Brand vs. Direct Response: Advertising’s Achilles Heel With Preston Rutherford

Preston Rutherford is the Co-founder of Marathon Data, which measures revenue from brand-building efforts. He also co-founded Chubbies Shorts, a men’s apparel brand, and Loop, a software company that streamlines the returns and exchanges process for e-commerce brands. Before exiting Chubbies, Preston grew the brand to $100 million, drove over one billion video views, garnered four million social media followers, and became the most-viewed men’s apparel brand on social media.

Here’s a glimpse of what you’ll learn:

[4:10] The Chubbies Shorts' founding story
[10:01] Preston Rutherford talks about Chubbies’ text and email marketing approach
[15:07] How Chubbies transitioned out of bankruptcy
[21:04] A roleplay conversation between a CMO and CFO
[26:17] What is the 95 rule?
[33:46] The difference between brand and performance marketing content
[44:06] How to measure brand-building efforts

In this episode…

Performance marketing is a useful strategy for generating and measuring initial clicks, leads, and conversions, but it doesn’t foster audience engagement or retain consumers long-term. Similarly, while ROAS measures efficiency from these ad campaigns, it fails to measure their engagement across channels. What metrics should brands track, and how can they shift from direct response and performance marketing to brand engagement?

Multimillion-dollar brand builder Preston Rutherford warns that focusing solely on ROAS stunts long-term goals; instead, brands should track effectiveness metrics that measure customer lifetime value. You can acquire and retain customers through brand-building and awareness campaigns that leverage engagement-driven content. Each content piece you produce or share establishes your reputation, so you should create campaigns intentionally to build a resonant brand story.

Tune in to the latest episode of the Up Arrow Podcast as William Harris chats with Preston Rutherford, the Co-founder of Marathon Data, about creating brand marketing content. Preston explains the 95 rule, how he recovered his brand from bankruptcy, and his engaging text and email marketing approach.

Resources mentioned in this episode

Quotable Moments

"We wanted to create something that was the opposite of 'can't sit with us' fashion vibes."
"If we need it, there's got to be other people out there that need it."
"We wanted it to feel like the best writing you consumed, like emails from your buddies."
"To create something that people care about, I'm okay if people hate it. It's never fun, but I don't want apathy."
"Focusing too much on efficiency metrics like ROAS will incentivize team behaviors counter to our long-term goals."

Action Steps

Focus on creating engaging content that resonates emotionally: This establishes a strong emotional connection with potential customers, making the brand memorable when it enters the market. By prioritizing content that earns engagement and positive associations, companies can capture 95% of people not currently in the market.
Balance efficiency and effectiveness metrics: By incorporating effectiveness metrics, such as total 180-day contribution LTV from full-price customers, brands can ensure their strategies drive sustainable growth and customer quality.
Invest in brand-building through performance marketing: This combines the best of both worlds, using performance marketing techniques to enhance brand awareness and emotional connections. This approach can increase branded searches and ultimately lead to higher contribution margins.
Hire creative talent focused on emotional storytelling: Hiring individuals skilled in creating emotionally resonant content can significantly impact a brand's success.
Use predictive analytics to measure brand impact: Implementing tools like Marathon Data can provide immediate insights into brand-building efforts. This allows brands to make data-driven decisions and optimize their investments in real-time.

Sponsor for this episode

This episode is brought to you by Elumynt. Elumynt is a performance-driven e-commerce marketing agency focused on finding the best opportunities for you to grow and scale your business.

Our paid search, social, and programmatic services have proven to increase traffic and ROAS, allowing you to make more money efficiently.

To learn more, visit www.elumynt.com.

Episode Transcript

Intro 0:00

Welcome to the Up Arrow Podcast with William Harris, featuring top business leaders, sharing strategies and resources to get to the next level. Now let's get started with the show.

William Harris 0:15

Hey everyone. I'm William Harris. I'm the founder and CEO of Elumynt and the host of the up arrow podcast, where I feature the best minds in e-commerce to help you scale from 10 million to 100 million and beyond as you up arrow your business and your personal life. Joining me today is Preston Rutherford, co founder of Chubbies, scaled to a nine figure exit in 2021 acquired by solo brands fast followed by a 10 figure exit in 2021 and now he's full time posting the absolute most amazing cmo CFO conversations on X that I've been really enjoying and so excited to have you on the show here today Preston.

Preston Rutherford 0:48

Well, I appreciate it. Thank you. What a hell of an intro that was. Yeah,

William Harris 0:52

I know you have full time doing that, but it's one of those things where I see this and I'm like, Man, this is so good.

Preston Rutherford 0:57

Thank you.

William Harris 0:58

I want to give a shout out. So lot of times I'll shout out who introduced me to the guest? Nobody introduced me to you. It was just X and seeing this stuff. But I will give a shout out to my brother in law, Ryan Strauss, because he's the one who first introduced me to you guys. I think it's back in like, 2013 or something, bought me my first pair of Chubbie Shorts. He's like, this brand is amazing, like, you have to follow them. And so I've been a fan of you guys ever since. So Ryan, thanks for putting me in touch with Chubbies in the first place.

Speaker 1 1:24

Thanks, Ryan. I appreciate it.

