads? Will you take cannabis ads?" And we actually got more than we thought we would initially. And of course, since then it's gotten much easier. We built the first cannabis-approved sort of supply ecosystem.
That was the one problem set. The other problem was, again, we couldn't use the tools that marketers use for digital advertising. We couldn't use, Google or Facebook or any of those things to, to measure the efficacy of the advertising. So my background is in building software platforms, so we built those tools ourselves.
The crux of which is really attribution. So attribution meaning you're spending dollars in advertising What are those dollars doing? And so we built a platform that does that, and we integrated with multiple different ad platforms to do that. But it basically means when your ad is running on someone's device, a little signal or a cookie or a pixel is gonna fire.
And then we [00:05:00] also integrated on the other end. So we started with Jane and Dutchie, the major e-commerce platforms, and we can pick up a signal when someone makes a purchase, and then we can tie that to advertising that happened in between up to a thirty-day window, depending on what your personal philosophy is about attribution windows, which varies wildly.
So those are the two pieces. We put those together. It took us a little while to do that. And that is the crux of what we do today. There's a lot of things wrapped around that, that we do that, that covers different parts of marketing, but I'll pause there to see if you have questions on that, because that's a little bit to digest.
Tommy Truong: You say that so nonchalantly. You obviously know how much of a problem that is. First, finding space, but also attribution. Attribution is king in marketing. We have a problem with attribution, and we don't have nearly as much of a problem than the cannabis industry. It's huge.
Jake Litke: It is large. And, each marketing channel presents its own attribution. In the early days we focused a lot [00:06:00] on geographic attribution because that was the last platform that my co-founder and I had built, was around measuring device observations and seeing who had walked into stores, and we did kinda walk-in attribution meaning that we started this ad to this phone, and then we saw that phone inside of this location at some later date.
The problem with that data is it's a pretty small sample size, So if a hundred people walk into a retail location, only about five, maybe plus or minus two of those people are on a device where they're sharing their location and they're using some app that's getting that location.
So what happens there is you end up having a conversation about statistical modeling and saying-- and this is what Nielsen does, right? Which everyone loves. Maybe not everyone loves Nielsen, but Nielsen is the standard of this as a measurement. But Nielsen doesn't measure very much of the market.
It's less than five percent. And if you are a mathematician, technically a five percent population rate is extrapolatable. Is that a word? You can extrapolate it, into something that is meaningful and [00:07:00] that a lot of the advertising indus-industry is based on. However, that conversation is more difficult to have in smaller businesses. And so that's one of the reasons why we, as quickly as we could, integrated directly with the e-com platforms so that we can say, " Here's a specific order number You have the cust- and we don't collect any PII at all, right? So we have a order ID, we might have a customer number. We know what was purchased, and then we can anonymously tie that back to an ad that was served.
And it's usually not one ad, it's usually seven to 10 ads over a 10 to 14-day period is usually the window. Another thing that people, when they come into marketing, if you don't have a lot of experience in it, most people just think of like Instagram, right? So it's oh, you see an ad and you buy the thing and it goes to your house.
But in normal marketing, what happens is you have to serve someone 10, 20 ads over a time window. And cannabis specifically is not something that people usually buy on an impulse, right? You're not like playing Words With Friends and see an ad and you're like, "Oh, I'm gonna buy cannabis right [00:08:00] now." They're probably gonna go on Thursday and you served them the ad on, Tuesday.
So you have to be able to show that, that buyer's journey in terms of, the touch points.
Tommy Truong: Do you have any data, and you probably do, on companies prior to using your platform, what they were doing? They're pretty much going in the dark with their advertising.
Jake Litke: Yeah we still run into some dispensary owners that don't even know that they can do digital advertising, right? And so a lot of the marketing historically has been like field marketing, right? Like in-person activations, field marketing, promos, offering discounts to retail-- if you're a brand offering discounts to the retailer so they can then offer a discount. And then text messaging and email, right? I mean, text has its own issues with, sometimes the carrier shutting you down. But those are in theory direct to consumer channels where the consumer has like, "I have given you my number, I've given you my email address," so that you have less restrictions [00:09:00] there.
And that's primarily what people have been doing. Billboards, magazines, field marketing but opening up digital. And even today we are at the point now where we can run TV ads on like connected TVs. So not anything within like an FCC license like cable. We can't do that 'cause it has F for federal in front of it, so that doesn't work.
