How To Measure Brand with Preston Rutherford, Co-founder of Chubbies | Ep. 367

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0:48Get ready to turn the f*** up. what is up everybody welcome back to another episode of the market millennials i have preston rutherford here co-founder of chubby's loop returns um marathondatacode.com but we're going to talk about a topic that i think a lot of people should be thinking about they should be doing they probably don't know how to do it or they probably not doing it right now which is a different way to think about brand people always say do brand brand brand but what does brand actually mean and Preston has actually a playbook to show you what like how to do brand but actually make it perform so I'm gonna let you do a more of an intro if you need to Preston but Chubby's is enough of a like a case study to show that like you know what you're talking about but oh man yeah appreciate it thanks Dana for having me pumped to be here and yeah one of the co-founders of a brand called chubbies and some of the other stuff too but uh yeah basically just trying to demystify the whole thing uh and unfuzzify it if you will so that you can actually start uh doing it because at the end of the day it's all performance marketing it's all growth marketing it's just you know how you do it how you measure it how you think about it okay let's just go into it because i think that's like the first aha moment that you should understand is like all marketing is performance marketing so how could we make how could people start thinking about brand as performance marketing and that's where i think the mindset shift needs to start yeah totally i think part of it starts with understanding the shortcomings of the way we measure bottom funnel short-term stuff you know that it's not perfect today it's and i think we know that to a certain extent but we don't quantify you know the impact of it so you know like high level 85 % of the data that you get from meta, for instance, is modeled in and of itself, you know, because of iOS 14.

2:50And, you know, you just hover over the little eye and ads manager and it's like, Oh, this data is modeled. And so it's like, we used to kind of walk around this earth thinking like that's the be all end all truth kind of thing. And I think once we get to a point where it's like, Hey, I have no idea how incremental this current spend is meaning I spend this money and I get a purchase. I wouldn't have gotten had I not spent the money. And then B, that a lot of the data is modeled anyways, then we can kind of get to a place where it's like, okay, we're already triangulating quite a bit. But then as it relates to like how we can actually start doing this brand thing, like performance, right?

3:28I think at the end of the day, there's some very basic things and there are better ways to measure this, but like from the Chubbies experience, which I mean, all credit to the team i get none of this credit um tiny tiny tiny piece or whatever but like chubby's coming off of like eight straight years of revenue and profit growth they just they reported earnings i haven't heard the more recent ones but for the first six months of 2025 like over about 90 million in revenue like a 26 percent EBITDA margin right which is just like killing it and growing i guess well over 20 a year i think maybe six months year over year like 40 so it's like there's something that's working with this whole thing, right?

4:10You just look at the results. It's a great example. So it's like, it works. So then it's like, how? A lot of the way we approached it was, let's just drive brand searches. And you can poo-poo brand searches all day. You know, you can talk about, well, that's because a TV drives brand searches, or the more I spend, the more searches I get. But sure, but it's not just about that. It's per dollar spent, how many searches can I drive? And then for my brand, like, cause that's just a representation of people thinking about me and taking some action. It's not necessarily a shopping action, but it's an action, but that's a great way to start.

4:47Like the reason we built marathon is cause you still have to take it further. And like, how, how much money do I make when I drive these searches outside of short-term, you know, click-based attribution, but like, it's a great start just to start thinking about, okay, like if I've got a dollar, how many searches can I drive? whether it be with creating content, like not even through paid media. But I think one of the things we can so easily forget as brands, especially once we get to a certain point, we're starting like systematizing and looking for scalable things that are consistent. You know, we get into this tunnel vision of just like running meta, running Google, et cetera, et cetera.

5:25And you forget some of like the earlier things that got us a lot of like free reach and generated a lot of free memories. It's one of the things just like as a tactical recommendation I always give to people is like, remember how you started and start doing some of that stuff again, some of this fun stuff that's just crazy, that's interesting, that's different, that stands out. It doesn't have to be via ads. So that's one of the things. And then the other thing is just start monitoring brand search maniacally. And not only that, but total clicks from brand searches so that you can see how you're actually converting what brand you're developing.