William Harris 1:27

We're going to get into some of the good stuff here. The main focus of the topic that I want to talk about is just brand versus direct response, because I see you talking about this a lot, and I almost call this the Achilles heel of advertising within e-commerce. So I want to dig into that before we jump into that real quick. I want to announce our sponsor. This episode is brought to you by Elumynt. Elumynt is an award winning advertising agency optimizing e-commerce campaigns around profit. In fact, we've helped 13 of our customers get acquired, with the largest one selling for nearly 800,000,001 that ipoed. You can learn more on our website@Elumynt.com which is spelled E, l, u, m, y, N, t.com, all right, that's it. With the board.

Preston Rutherford 2:05

Can I ask about? Please go for it. Yeah. So can you talk? You can talk about those brands, I assume, what some of them?

William Harris 2:12

Yes. I mean, I can talk about things about them, but I maybe can't mention some of their names, because some of the you know, their private acquisitions,

Preston Rutherford 2:19

sure. That's awesome, though. Like, those stats are pretty compelling. Thanks, man. That's like, how, wow, that's legit, yeah, what? What can you say? And, like, how did you help them? Okay, the easiest

William Harris 2:35

way that I would explain a lot of this is simply coming down to exactly what you're talking about helping them understand that it's like, i The number one thing that I would come into a brand and say, Hey, I'm probably gonna lower your ROAs, but I'm gonna increase your profit. Is that okay? That was the might like my pitch. If that was the thing, they're like, lower my ROAs. No, that's not okay. I was like, But wait a minute, let me show you what I mean by this. And that was the thing. And I think so when I talked to a lot of other people in the advertising space. They weren't understanding P and L's. They didn't understand whether or not what they were doing was actually driving EBITDA. And I so this is why I'm very excited about these conversations you've had, because I feel like I explain it maybe not in the best way, and then you take this into like, this conversation between cmo and versus CFO and stuff. And I'm like, You nailed it so well. And I now just, I just share your your your posts with people. I'm like, This is what I'm talking about. This is what I mean.

Preston Rutherford 3:24

Amazing. That's so cool. So when you get that, when

William Harris 3:27

you get that set up right, it ends up being a lot easier to scale profitably, because now you're putting the money towards the right things. And so then you can take a brand very quickly from 10 million, 100 million, and now they're in a spot where they're saying, Great, we're ready for acquisition. And so, and again, that again, that looks very good for anybody who's going to acquire them. You're helping with the multiples and stuff like that. So 100% cool. Love it. Let's do it. Yeah. Okay. So I want to dig into that. Before we dig into that, I do want to give, have you give, like, a quick rundown of, like, like, the Chubbies story. I've read about it. I think it's a lot of fun, like the one on one selling at Stanford. But for anybody who's listening that doesn't know the story, which I think is, what if they don't, but I'm sure there are still people who don't know the story, so like, give me the rundown over it's like, this is how we started it, and why? Sure,

Preston Rutherford 4:10

so started by four friends at a college and and then brought to the world and ultimately grown into something that I think is a pretty cool, meaningful brand by this amazing team of folks. So, you know, from the whole perspective of like, none of the credit goes to me, it's, it's all to the team, and I'd say all to the other founders. But we started it late 2011 at the time, couple things were different. One, Abercrombie was not cool. It is cool now not cool. It was like the worst, and that represented a lot of, like, men's fashion, right? Typified by can't sit with us kind of vibe, right? Gotta look a certain way. I'm gonna have my shirt off, stand at the door, right? Spray you with cologne and have this horrible, like, elevator style, house music. Like just pulsating, but that's that's very much like what cool was 13 years ago, right? So that, being number one, we wanted to effectively be create something that was the opposite of that. Once we decided that men's tiny shorts was what we wanted to devote our lives to, which, in and of itself, was its own conversation of just trying to figure out, like, because we had been working for other people, you know what I mean? And like, you're 2526 ish, and you're like, my boss is an idiot, and I got, I don't want to work for someone else. So you have that whole rationalization or realization, you know, pre marriage, pre mortgage, marriage and mortgage. So we had a little bit of an opportunity to just go for it and be responsible for our fate, basically, and be able to create something so that was, you know, we were all in this place where we were all in the same place in life, entrepreneurs in search of a company which was kind of like the way we think about it, and but then focused in on this idea of, You know, fashion. Two of the founders actually worked at Abercrombie in the Stanford mall, which is kind of funny, and so got this, like, first hand taste of, like, this is not the vibe that I'm about. And then it also kind of seemed like there was a product gap too, right at the time, yep, it was long cargo shorts, right? That was what was, what was cool. And all of a like, I played rugby in college, right? Shorter shorts. Two of the founders played soccer at Stanford, shorter shorts, generally. Fourth founder spent a lot of time military kid, but spent a lot of time growing up in Georgia, generally wear shorter shorts, right? So there was all this thing, and so there was this, like, what's we weren't that articulate, where we're like, there was a brand gap and a product gap, but something didn't exist that we thought could exist because we weren't necessarily being served by the status quo. Kind of felt like, well, if we need it, there got to be other people out there that need it. It wasn't like this super consulty, like top down tam analysis. It was like, we want, we want to make something for ourselves. And that, that was kind of the the start of it. And then you mentioned, like, door to door sales, basically, yeah, I mean, we just sold short. Side of our backpacks started selling to our close friends. And then they told their friends, you know, we'd be out at the park in San Francisco, and people would come up, because you got this group of people having a great time trying to be, you know, fun and welcoming, just like who we were as people and but we were in bright, tiny shorts, and so it was immediately notable and memorable and different. Some people hated it, some people loved it, and that felt great, you know, because I think each of us came from an experience, a background, where we worked on things that people didn't care about, but that people you know, that we were devoting our lives to. So it was like, next thing I do, I want it to be a physical product, or I can hand it to someone. I can see their face light up, and they give me money for it right away. But that being less important. What more important is I create something that people care about, and I'm okay if people hate it, it's never fun. But I want, I don't want apathy, you know what I mean? And so those are some of the core things that kind of brought us together and got us to start the thing in the first place.