But most people are using apps on their connected TVs now, right? You're on Roku, you're on Netflix, you're watching CNN, but you're watching CNN on the CNN app, which is technically no different than the CNN app on your phone. And so that becomes a policy decision by the publisher and not a government oversight thing.
So we can run ads on TV, and we're running ads for... and actually I got to see one of the, our client's ads the other day on TV. I was at a restaurant having lunch and I saw an ad that we created that was running on TV, which was a pretty cool moment for me. I was very excited. Everyone else in the restaurant was confused as to why I was making so much noise, but
Tommy Truong: Can you walk me through, and I am a novice, and I'm sure [00:10:00] that everybody listening is completely... This is new to everybody. I had no idea before I met you that online advertising is legal in the cannabis industry somewhat. Where would people see ads online if I was on my phone?
Where would I go to see an ad?
Jake Litke: Yeah, so, basically anything that's outside of the walled gardens. Walled gardens meaning like TikTok, Meta, Facebook, Instagram. And those are still policy decisions that are held by those companies. But anywhere, any website you're on reading the news, Reddit, any app you're on, games, video sites, whatever it is anytime you see an ad there, those ads are generally what's called, the open web.
And that is the programmatic advertising exchange is how that works. And it's like the stock market. People have seats, like we have multiple seats on the exchange, and we use those to buy ads. And so it's really everywhere at this point. There are certain [00:11:00] publishers or media companies, like we're not running cannabis ads on the Disney Channel, right?
That's not happening. But pretty much everyone else at this point. So like CNN, Fox News, Barstool Sports, like all of those types of sites and then most of the apps that are advertising driven as well except for the social media ones because they control their own walled garden.
Tommy Truong: How dialed in can I set the audience geography-wise and demographic-wise?
Jake Litke: Yeah, so you can do-- you can get as detailed as you want. And the only issue is that when you stack too many audiences together, you end up with too small of a audience size, right? So, first off, everything we do has geography, right? A layer we haven't really talked about is the compliance layer.
There are literally thousands of laws in the US today about running cannabis ads. So every state has its own laws. Sometimes counties, sometimes cities have their own laws. That means that by [00:12:00] default, we have to know where we're serving the ads because it has to be a state where it's legal to begin with.
Then you've got a different set of laws, which is each state allows different types of things in the advertising. Some states you can show a picture of the product or flower, others you cannot. Some states are like you literally can just have black and white ads. Canada is a lot like that, actually.
Canada's advertising restrictions are some of the strictest. And it's an extrapolation of the old like Joe Camel fiasco, right? Where the idea is that they don't want you trying to serve ads that are appealing to minors. And in some states, they don't want you to have advertising that encourages purchasing in any way.
So you can't use the word "buy," for example. So there's all those kinds of restrictions. So we-we're always gonna track geo, and we're always going to make sure that where the ad is running and what's in it is compliant. And then you get into the next layer. Once you're like, "That's table stakes, let's not get in trouble," then you [00:13:00] start talking about demographics.
Do you want to target by age, gender, income? Do they have dogs? Those are your basic demographic layers, and then you get into semantic targeting. Semantic targeting meaning that we are now going to decide what the content is on the particular page that someone is looking at, right? So let's take a news site. A classic example of semantic targeting is that airline companies do not want to have their ads next to articles about airline crashes, right? That's how this starts, right? Which is we don't want to have our ad there. So you can turn that around the other way, though, and say, "I only want to show my ads in particular articles that are about this content."
An example of that would be, it could be like a parenting blog that you would not normally target for a cannabis ad, but there might be an article about CBD for parents or whatever it is. In that case, you want to target that specific article on that site, but you don't want to target the whole site in general.
So that's semantic targeting. And you can do geographic [00:14:00] retargeting, which is that we have the ability to draw polygons around anywhere in the US, identify devices that have been seen anonymously. We don't know who the devices are, but we know that this phone was seen at the dog park, for example, and I'm selling dog food.
And at that point, I don't really care about much else that I know about that consumer. I know they're in a dog park, so there's like a ninety percent chance they have a dog, right? So I'm just giving you some examples. There's a whole world of targeting. We can do retargeting based on email lists.
You can do lookalike targeting. There's a lot of different options. To answer your question, it's pretty much as detailed as you want.
Tommy Truong: Wow, that's so cool. I'm even thinking to myself gamers
Jake Litke: Yeah?
Tommy Truong: are a huge market for cannabis.
Jake Litke: They are. We can also retarget based on search intent, meaning like people that have searched for things, specific topics. That works very well. And then the sort of recipe here is what is the geography? What did your creative look like? What kind of audiences are you targeting?