5:59And then have someone own that metric. And there's no reason why you can't double it or triple or more. But like one of the realities is like, it's kind of like, I don't know, gravity. It just is like, if there's a brand that's 10 times bigger than you, they probably have 10 times more searches than you. Like you can fudge it on the margins or whatever. But like, that's just one of the truths that like, if you grow that you generally can become a bigger business. Yeah. Cause I mean, branded searches, literally people searching your name which is like not your the problem you're having it's literally searching your brand brand's name i want to go into like okay so chubbies or other brands how do you recommend actually getting that brand search so like if i'm going to run meta ads to get a branded search or i'm going to do content what is like that flywheel to ignite a brand search in your eyes or what do chubbies do or what are other brands doing the mindset i would always take and i wouldn't say chubbies at least when i was associated with it and therefore i'm the one to blame wasn't doing this perfectly but it's like always start from free i think that's one of the things that we forget like start with the free things that i can do first and then paid is a thing you then gotta do like from a free perspective i mean many ways to do it right and it depends on category and where you feel comfortable in terms of like where your skillset is, but like find a way to make organic social interesting to people.

7:29Right. I mean, how can you be in the running to be the most interesting piece of content you see all day? You're really good at it. Like you're a great example. You make stuff that's just interesting to people that people want to engage with and share. Right. There's no reason why brands can't do more of that. I think you just get in this crazy silo of thinking where we just stop investing in it. But like, there's a ton of free memory generation out there, you know, if we just do better, you know, and it's like, sure, do better, but like, it's totally possible. So organic social, and then all the obvious stuff, like do things that whether it's like an interesting stunt or something interesting in the world, just something that earns attention, right?

8:11I think we kind of forget the idea that like at the end of the day, when we're building a brand, a word that is very helpful for me just to kind of reframe is like, be famous, get famous. You know, how do people get famous, right? There's a variety of ways, infinite paths, right? But your goal is to get yourselves to be famous. And so just like, do that. And that requires creativity, that requires fun, that requires doing things that are different. And then of course you can, and like, I guess you can poopoo that too, but like, that's the reality. Like it's our jobs as marketers to be interesting and to earn attention and to earn thought.

8:47And I think you do a great job of that. And then the other is like on the paid side, right? There are just like some tactics that people would probably freak out at, but that open up reach much less expensively, which I think everyone's struggling with, right? I mean, And if I go into a bunch of ad accounts and you just do like the account level report, last 30 days, compare same days prior year, it's like spends up 20%, reach down 30%, right? And that's just a really, and then like unique outbound clicks down some big amount. Generally, those are the things that we're seeing. And it's like, man, that's hard to grow if those are your economics from the ad platform.

9:24You know what I mean? So we got to start adding in, in my opinion, just something to try. And there's a lot of data that supports like studies. And then now we've got a bunch of case studies drive engagements, like optimize for engagements, optimize for follows, optimize for shares across all the ad platforms. Right. Now people are like, but you start paying for it. So it's a lower value. Yes, obviously same thing when you start paying for purchases, you know what I mean? It's all the same stuff. Right. So, So, but there's a lot of studies that support the idea that like, if I'm getting people to engage, to take action rather than like a reach campaign or a video views campaign, nothing against them.

10:07And they could be great. They're probably great, especially if you get that engaged view. Because I think a focused time spent means a lot, but legitimately, like if I can get someone to raise their hand and like follow my brand or share one of my pieces of content, I would happily pay for that. So DTC Twitter would probably shit on that, but that's fine. That's why the CPMs are so low and that's why it works. So it allows you to reach more people, but it gets them to take action, which kind of helps to sear that memory in people's minds. And it's not like you stop doing direct response, but it's like, spend a little bit of your budget on this stuff distributing your organic pieces of content that got the most shares like it's a very kind of simple thing that that also helps people understand it can't just be like a straight up meme for meme's sake so just be obvious that like or be reasonable that like you want to pick a piece of content that in some way conveys who you are what you do and then you're feeling your vibe that's interesting that earns engagement that earns attention in the same way that i was just talking about earlier yeah i mean there's a company called dad gang that um who does this exact thing where he he i think you heard but you've probably seen on twitter but he finds the most engaging piece of content and he optimizes for follows shares um and he grew that following to like 250k and then when someone goes to like dad gang on instagram it looks like a a huge brand with a huge community and then you he uses stuff on the platform like um like on facebook you can create facebook groups on instagram you can create the um i don't know the commute the little community of like people where you if you start optimizing for that and then you can do organic drops on facebook groups of like and stuff like that so once you get people you can start getting them to these like micro communities inside of the platforms too which is an pretty much an or is an organic way to start dropping things to your raising raving fans which is what you're trying to do um yeah you don't truly own any audience right like even your email list like all this shit but like build owned audiences right is one of those things that just like pays you over time to your point build that facebook group right run ads to build the Facebook group.