William Harris 8:12

I love that you said you don't want apathy. I've heard it said that, you know, some people say hate is the opposite of love. And I forget who told me this, but it was one of my mentors when I was younger. This is like, no, no. Apathy is the opposite of love, right? Like, if you hate something or someone, even, let's just say that's because you care so much about their opinion or whatever. Like, if there's arguing or whatever going on, then the relationship is still salvageable. When somebody's apathetic, there's no more opportunity for the relationship. And so I love that idea. It's like no, no apathy. It's like, how do something that people either love or hate? Yeah,

Preston Rutherford 8:43

something to because, yeah, that's a great way to frame it. I actually really like that, right? Because the the hate is because you've had an impact, you know, you've had an impact, and there's and then the second piece, and one of the ways that I used to think about it is that there's something that's definable to then hate, you know, when, when there's empathy, right? It's just sort of like, I don't know what I'm react I have nothing to react to, and therefore I can articulate any kind of opposition because I don't know what to oppose. So having something that is then clear, clear idea, clear set of just a clearly understandable thing is kind of like the other component. But I really love that idea of, like, apathy, the opposite of hate.

William Harris 9:22

That's dope. So okay, now one of the things that really got me to love your brand at the time, I don't even think I was in marketing at the time. I'm sorry, I think 2013 I maybe had just started into marketing, is your emails and your marketing was very irreverent and almost like, seemingly unpolished, but unpolished on purpose, to a point where it was like, the coupon code might be like, This is our 20% off coupon code. Use it now. And it's like, this one big, long word, like, like, things like this. How did that come to be like, the thing that you're like, hey, let's just go ahead and do this. As opposed to like, let's just do what we're supposed to. Do,

Preston Rutherford 10:01

I'd say two, two things, three things. Maybe one is we wanted to do things that just felt great to us as people. And part of that was rooted in this idea that we're sitting in this nine to five, although it wasn't nine to five, right? We were working, I don't know, like eight to eight. You know, early days out of school trying to make it great. We graduated in Oh, eight, right? So times were different. You know, it was like a stressful time, hard to get jobs, working a ton. Some of our favorite things during that time, like were respite, was like the funny email thread you have with your friends, maybe you're planning a trip or events coming up, whatever it might be, and then it turns into this thing where you start razzing each other, right? You send memes, you send funny jokes, you say funny things. And those were just fun. You know? It would just be like this nice little break from the boss being like, give me your TPS report or whatever. And so that being one thing is we wanted it to feel like you're the best writing that you consumed, basically, which was, like, these text threads or these email threads, or just great funny content, but, but feeling like it was from your buddies, like that, we were insiders. We were a group of friends, right? That was, like, one of the foundational premises of how we wanted everything to feel that like we're all buddies. We're not a company selling to customers. We're just group of friends, and we just want this thing to exist, right? We all want it to exist, so let's just make it and but we're we're friends. You're like me, I'm like you, but we are buddies. And that idea kind of permeated everything we do, where I would never write an email that comes from some business to my buddy. I would never text that to my friend, you know what I mean. And when you put it through that kind of a filter like, that's absurd that you would just like, check this box of, well, I wrote an email. I mean, people see through that shit, you know what I mean. So it was kind of obvious that it should feel different and that the second thing is, like we need to earn like we need to earn your time. You're giving us time by opening our email. You need to then have a positive association built up with that action that you just took. You're not gonna get a positive association by having it be some Hello. These are a new pair of I mean, this could be funny now that I'm saying it, but like common, you can do it in the right way, right the common email that is whatever the basic thing that we get from every other brand in the world trying to sell a shit. And can I use profanity?

William Harris 12:39

Yes,

Preston Rutherford 12:41

I won't do too much, but I just, I want to make sure, and that just doesn't feel good, you know what I mean, and it doesn't build that as a positive association, which, I mean, our open rates were crazy, and I think you have to earn that over time, and have to stand out. So those were some of the core things that that I think stood out to us, where we were just trying to, like, have it feel like it's conversation between friends, right? When that's your filter, everything that follows ladders up to that, and then earning, earning time created that positive association so that you've got this positive feedback loop of time. The way you get there, though, is trying really, really hard to make it good, so trying to come up with stupid ideas, but like, we're spending time being like that coupon code should be funny. The the alt text on the image, if images don't load in the email, think about that, right? That's a detail that matters, that someone's going to see the sub header of the email the sender. I don't, yeah, maybe it's not allowed to play with, send anything but, like people opted into our list, right? We weren't doing crazy, you know, email list stuff. So like, people knew it was us, but it was a funny name, it was a funny subject sender combo, right? It just, it provided a little bit of levity and fun and value in this sea of doom, scrolling of your email inbox, right? That is just like, so bad. So anyways, trying to bring some of those feelings to this medium, you know, this canvas, if I were to sound so, I don't know, not bold, but just kind of, like, maybe idiotically serious about what email is, but, and then the fact that it's it then earned something that is now, whatever, 13 years later, we're talking about this. You know what I mean? Like, that's what we want to do with building a brand and with marketing, is have something that that then sticks with people, that then, you know, we can talk about years later. Yeah.