And then [00:15:00] which publishers or applications are you trying to put them in? We usually start a campaign with a somewhat broad canvas of here's some kind of big picture, and then we see what the data tells us, because we get a lot of data. We serve millions of impressions every day. And a lot of the times when we start working with an advertiser that has not done targeted advertising like this before, like maybe they've done billboards, people have misconceptions about who their audience is.
And what you mentioned is a lot of what people come to the table with, right? They say, "Okay, we want college students and gamers and people that go to music festivals." Because those are pretty obvious, like high intent cannabis audiences. But it turns out there's a lot of people in this world and there's a lot of different types of cannabis consumers.
I'll give you my favorite example is we had a company, actually it was an accessory company. They sold bongs, right? And they were doing online, D2C website, e-commerce. And we had this conversation, said, "Who is your audience?" That's usually where we start. And [00:16:00] they said, "College students and gamers."
And so we built those audiences, and we ran the campaign like that, and it was not performing very well. It was like maybe a 1 X-ish ROAS, meaning they were, for every dollar they were spending, they were getting an equivalent number of dollars in sales, which is not a good return for advertising.
You really need to be like 3 X because you have cost of goods and everything else, right? After about a month of having gathered enough data about their audience and what was going on their website our head of media figured out that they were just very wrong about their audience.
Their audience, the people that were buying their product, were suburban moms who bake sourdough bread.
Tommy Truong: What?
Jake Litke: And then when we figured that out, we changed the targeting and the ROAS did exactly that. It went from 1 X to 3 X.
Tommy Truong: Who would have known?
Jake Litke: Not us. Like I didn't know that. And that's always-- it's the fun thing about like working with a new brand is seeing where their audience is 'cause you almost always find some kind of surprises like that.
Tommy Truong: Yeah. [00:17:00] I was gonna ask you, what does a successful campaign look like? How long should you be running in order to get enough data to get answers, to know you're right or wrong and to move forward?
Jake Litke: Yeah. So we generally fly the campaign when we kick something off in a ninety-day campaign. So three months. And usually by around week six, like the campaign performance between week one and week six is pretty dramatic. 'Cause like I said, what we don't wanna do is like not find the suburban moms on accident, right?
So we keep everything compliant, and we put things into reasonable categories, and then we look at what the data tells us, right? Which audience segments are performing better than others, which geographies, which creatives in which geographies on which publishers. An example that I will give, which is a little bit cheeky, but for cannabis, this is real data, right?
So for dispensaries, I use this example. Dispensaries in Michigan that we've worked with [00:18:00] have a very good conversion rate on manga and comic book apps, right? But if you go to West Hollywood, it's Grindr. Grindr kills it, right? And so there's also a combination of what the creative is.
Like we've done work in California with I use these examples 'cause they're extreme, Pop & Barkley, which is a very kind of health and wellness-focused brand, and then Heavy Hitters, which is a very like cannabis aficionado brand. The specific publishers that the ads are running on perform very differently, right?
So an example would be like on a health and wellness blog, for example, like Pop & Barkley is gonna do much better than Heavy Hitters will, but World Star Hip Hop performs really well for Heavy Hitters, right? So It's a big multivariate issue to, to sort out and we approach it with some expertise, but we like to keep an open mind because we get surprised all the time.
Tommy Truong: What would be the minimum somebody should spend in order to get enough [00:19:00] information back?
Jake Litke: So You have to think about it in the size of the audience in which you're targeting. So for example, you could spend five thousand dollars on programmatic around a store location over a few months and get some interesting data. But you couldn't spend five thousand dollars on a national e-commerce campaign because it's too diffuse, right?
You need to be able to know that you're going to hit your target at least ten to twenty times in that time period to get enough... this is a normal advertising adage, and some people say it's seven, some people say it's twenty. But if you haven't seen a brand before as a human being, you need to see that brand somewhere around ten to twenty times before it registers in your brain as a real thing that's not just a random, phone number on a wall.
So If you put that into context, that means that the size of your budget needs to be smaller if you're in a smaller area. Because what [00:20:00] you don't wanna do is serve one ad to ten thousand people, right? You wanna serve ten ads to a thousand people. Does that make sense?
Tommy Truong: Yeah, that makes total sense. For sure. The broader the market, the more you have to spend too, because you're just covering
Jake Litke: customers, advertisers today that are doing that, like they're spending five thousand dollars, and then we have other advertisers that are spending two hundred thousand dollars in a given month, right?