12:36And yeah, organic reach is going down and blah, blah, blah. That's just the reality of the platforms. Supply has to sort of like meet demand, but you got to do the best you can. And obviously you're trying to do as much of this as possible without paying for it. But when you start paying for it, yeah, totally. That makes sense. And then you build these little communities where you've got ability to reach people and have them feel like they're a part of something. I think that's the other thing that people that we kind of forget about is like, we're all little like, monkey brain people. We just want to feel like we're parts of communities.

13:08That's what assigns the meaning to your pair of pants or your hat or your socks or your whatevers. Because we're all mostly selling commodities that anyone can copy right at the end of the day. And we're trying to get a price premium for it. It's like, you got to do something because it's not price and features because that's a race to the bottom, right? I mean, everyone who's competing on price and features, if you don't have some crazy supply chain differentiation or whatever, whatever, whatever, it's hard to become a long-term, sustainable, growing business in that path. You can maybe get some short-term wins, right?

13:44But to be a decade and a half, two decades, three decades in and still growing and generating more and more profits, that becomes really hard if you're just competing on the level of price and features and you don't have communities that you kind of own. I want to go into the classic, what happens to a lot of brands, but I wanted to see how you would fix it. We were talking before this about Little Lemon, but a lot of brands get into the trap of these quarterly results, have to hit a revenue number. They do it by just straight trying to do performance marketing, like run as many ads as possible.

14:24And as we talked about now, like there's a cap on how much of that. And every year it's going up. And even if you're not running brand, it's going to go up even more because there's a frequency cap to it. There's people get fatigued of your ads. People get fatigued of your name. So how do we get out of this trap, like the trap of quarterly results? I know we have to hit a goal, but how do we get out of the trap and go back to doing the brand stuff that works? Yeah, totally. And just to add a couple points to your observation, right? like stats, like Facebook and their earnings, they put out average cost per ad changes.

15:08And last quarter, it was up 14 % year over year. This last quarter, I think it was 10 or 11 or something like that. So like just the cost to play the game, to enter the auction is going up double digits and compounding every year, right? So it's like, man, that's tough because inflation is what, like two-ish percent? So 5X inflation is just the cost to play the game that's going up. that's bonkers. I've read a triple well report that says on meta CPMs are up 25 % year over year, right? So it's just hard to do the same thing and, and find accumulating advantages. There's just more and more friction if you're just going to do the same thing over and over.

15:47So that's, that's where it gets somewhat difficult, but yeah, as it relates to like the short-term piece, right? It takes having a strong view, right? I think if you're, if you're a bootstrap business it's maybe a little bit easier but you still want to still want to keep growing but a couple of thoughts right especially if you have like a board or investors or whatever first is like as quickly as you could stop looking at the revenue number it's hard to do but as quickly as you can stop looking at the revenue number and look at the profit number or the contribution i talk a lot about contribution margin which is just revenue minus the cost of your goods, minus the cost of your marketing ads, minus discounts.