William Harris 14:31

So then, you know, fast forward, the brand is growing. You get into, you sucked into the, like, the meta performance marketing stuff for a little while, and then you start to have, like, this shift, and you start having, I assume you started having these conversations. The conversations you're posting were based on conversations you were having with your C suite of like, Oh, guys, we also need to focus on this. What was that, that wake up moment for you, when you started realizing, like, we're getting lost in this? Sea of performance marketing like we need to maybe shift back to some of our core values here, of being a friend or whatever.

Preston Rutherford 15:07

Yeah, I mean, almost running out of money and going bankrupt is a pretty good wake up call. Sure, that was us, so that was us, and it was, it was a bummer, right? It was tough. And, you know, because the you kick the can down the road because you don't want to face hard truths sometimes, and you can cover up difficult things that are happening with other things that are like band aids, right? So every brand, everyone does this in their life, but every brand does this to a certain extent to because the core issue is scary, you know? So you can add more product categories, you can expand your national you could try to do all of these things that are growth, but, like, the core is withering, so it's like, there's like a process, right? Of like, what is the, I don't know, the steps of grief, but that and so anyways, got there, but then, like the reality was the reality, like, we had to fire people, which was very unfortunate and sad and and difficult, embarrassing, all of that kind of stuff. So we had to do the brand reset. But, like, the business reset, right? And, you know, we had raised some venture capitals, but, you know, ran out of that and couldn't raise money, but we had previously architected the business around, yeah, we could just raise more venture just raise more venture, you know, and then, you know, add to it, keep that revenue growth going to the moon. And, you know, lost, lost that ability. So had to become a new business, like, effectively, a venture backed business that had to become a bootstrapped business, because they had no choice. And that, that was the transition, but it was very much like other indicators, right? Like, how did it show up in the biz? Like, row, I mean, row as could be okay, but contribution margin going down, right? Blended contribution March, difference between gross and net sales, right? Due to discounting going up. You know, bigger discount rate on aggregate the year, year over year, going up and up and up. You know, more you look at revenue composition, more and more of it coming from paid even on like a last click basis. But just the change over time, more of a we were just effectively buying transactions which were comprising our growth, right? There was no fundamental like organic growth keeping up with the paid growth kind of thing. It was like, if you just look at the chart, sure top line is going up, organic is here or down, but all of it is just this whole area is coming from paid and it's just getting bigger and bigger. And that in aggregate, you're like, What do I have? What is this business that I have? Obviously we're a negative EBITDA margin, so like, but that was something that, like, we spent into for the first number of years, because, right, we're venture backed, right? We'll spend all money, put it, put it all back into marketing to take any profits. Now, it'd be stupid. But, you know, the EBITDA margin goes from like zero to negative one or negative two, to go to the wrong direction, all of those things in aggregate, we're like, okay, you know, got to change completely. Being obsessed with these myopic, short term vanity metrics clearly isn't working for us. So what are we going to do? We are a brand, right? Like we are selling a commodity, one of the commodity of all commodities, right? Cotton shorts for men, you know, like that is as much an afterthought, product wise as I don't know, socks like just and obviously, there have been brands built on socks and obviously brands built on shorts, but it's just like, you can get this thing for three bucks on Amazon, and I'm trying to sell it to you for 20x that. So like, why? You know, why? Why would someone do that? You know, the answer was becoming less and less clear, based upon our tactics of, you know, product focused, offer, focused, urgency, focused right? Things that people could copy and things that become less and less effective over time the more you use this promotion, right? I mean, if you're going to positively comp a promotion you're running, it's got to be a better promotion margin on that promotion right, down, down and down. But if you want to keep growing revenue, and you have no other lever to pull other than trying to just dupe people into buying from you. You know, it gets nasty over time. So, yeah, that was, like our midlife crisis.

William Harris 19:28

This is the plateau that I see so many brands run into that haven't invested in this and this. Like we're talking like this 10 million $100 million this is probably, in my opinion, the single greatest hurdle that those brands need to get over, to get from 10 million to 100 million. There's a lot of others, and we've talked about, like, operational challenges and things like that on this podcast, but like this is the plateau that I think sets those brands apart. What I want to do on one of these is I actually want to have you read we're going to do a. Meeting of one of your tweets. So you'll be the CMO. I'll be the CFO. Just to kind of set the stage here. Let me see if I've got that one pulled up. I've got it right here before we before we dig into this one. I kind of feel a little tight. I don't know if you're feeling tight. I want to stretch out just a little bit here real quick.

Preston Rutherford 20:20

It's funny, that camera. Oh, love it. Oh, wow. Those are, those are, those are classic ones, the solid light blue with the Chevys, all right? Those are from, those are from what, like, 13, right? That's what I'm saying.