And those larger advertisers are advertising, they might have ten locations inside of a state. Again, we're gonna serve the ads in a radius around that state or to specific zip codes where we've found affinity. Zip codes are an interesting study too. We could talk about that for a long time.
The behavior of zip codes. People are more likely to behave like their neighbors than they are like people on the other side of town. And so you see distinct patterns even inside of not even large cities of which zip codes are gonna have more affinity to the brand, and that's where the brand comes into play as well, right?
The brand experience matters. Are you like [00:21:00] a super bougie brand, or are you a more approachable, lifestyle brand? These things all, come into play.
Tommy Truong: I was gonna ask you, what should a company have in place to set themselves up for the most success before a campaign?
Jake Litke: That is a very good question. There are companies that come to us and want to do advertising, and we actually tell them that we do not wanna take their money. And that scenario is when they have-- when they don't have their post-click experience, their funnel set up correctly.
At the end of the day, it's a math game, right? You're gonna serve a certain number of impressions. A small percentage of those are gonna get clicked on or people are gonna go find your site later, and then another small percentage of those people are gonna make a purchase, right?
So if you have-- We'll take e-commerce 'cause it's the easiest one to measure. If your conversion rate on an e-commerce site, let's say it's three percent, which is pretty good, right? You should be able to do pretty well with a three percent conversion rate. Now, if your conversion rate is only one percent, meaning only one percent of the people that go to your website make [00:22:00] a purchase, that means that your media cost is three hundred percent 'cause you have to buy three times as many ads to get the people to your site to get to the same number of sales.
So if you don't have-- the first question is what is your conversion rate? And if someone doesn't know the answer to that, you have to stop the training right there and say, "Okay, we gotta take a step back and understand what your actual conversion rate is." If your site doesn't look good and it's not easy to navigate the cart, all of those friction points cost money, right?
So you want to feel like for online sales, your website or your landing page is your salesperson, right? A lot of entrepreneurs are passionate about the product that they've made and are under the mistaken assumption that everyone would be able to recognize how great their product is just by seeing a picture of it, right?
And you really do need to actually make your digital engagement platform your salesperson, right? So you have to have social proof and good photos and explaining why you're [00:23:00] better than other people. And if those things are not in place, then it doesn't make sense to really get into paid media. We tell people like, " Take the money you were gonna spend on ads and make a better customer experience instead, and then come back to us."
Tommy Truong: So much sense. Yeah, just optimize your site. Make sure that buying experience is there, or at least to a point where you wanna start spending money to bring people there.
Jake Litke: Yeah. And you know what? Today it's easier than it ever has been, to get that done, frankly, with AI. The tools exist today. You can go string together a couple of prompts with the right tools and build a really nice landing page in 20 minutes.
Tommy Truong: It's so true. If there's one thing that AI has solved is that you can get up and running pretty quick.
Jake Litke: Your copy, your layout, everything can be, like, nice and smooth. And these are things that you would have had to have spent tens of thousands of dollars on even 18 months ago and also find someone who's actually gonna do it, right? And this is, as a marketing company, this is something we run into a lot.
Because there's no license to be a [00:24:00] marketing company, anyone can say they're an agency, right? So the bar is very low. And also anyone can technically run ads. It's not that hard to go and figure out how to buy ads. And so we run into a lot of people that have been burned by people that didn't know what they're doing.
The copy and website stuff has largely been solved if you wanna take the time to go out and use the tools. It's pretty exciting. I could go, we could go real deep in, in-into that, but
Tommy Truong: I wanna go deep.
Jake Litke: Okay.
Tommy Truong: That sounds fascinating.
Jake Litke: Yeah, I would say, where we're at today, if you were to go and spend a couple days on YouTube, figure out which one of-- There's a lot of different tools you can use, but most of them will give you a reasonable output in terms of being able to say, you know- Go to Claude Code or Lovable or whatever it is and just say this is my product.
I want you to build me a high-performing landing page design for e-commerce," or whatever it is that you're trying to do. And within a little [00:25:00] bit of iteration, you will end up with something that, that will convert, assuming that your product is, decent and is something that people want to buy.
That part is effectively free now if you have the initiative to, to do it.
Tommy Truong: Yeah. So let's say I'm a business. I've done that, and we have it dialed in. What should I have in place other than that to set myself up for the most success? And how would a campaign, What would it look like if I started a campaign with you guys?
Jake Litke: Yeah. So let's assume that you have a, first of all, a product that some number of people will want. Then you have gone and made a nice landing page that demonstrates the value of your product to someone, and now you want to go out and do advertising.