16:29Start looking at that as a metric and trying to grow that. That maybe gets you 70 % of the way there, right? Just stop getting so obsessed with revenue as the mark of success, but rather what comes out after discounts, after marketing spend, et cetera, et cetera. That being number one. number two is like remember what we are to people and i kind of talked about this a second ago right we're simply trying to create something that should always feel like it's the most popular kid at the party kind of thing you know and once it stops feeling like that that's when really dangerous things because we're just in the desire game you know our our goal is just to be desired and when you use that as a filter like hey is this discount promo thing where i'm kind of like selling my soul to hit this short-term number does that increase overall desirability for my full price product over time or does this anchor someone at a lower price and make them only want to purchase again when i come out with a bigger and bigger discount right so like that as a filter is a is just a very tactical recommendation that i would I would absolutely suggest like, A, be okay, not positive comping on revenue, but be a little bit more maniacal and trying to just beat where you were on contribution.

17:51And then just run decisions through the filter of desirability. Like, does this increase the likelihood that someone's going to want to pay my full price for my product over a long period of time? Yes. Cool. Do it. No? Okay. Maybe just, we have to move inventory. Like at the end of the day, if you make an inventory buy that, that doesn't work or whatever, you got to move it to free up the cash. So I'm not saying never discount at all. There's always a reason to do it, but just view it as a system. The next thing is like, what is the business that I want to own? You can take two identical businesses, two identical brands, same revenue, and 99 % of the impressions that this brand puts out into the world is product shot on a white background.

18:39It's like 50 % off if you buy today kind of thing. And you're having to constantly launch new products to just kind of keep up with the fading demand of your core. Launching into new GOs, launching new categories. Whereas you add a bunch of complexity to your business, blah, blah, blah. Have to churn through this ton of volatility, right? Because you're totally subject to the ad platforms. Or it's like a lot of what you put out there, just people look at and they're like, this is freaking awesome. I love this. I love that I get to put this out there into the world. I love that they're making this stuff.

19:13It feels great. Same revenue. Less discounts, right? Less promo, right? People are buying because you launch a cool new thing that is maybe part of your core. but they're just excited about it or you launch a cool partnership or whatever just cool stuff that adds value to the customer's lives i mean i think that's how like that's my opinion of why lulu's faltering a little bit is there's and there's a bunch of other stuff i think associated with it but like just getting into this i gotta orient everything around hitting this next number so that i've got like this very clean growth not that consistent growth is bad but just the general idea of losing the spark can be very dangerous, but to have the spark introduces a bit of, it fits less into a clean spreadsheet, right?

20:03If you're going to do something that's really interesting and really novel and captures people's imagination, right? I mean, I think if you look at a Lululemon, they've really let Aloe, your hat, which is an awesome hat, or Viore kind of come in. I just did some quick analysis on Google Trends and found that just over the last three years, the gain in search interest, imperfect metric, all the obvious caveats, has more than almost tripled, I think, for Viore and Aloe, where they've taken over as the majority share. If you look at just like Lulu, Athleta, Aloe, and Viore, so it's like just they stopped doing things that got people to search for them.

20:44You know what I mean? And I have no idea how much money they're spending. Probably find it in the public filings. I'm sure it hasn't gone down much, but general idea being they stopped doing shit that was interesting to people. So at the end of the day, let's optimize for that. Not necessarily like, oh, I got to just make sure I'm hitting this revenue number. now I don't know what their profit numbers were but I assume if they were just a little bit more focused on just like the profit march it would also have been better but I'm assuming a big part of it was just like losing what made them super what made you super loyal to them like we were talking about yeah I also think that for some odd reason like contribution margin and profits not sexy like which would for like but like saying you got like a hundred million revenue sounds sexier than getting $3 million in profit or something like that.

21:38They'd rather get $100 ,000 in profit than$3 million. It's just a crazy thing to think about just because it's an ego thing to say we're a$300 million a year business instead of saying we're a$10 million profitable business which is a sexy it should be a sexy metric because that means you're making actual money. But it's just so it's just it's funny because like you see these brands on like D2C Twitter or like founders bragging that they're like a 30 million dollar business. But you can easily spend money to make you a 30 million dollar business and have nothing squeezed out of it. Like if you could spend your way to a 30 million dollar business without having that profit and contribution margin.