William Harris 20:35

I'm pretty sure those are from 2013 This is my first pair

Preston Rutherford 20:38

that is, like the first swim trunk run that we if I'm not mistaken, I could be wrong, but, like, those were the first swim trunks we ever made. That's so cool. I haven't seen, yeah,

William Harris 20:49

so I said I've been a fan for a while, so I'm excited about this. Okay, I'm gonna pull up the screen. We're gonna do a reading. I'm not an actor, but this is just fun. Anyways, ready, me and you. Oh, god, you're gonna play the CMO. I'll be the CFO. Okay,

Preston Rutherford 21:04

let's do it all right. Show me a two row as or 20 row as I can do that. What the f do you mean? Well, yeah, it's basic math. I could toggle three big things and get you whatever number we want. I can spend one retargeting or bring keywords, discount sales out the butt, or reduce spend like I can do any of those things and take ROAs to the moon go on. So the problem is that we've not evolved from the early days when we had existing untapped demand. That's why we started the business in the first place. There was demand for a product that didn't yet exist in the market. Therefore, every dollar we spent was both high ROAs and driving incremental revenue. I'm

William Harris 21:51

starting to follow.

Preston Rutherford 21:55

But and here's the rub, as we've grown, we've exhausted that group's revenue. We haven't started generating new demand. What got us here won't get us where we need to

William Harris 22:08

go, but we need a number showing how our investments are driving increased profitable growth.

Preston Rutherford 22:13

Hey, come on. I get it. We're on the same page here, but if we're using ROAs as the tier one metric, our team will be incentivized to do things that actually have the opposite impact.

William Harris 22:25

I'm back to not following

Preston Rutherford 22:29

All right, let me just like lay it down for you here. ROAs is the only metric will drive the human tendency to do three things. Pull back spend on low ROAs, but high incrementality in print as an aside driving purchases that would not have happened without this spend, Close Print resume investments over spend on high ROAs low incrementality tactics like retargeting or brand keywords and prioritize messaging creative and sending traffic to things like discount collections or promotions or other offers or just product features, blah, blah, blah. Here's

William Harris 23:07

my parentheses. I got the better end of this deal. You've got a lot more lines than I do. Okay, that's making sense.

Preston Rutherford 23:15

Good, good, good. I'm happy to hear that we're making some progress here. So our new customer cohorts. If we do above, we'll continue to shrink and a larger percentage of that cohort will be acquired on discount, because our forecasts have increasing pressure on repeat revenue, which often happens when we're going through these processes, we'll push harder to get more revenue sooner from these cohorts, but because there are fewer customers coming in and their lower LTV to begin with, given that they were acquired on promo, we won't be able to hit our forecast without further discounting to drive them to purchase. You can see how this doesn't end. Well,

William Harris 23:54

gotcha. So you're saying focusing on ROAs alone makes us do things that actually slow our growth while simultaneously reducing our margin.

Preston Rutherford 24:03

Yes, clearly, we need to run promotion sometimes. Let's be real. Here. Come on, we're both adults, and there's some amount of retargeting that makes sense, but ROAs is an efficiency metric. We need an effectiveness metric to balance it out. Sure we can you number use number of new customers, but that doesn't tell us about customer quality.

William Harris 24:29

So let me see if I'm picking up what you're putting down. Putting too much focus on efficiency metrics like ROAS will incentivize team behaviors counter to our long term goals. Therefore, we need a metric that represents the total amount of growth, aka effectiveness, but it has to represent long term customer quality, not just new customers, like total 180 day contribution, LTV dollars from full price customers acquired.

Preston Rutherford 24:59

You're my hero. No,

William Harris 25:02

not all heroes who are capes. If you're watching this and you would like to cast either Preston or I in your next movie, please reach out to our agent. Okay, the types of conversations that you've been putting out that I really, really love, because you help people walk through the conversations that they need to have with their other C suite or board members or things like that, to make sense here. But you touch on this idea of what I call the ROAs death spiral, and this is one of the things you're asking, Well, how did we help people? I wrote an article called The ROAs death spiral, which was like, Hey, we're doing really well. We're spending $100,000 a month at an 8m ER or ROAs, whatever you want to look at there. And CFO comes and says, ah, that's not good enough. Like we need more profit, so you should aim for a nine. And they say, Great, we're gonna aim for a nine. And then the agency goes, Well, I gotta cut this campaign and this campaign, because it's not there, and I've gotta pull back here and here and here. And so now they're only spending 75,000 at a nine, and they're making less EBITDA. And you're like, well, that's not the goal. So wait a minute, we need to rethink about how we're doing what we're doing and why we're doing it. So, what said? What? Yeah, okay. So then, like, when you think about, how do you fix this? Then moving forward, one of the things you talked about was, like the 95 five rule. What is the 95 five rule?

Preston Rutherford 26:17

Dude? It's something that blew my mind. First of all, let me just like, tee it up and sort of like, build some suspense sort of thing. Like, okay, I'll try it is, like the opposite of the way I operated for the first half decade of my tenure as a completely untrained marketer, knowing nothing about any of this stuff, not having an MBA. Like, yes, I read Kellogg on branding, which was awesome. But, like, a lot of it was, like, in one year out the other. I was like, yeah, yeah. I mean, that applies to, like, Coca Cola, but, like, not to whatever. Modern brands who've got data and can advertise on Facebook, get out of here. You're, you're, you're a relic of the past. Anyways, the general idea is that 95 at any given time, 95% of the people who are seeing your content, particularly paid stuff, but like content, are simply not in market for your category, not even your brand, your category, at any given time. So that being the case if we're spending effectively 100% of our marketing dollars, or allocating 100% of our marketing resources, assuming that you're in market, you know 95% of the people, or 90 you could even then make the extrapolation, 95% of the dollars allocated are being, I don't want to say wasted, but sub optimally allocated, because if you're not in market, and I'm trying to shoot like, if I'm just walking down, think of it like human life, if I'm walking down the street, and I'm thinking about this meeting I have where I have to present to some very important person, and you come up to me, stand in front of me, and you're like, here's here's A necklace. Like, I'm just gonna click, get out of my way, right? Because I gotta do this other thing. I'm not in, I'm not in market for this necklace. But 10 months later, two days later, I could be in market for a pretty sweet necklace, because I'm looking to, you know, blingify my life a little

William Harris 28:16

bit. You want to look more like Mike Zuckerberg or something, right? I want to look like Mr.

