A company which spent almost €275,000 on Facebook advertising over three years has seen its sales plummet after the online media giant started rejecting their ads. Finland-based Hemprefine Oy spent five years developing its hemp processing line at a huge cost, founder Mikko Neuvo told HempToday.
“We invested everything we had and more to build the processing line and to provide Finnish customers with hemp products,” Neuvo said.
Because Facebook turned out to be the most efficient tool for targeting specific audiences, the company decided to invest a lot of time and money for building a hemp community to support its business model. “We had to aggressively advertise hemp products in Finland because we had to create the market from scratch,” Neuvo said.
Retailers don’t need ads
He suggests Hemprefine Oy ads helped create a demand which has seen Finnish retail shops import from larger producers, which has further undermined his company’s business.
“These retailers had no need for advertising because customers already know the product due to our efforts. Most of these customers also think that they are purchasing our products and retail chains don’t want to change that impression,” said Neuvo.
“Sometimes our ads were disapproved but problems were always solved with Facebook’s customer service.” Neuvo said he even had contact with Facebook’s London office in order to solve problems related to the word hemp. He said he was encouraged to continue and Facebook’s staff really seemed to understand what Hemprefine Oy’s business is about.
However, on one recent Sunday morning everything suddenly changed. “Facebook disabled my personal ad account without a warning. Sales plummeted about 90% due to Facebook being the only marketing channel I had,” Neuvo said. “After a few months we are having a cash crisis and a good possibility to go bankrupt.”
“As a startup company, we didn’t have enough working capital to survive 6 months with minimum sales. Now it seems improbable we can continue. But this is the risk hemp entrepreneurs have to take.” Neuvo laments. He adds other challenges exist including small changes in legislation, policies or regulations which can have profound effects on the industry.
Neuvo said Facebook’s behavior wouldn’t irritate him so much if Hemprefine Oy had just purchased and sold hemp products. “But we worked 16 hour days for 4 years to get our processing line working as it should” Neuvo said. “You can’t process spring-harvested, winter-retted biomass the same way you process dew-retted hemp, so we had to come up with unique solutions, and we managed to do it with decent costs.”
There have been other knock-on effects too. Many of Hemprefine Oy’s customers donated insulation fibre for rescue dogs and cats around Europe for the last two winters. “This year these animals will have to do without the fibre because we can’t get the message out with Facebook to ask people for donations,” Neuvo said.
Hemprefine Oy isn’t the only company encountering difficulties with advertising on Facebook. Last month Evo Hemp, a major American hemp company, reported having difficulties with the social media giant.