There's a lot of different channels. We're gonna talk about paid channels right now. Organic we can talk about also, like SEO and all that. But if we're gonna talk about buying traffic, then your main options are gonna be display advertising which is what we've been talking about.
[00:26:00] Paid search, right? So that's buying your ad placements on Google or Bing or one of the search engines or social, right? Paid social. Now, we focus mostly on display advertising because we don't have to do anything weird, specifically with cannabis. You can run ads on Meta, but they don't really want you to, and you get shut down, and they might shut off your brand page.
Google's kind of in the middle. We do and have been running ads on Google for a long time. And they're lightening up even more now. You just have to know what you can and can't say, right? There's certain words that you can use and certain words you can't to be not in trouble. And then it's gonna be about with display or programmatic advertising, you are optimizing by effectively by removing the traffic you don't want, right? So we talked about this earlier. You wanna put these filters in, right? So let's say there's a billion ad impressions. I only want people in this area on these publishers that match [00:27:00] these demographics and have this purchase history. Now you've narrowed the lens down. And that's what you wanna do because I talked about your conversion rate being one percent or three percent. The same thing happens when we're talking about the top of the funnel, right? Marketing is largely described as a funnel, right? At the top you have awareness, in the middle you have engagement, the bottom you have conversion.
There are some middle layers if you wanna get into the details, but those are the three buckets. And it's usually shaped, like this. So you're gonna run like a million ads, literally a million ads, 'cause they're not very expensive individually. Like a standard cost per thousand impressions for someone is gonna be like, let's say seven dollars, right?
So for seven dollars you get a thousand impressions. So you get a lot of impressions when you're spending thousands of dollars. To the extent that you can narrow the top of the funnel, it becomes less expensive all the way down, right? So the idea is you wanna figure out all the things you don't wanna bid on.
The advertising landscape as a whole is a system that is designed [00:28:00] to take your money from you as fast as you're willing to give it to it and provide as little value as possible in many cases, unless you are very specific about how you use that system, if that makes sense.
Tommy Truong: Yeah, that makes perfect sense. It's true. It reminds me of just even for us, we're a B2B company, and just a small percentage at the top yields tremendous return at the bottom. Huge. So if you're just X percent efficient at the top it's incredible.
Jake Litke: Yeah, and so that's why I was saying about how the performance gets better because over time we can backtrace the conversions, right? We can see which path-- there's a million paths that came down, right? And most of them just fall out like a pachinko machine. But the ones that go to the bottom, if you can figure out where they originated from, then you can start to narrow your aperture again, right?
Because ultimately if you bought ten impressions and that resulted in a sale that was a hundred dollars, those impressions, the ones that actually like converted, those are [00:29:00] pennies,
right? But you're spending dollars to, to find those. And so generally w-when a campaign starts by about the sixth week, maybe the end of the second month, the performance has usually doubled or tripled than what it was in the first couple of weeks because we can narrow down who we're trying to target.
Tommy Truong: Yeah. It's fascinating. My SVP of marketing always tells me about how important it is to have a brand understand who your audience is, and if those two align, then that's like the foundation of everything pretty much.
And it's what you've explained.
Jake Litke: Yeah, and if you bubble it up to marketing 101, and I think a lot of people skip this step and get right to like advertising "Oh, I wanna run ads, and here's my product." What you need to remember is that m-marketing is about storytelling. Human beings connect with stories.
That's how you can send a message. [00:30:00] And whenever your company, whether you're B2B or B2C, there's a value exchange in advertising, and the value exchange is relatively straightforward. The consumer is giving you their time and consideration looking at your product, right? Or your ad. and in exchange, you need to give them some sort of value.
The easiest value is usually some sort of discount on a product that they're probably interested in, right? "Hey, you can have this product. It will cost you less money." I like to use insurance companies as an example because every insurance company ad, most of them, Allstate's a little different, but most of the insurance companies use humor.
And they use humor because insurance is boring, right? And ultimately, like maybe you save 15% or whatever here or there, but they're using humor because that's the value exchange that they're giving to the consumer, is they're giving some of them a little tiny slice of entertainment in exchange for hopefully some brand equity for that brand and consideration later.
you take those two concepts and put them together, which is that [00:31:00] humans resonate with storytelling and marketing is a value exchange between a company and a consumer, that gives you a good foundation for thinking about how you wanna advertise.
Tommy Truong: Yeah. The psychology of it is-- You know, we can talk about this all day. Most advertisers probably have a psychology background I'm assuming.