Preston Rutherford 28:19

Zuck. I want to look and and that's a completely different conversation. But, you know, I'm not. I was simply not in market in that moment. And that is what the reality is, that 95% of the people that were just like slamming stuff in their feeds, they're walking to that meeting. You know, they're not trying to get a necklace, but they will, right? So, what does that mean? What's the so? What the So? What is that we need to behave differently, knowing that that is the truth, right? How then do we prep the 95% of people where, when they do decide to come in market, and I can't force you in market, right? Where they do decide to come in market for this necklace, they instantly think of me. They think of my brand. They think of the feeling that I elicited, right? And I don't want to get like, into this whole like system one system two thinking. But like, kind of, like, there's two ways that people think. One is like, highly rational. It's like, very heavy cognitive load. Like, think of doing like, a math problem set. And the other is, what's an example? Shit, I don't know, buying freaking movie on Amazon Prime, or 399 but I really want to see it. Okay, some emotional type purchase, right? That is the type of purchase that we generally want to engender with a brand, right? Because it's then less of a rational purchase, and therefore less driven by, okay, I want the greatest feature set at the lowest cost, right? And so I'm going to look, I'm going to survey the landscape, and I'm going to pick whoever does that for me. And I don't care who does it. I just want to set a product features at the lowest. I want to get a deal that is the opposite of what anyone is trying to do in marketing, right? So what we want to then. Right? To be able to do is get us out of that, and you do that by establishing emotional connection and driving this sort of an impact that is not rational, but it makes you feel good, right? So maybe it's one of those emails that we were talking about earlier, right? It sets itself apart. It's like, oh, positive association, oh, okay, when they when I want a light blue pair of swim trunks. You know that funny email so it doesn't even, it doesn't only apply to paid, paid social applies everything made me laugh, right? Their shorts, probably, they seem pretty sweet, yeah, oh, wow. 60 bucks. 70 bucks for, whoa. If I weren't emotionally impacted there, I'd be like, screw that. I'm going Amazon. They're like, 90 different copycats of Chubbie swim trunks. You can find them anywhere, but people show by, right? So there's something irrational happening. Product is great, product is better, right? There are all of these rational things, but and not that we're trying to manipulate, right? That's a complete misunderstanding of what we're trying to do as marketers, right? But what we're trying to do is help people feel something great, right? Make them feel good, right? And so we're prepping that 95% so that when they come in market, they then don't require you to throw an ad in their feed and to get them to click on it to then get the purchase. They'll just seek you out like inbound, right? That's pretty awesome, right? Who doesn't want more of that? Who wouldn't want all of their revenue simply coming from people who search chevies, swim trucks, I would love, and that's not going to show me any row ads, right? Because no one's clicking on my ads, right, right? And there, there in lies this, like, oh, my god, wow, you're there. I The final thing being, I used to spend so much time with our team and just with myself and just with the way we crafted strategy that was around. We need, okay, we need to test 10x more angles, right? We just need to run more tests. We just need more variants. Because my assumption was that I just need to be more convincing, and if I'm more convincing, I will then accomplish my goals. Whereas there are 95% people who can't be convinced because they're just not convincible. So I was, you know, treating a symptom that I was completely misdiagnosing, if that makes sense,

William Harris 32:24

yep. So then one of the solutions to this is, like, you said, this brand versus performance marketing. And so I would say, but you almost say it's like, brand through performance marketing to a point, right? But like, how would you define what type of content this looks like to people? Because it's not like the like you said. It's not the old school, you know, branding that you would think of when people are just like it needs to be like this old I don't know. We've done ads for people. I ran stuff for GoDaddy, and one of the things we ended up running into so one of the companies you talked about, cell right, was acquired by GoDaddy. One of the ads that we had that was running for the longest time was not a very good looking it was not a very good branded ad, but it was the best running ad for like, four years in a row. And their brand team threw everything they could at trying to beat this ad that we made that was like an Excel screenshot, basically, and it wouldn't convert better, right? So you're not necessarily talking about like, and Let's Get aside from the conversion aspect of it, but you're not talking about like old school brand that you would think of. It's more brand of like in gracing the customer to this emotional response of who you are and wanting to be a part of this. What is this? What does this content look like, and and who makes that like? How does because it's probably not your advertising team. It could be, but it's, it's not like. It's like, is this a social media manager? Like, who? Like, what does this brand content look like, and who makes that?

Preston Rutherford 33:46

Yeah, great question. So, yeah, first of all, I mean, I think the knock on doing this in the first place is what it's from a content create, creation perspective, it's that it's expensive, right? It's that I can't test it out. It's that I can't quickly iterate, right? I just get like, this one and done, Super Bowl ad. I spent a million bucks retaining this creative agency and then spent another million to produce it, no test, no validation, and then I just run it and hope and pray, right? That that's what I think of when I think of like John ham sitting on a couch, three Martini lunch, traditional advertising agents, that kind of thing. That is not, you know what, what I think you know modern brand building content is, and then that ladders up to, like, the problem with investing in brand to begin with, right? Which is more in the realm of, I don't want to waste money, like I'm gonna You're telling me I'm gonna spend money and have no idea if I'm gonna get a return, and if I do, which is like that in your team, when I'm gonna get it, and you expect me to be able to come up with a forecast and have a piano, right? I mean, that is legitimately, like, a reasonable problem, and that's. What leads us all to think about, oh, okay, like brand too early for me, man, I don't know. I'm not Nike, I'm not Apple, I'm not and that, again, that's what I felt for a very long period of time. So all of that is BS what, what we're trying to do is just get more people to effectively search for our brand, you know, I think that's what a lot of this ultimately ladders up to, because those folks, you know, revenue from brand organic search is obviously not, obviously often much higher contribution margin, much higher LTV, much less price sensitive, right? So it's, it's driving behaviors. And this harkens back to your earlier point, which is like brand as direct response, it's brand responses right that then ladder to things like brand organic searches that then brand that, then ladder to things like sessions from brand organic that then ladder to revenue from brand organic search, right and and then that leads to an increased blended contribution margin is a larger share of your overall revenue comes from purchase behaviors like that that represent, you know, the memory structures that we've built. So then, what's the content? The content? I think I could be wrong. Does four things. It earns engagement. Right earns engagement, meaning it, it has earned your time to where you're going to take your reputation. You're going to put your hand up in the air, and you're going to click that button, and you're going to associate your reputation with sharing that piece of content, because you're going to then going to put it out there, right? That's, that's, that's doing something right. So it's got to do that, but it can't do only that right, because we can play the virality game, and we can just become meme accounts. How do I know this? Because I did, we did this. We did this with Chubbie where we like brand awareness cool. Let's get a lot of video views. How do we get a lot of video views? We're gonna just do the meme me things. We're just gonna jump on every single trend. And we felt like we had a pretty good feedback loop and a good content machine, you know? Okay, that's how we build brand. We look back a year later, no incremental sales that we could, you know, any kind of tracking methodology could tie to it, right? So we made that mistake, and that's if you only do check box number one, box number two. Your Brand has to be there, whether it be brand name, logo, distinctive sound assets, like, think of any but, and, and then three, you got to convey what you sell, like a that you're trying to sell stuff, right? When we were going super Viber, like, it was not clear at all that we were selling anything. So we're just trying to make you laugh, right? So you have to do that. And, yeah, I'm trying to hock you some shorts, right? I'm trying to get you to buy some shorts. And then the fourth thing, like, why you versus all of the other sellers of shorts in the world right now? You don't have to hit on all those things. You don't have to be super on the nose. You don't have to do them all to the same degree, right? Because think of it. It's like a portfolio of my content over a monthly period of time or a quarterly period of time. I want to hit on each of these notes to varying degrees. Varying degrees, but ultimately, I want to be in balance across those four boxes over any period of time. Now that does not require some Madison Avenue million dollar right? It requires just knowledge of like narrative structures and how to craft a piece of content that gets someone to do those four things, and how to weave these things in these boxes that you that you want to check. But there is a science. There is an art. It does not cost money, and it does not take a long time, and it is not something that is not measurable meaning like, you can turn this into a machine, into a feedback loop, who makes it? I don't know. Like, it could be, could be anyone. I tend to be somewhat biased that it's and I mean, your camera setup is amazing and you look fantastic, but I don't think it necessarily requires, and now it's not gonna, it's not gonna, it's not prohibitive to be able to buy one of these really nice DSLRs or whatever, and to actually do, do work on the nice lighting, and do all of those sorts of things, and I and that works. And some brands require it, right? Some brands is have a vibrant has to look and feel a certain way. But that's not cost prohibitive, like you could set this stuff up for couple 100 bucks, right? And but anyone can do it. I think you're gonna be crappy at it at the beginning, for sure, right? But the key, if you want to do it in house, the key is just to keep going, have a way to measure it, because no one's going to see your crappy stuff. Anyways, it just doesn't get distribution. So that's, I think, one of the things that really helped us, but it could be the Social Media Manager. One of the things we learned was that it's great when you have someone who can go, or at least has context on the end to end right, where they can go from like concept, and they have an understanding of what running the media looks like, you know just what that route right? Rather than, you know, I'm just creative, you know, they'll do their thing. They gave me the brief. Nothing wrong with that process at all. But it's context ends up being very important, because this is ultimately, like a learning feedback loop, where when you lack context, that's when learning slows, so to the extent you have that. But I mean, I mean, that's it. It's, I don't mean to be pedantic, but, you know, that's what we're that's what we're trying to do, and what's possible is to do a lot of it and to learn a lot, and it doesn't have to cost a lot of money. I don't think because that's what people are scared of, right? Hearkening back to some of the points I was trying to make at the beginning, yeah, you're scared

William Harris 40:38

of the money, and I think sometimes they're just scared of the I don't know how to do that, so I'm going so I'm going to just dig into the things that I already know how to do. And I think that's kind of where I'm getting at, like, what is this position? What is this title? What is this person that we're trying to hire? If they're hiring somebody, because I'll tell you right now, I'm literally having this conversation with another brand that they've done very well. They've scaled up, I want to say, maybe around $20 million and we've been pushing them. It's like, okay, in order for you to keep growing, this is what I think you need to do. You need this. I can't, I don't know how to direct them into like. They're like, Well, who do we hire for that? I'm like, I don't know like, I I know what content I want to see, but I don't know who does that. I don't know like, and they're not the type of founders who are like, yeah. They're like, okay, great. We're, you know, founders who can create this content. They're just, they're not. They're definitely not. So that's okay. They're great. They turn to,