Jake Litke: There, there should be some level 'cause it is psychology. And if you wanna be like completely like mercenary and capitalist about it, you could just say that advertising is a mind control game. 'Cause effectively what you're trying to do is move someone's opinion towards buying your product, right?
And you're doing that through a variety of methods. Sometimes the value exchange is emotional, right? Like the Budweiser ads in the Super Bowl, right? They've got the Clydesdale and farmer or whatever, and it's all very dramatic music, and it gives you this Americana heartwarming kinda feel thing, right?
So it is psychology, right? So are you giving someone a deal? Are they excited about getting something for cheaper? Are you appealing [00:32:00] to their inner emotions about creating a bond between your brand and their like sort of emotional psyche? Are you trying to entertain them, right? It does all come down to that 'cause at the end of the day, we're emotional beings, right?
Tommy Truong: Is there any data on depending on how you want to communicate your brand and which emotions you're trying to pull out, how long it would take for you to convert a customer? Or are they all just the same? It's just which way is more effective for you?
Jake Litke: I would say that actually more like they're all different, right? So what is the story you're trying to tell? The reason why discounts or, act now, get two for the price of one, the reason why a lot of advertisers use that is because it's a relatively straightforward marketing exercise.
You don't have to build a sort of a complex emotional relationship because you're really just appealing to, to value monetary value. but if you look at [00:33:00] luxury brands, let's take BMW or Mercedes, for example. The majority of the budget that they're spending and that they're targeting is actually to their own customers, right?
And there's two reasons for that. The average buying cycle for a car is like four to five years. So for a brand like BMW or Mercedes, they're going to spend quite a bit of money in advertising. They spend huge amounts of money, but they're actually spending a significant amount of money at the individual level advertising to their existing customers so that they feel good about the purchase that they made in the past, and they're more likely to purchase again.
There's even-- You can probably find an example of this in your own personal life where you bought some product, and it was maybe a newer product or a newer restaurant or something, and then you saw an ad for it, and you're like, "Oh, hey, I went there." That interaction right there is a post-purchase validation of something you did in the past that makes you feel good about that [00:34:00] purchase that you made because you didn't just do it all alone by yourself.
It's obviously in the zeitgeist, and you are, like part of some sort of trend.
Tommy Truong: That's actually, you're blowing my mind because it's so true. It's so true, and you feel part of maybe a tribe or whatever the case may be...
Jake Litke: Yeah.
Tommy Truong: That connects you. I had no idea about BMW, and it makes so much sense. It's true. When your lease is over, are you gonna renew another lease?
Jake Litke: And then, and that's the game that you see all these car companies playing, right? Which is they're trying to either conquest and steal-- Mercedes wants to steal a BMW customer. At the same time, BMW is trying to defend their brand equity, right? And depending on what your brand image is, they're gonna show-- A lot of it is showing images of people in scenarios that the target audience would like to be, right?
Like they show the nice car driving up to the nice house or on the beach, and you're like, "Oh, [00:35:00] I wanna be that person. That's what I aspire to." That's the emotional connect that those luxury brands are playing into or tapping into, I should say.
Tommy Truong: You blow my mind, Jake. Jake, I wanna thank you. Oh, before I let you go, how can our listeners find you?
Jake Litke: Sure. MediaJel.com. That's MediaJel with a J. We should be pretty easy to find online, LinkedIn, socials. If you want to reach me directly, my email address is jake@mediajel.com.
Tommy Truong: Congratulations, by the way I didn't mention this earlier, on winning Agency of the Year at the MJ's.
Jake Litke: Oh, yeah. You know what? That was really cool. I don't think I'd actually ever-- I didn't win it. The company won it. But I've never-- I actually have. Look, I have it. I have
Tommy Truong: Yeah. Congratulations.
Jake Litke: I didn't really play sports in school. I was like in marching band, so you don't really get trophies for being in band.
And I think that was the first time I ever got to go and get a trophy, so it was very cool. And it was nice to see the recognition. So
Tommy Truong: Well deserved, for sure.
Jake Litke: Yeah. Thank you.[00:36:00]
Tommy Truong: Thanks so much. I have to have you on board back on the pod, and we need to dive deeper into this 'cause I'm fascinated.
Jake Litke: Yeah, pick one topic, and we can go deep into it if you want because there's a, it's a big, it's a big playing field.
Tommy Truong: For sure. Thanks so much. Talk soon.
Jake Litke: All right. Thanks, Tommy.
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