Preston Rutherford 41:25

yeah? I mean, there are great agencies that help with this and that they can, I can do that stuff. Yeah, obviously there are people. I mean, what I would say is that if you're looking to bring it in house, I would suggest throwing out the traditional job description and what you're looking for on the resume, and focus in on just your funny friends. One of one of the people who ended up doing really amazing content was a friend from college who went the traditional consulting route because thought that that's what I need to do to be successful. Got completely disillusioned, but he was just always one of the people who made us laugh. Who made us laugh, right? Was jumping in on those email threads, right? Knew nothing about making content, right? Had a phone, but that was it. That all could be learned. But the core of being able to do something that elicits a response for for us, the response was a laugh that person had. And that's the thing that I would focus on when you're looking for people, and you probably have more than enough of those people in your network, even like buddy buddies from school, friends that you know, like from middle school, whatever. That's how I would think about it. Or we found like people on Craigslist. Who? One guy, for instance, Moon getting a stand up comedy career off the ground. So he was doing sets at 11pm 1am but wasn't making a ton of money at that time, so needed to pay rent. But again, had that core of being able to put something out there, see how there was a reaction, try to deliver this nugget of information right, to elicit this response, but obsessed with the feedback right and craft and craft and craft and iterate over time, but like that's not super obvious, especially if you have no skills in actually creating content. But all that you know can be learned relatively easily for the tactics of actually executing on it. But anyways, those are some things that we learned that ended up working. Yeah,

William Harris 43:27

I know that we're coming up on time. The last question that I want to hit on then, because you touched on this, and I want to make sure that it's very crystal clear for people, is that this is a measurable tactic. This is something you can do to say whether or not you're having an impact. And one of the things that you mentioned is, you know, this is brand searches is a good way to look at this, but there's some nuance to that as well, right? And so like, when you're nuancing this, and you're saying, Okay, how do I know if we've been investing in this for six months now, whether it's having the impact that we want, that I could take to the CFO and say, See, we're on the right track this. Keep pushing the pedal on this. Totally, yeah,

Preston Rutherford 44:06

you're right. I mean, so like, brand organic search, you know, you could, you could drive that in a variety of different ways. And so it's important to strip the noise, particularly driven by short term tactics. So like, if I launch a big sale sort of thing. A lot of people are going to be searching X, Y, Z, brand, right? But probably be brand, and then search string will contain 50% of for means, but that it'll do a brand. So, so there's that, like, do the obvious things, and you can do that. You can triangulate. What is still though undone is that that's like a midterm indicator, right we still need, given that most of us listening to this podcast, I would imagine, are coming from like a one day click, direct response, performance marketing background, we're used to getting data in session or in day, which is, which is why, and I don't know if you know this, but which is why I started this business Marathon, which is like the software platform to to measure. Or the predictive revenue mention

William Harris 45:02

that I didn't even see that. Okay, let's give a shout out to Marathon. Yeah, what is? What is Marathon doing? That's all

Preston Rutherford 45:08

it is. Basically. It's just sort of like, yeah, I can use brand organic search shortcomings we just talked about. But again, it's not a an immediate response indicator. So if I want to do things as a marketer that are going to build brand. I want to know right away, because I want to get the data if I'm not going to allocate capital to drive one day click row as I need to get some indicator that I'm driving this other value, brand value. And so that's basically what we're trying to do, is just like, create this metric that is like, statistical analysis of relationships between engagements that you've driven over the years and how your revenue has responded, basically trying to be the first platform, first brand measurement platform, to actually connect to your actual business, right? Because that's always been the knock on brand measurement, as well as, like, I get some brand awareness number, and then you get the readout, and you're like, so what do I do with this information? Right? So that's, you know, that that's the other problem. So anyways, trying to attack that issue and solve it based on some stuff that we learned at Chubbies that was really helpful for us to make this transition from obsession with bottom funnel, direct response to this balanced approach of call it brand and Dr,

William Harris 46:16

I love it again. There's no shortage of questions I want to ask as follow ups, but I do want to respectful of your time. Part two. Part two, yeah, part two is going to be a necessary thing. If people want to work with you or follow you, what's the best way for them to do that?

Preston Rutherford 46:31

If you want to do the X thing or the LinkedIn thing, you could just look up Preston Rutherford. I don't think there are a bunch of people named Preston Rutherford, so hopefully that's going to be pretty good. Or just Google, I guess Google my name, Preston Rutherford, and then, yeah, if you want to check out Marathon, it's just, yeah, Marathondataco.com, got to get a better URL, but it is what it is for now.

William Harris 46:55

I love it. That's great. I really appreciate you jumping on here, sharing your time and your with us. Thank

Preston Rutherford 47:00

you, man. I really appreciate it. Thank you for the opportunity.

William Harris 47:03

Thank you everyone for tuning in. Have a great rest of your day.

Outro 47:07

Thanks for listening to the Up Arrow Podcast with William Harris. We'll see you again next time, and be sure to click Subscribe to get future episodes.

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