22:29And I wanted to go into something else that you said. because it's pretty relevant to right now. You're talking about discounting, and I want to get your take on Black Friday, Cyber Monday is coming. A lot of brands have discounted so much on those days that they become just a Black Friday, Cyber Monday brand. People only will shop those brands on Black Friday and Cyber Monday because they know they have the best discount there, and they won't shop all year. So how should people be thinking about their launches in the next week or so? or two weeks or three weeks Cyber Monday, or for next year, if they already have their plan locked in with discounting and doing cool things with Cyber Monday, Black Friday.

23:15As marketers, we're all trying to answer the same question. Which investments are actually driving revenue? And too often, the honest answer is an educated guess. CallRail replaces that guesswork with proof. With the help of AI, you can connect every lead to the exact campaign that drove it. Analyze your conversations and capture leads around the clock. That's why over 220 ,000 businesses use CallRail to market smarter. Stop estimating impact and start proving it. Try CallRail for free at callrail.com slash prove it. Yeah. I was listening to a podcast earlier this year from Taylor Holiday of CTC and some of the data that he had.

24:01And so this was months ago, but it was like so far in 2025 or something like that. Discounts are up like 40 % year over year across all the brands that he tracks. I don't remember the exact details, but the point being discounts are already way up this year for brands versus where they were last year. So I think a difficult thing that we're potentially going to see is that we've already done a lot of demand pull forward this year, you know, as brands to kind of hit a 2025 number. Not that I'm necessarily saying I'm worried or nervous about how they're going to do in Black Friday, Severed Monday, but just the idea that we've already been discounting quite a bit.

24:44So Black Friday, Severed Monday, whatever you're going to do might feel less special to the consumer if it's purely kind of like discount driven, which is why in general, love to recommend like gifts with purchase or things that feel like you're getting something that is not a discount, even though it is a discount kind of thing. And I know more and more brands are doing stuff like that for Black Friday, separate Monday, but something where it feels like, Hey, I'm getting something. Like I buy two things and I get a whatever, a sock or a hoodie or whatever, whatever, whatever. The benefits of that, I think are awesome.

25:19It's potentially, you know, harder to do on the upside, but as much as it's And not that just saying, hey, flat 40 % off is bad, but it's like less interesting to the consumer. And it feels like straight up, hey, I'm devaluing the thing that I'm trying to create more value around over time. So that's maybe one tactical recommendation. What's also interesting, right, is I think a lot of people have launched Black Friday, Cyber Monday or whatever, like November sales already. And then it's like Cyber Month after Black Friday. But I think something cool that I see chubby chubbies do and some brands do.

25:59I like the gift for purchase. They have that, the checkout experience where you can like make your way up to like get cool, like extra stuff. So you get more, but I think also something that they do too, which I think brands can consider is like creating a loyalty program where you like, you can, you opt in to get the, the, the black Friday's every Monday. So now they're in like an opt-in loyalty community. And then you have a loyal program customer for the whole other year and you have something to market to them for the rest of the year instead of just keeping like trying to get them for this one moment.

26:38You have a loyalty program. I think that's a smart way. And then also dropping it earlier to that community, having better discounts in the community versus like upfront. I think those are some ways to counter the discounting a little bit, is give it to your most loyal people and get more people into that loyalty funnel instead of having it by yourself. For sure. I think it's a smart way to do it as well. Yeah, I think it all ladders up to what we've been talking about, which is build more communities that you own. You know what I mean? And the loyalty piece is another one. I mean, I've been out of the day-to-day at Chubby's for a long time, And I still am pumped when I get my Chubbies.

27:22It's Chubbies Collective is the name of our thing. And where I get to use some points, you know, at checkout kind of thing. Maybe I'm the highest LTV customer ever. I don't know. But still, I get pumped when I get to use it. And then you've got like True Classic, and I'm sure there are others who have like a subscription kind of situation, right? where you uh or whether it's not a subscription but you pay something and then you become like a an elevated member i don't know if it was like 12 bucks or something like that but i did that and that's pretty cool too just get access to other cool stuff like cheaper shipping and blah blah blah but like the economics of these things are kind of interesting but then yeah i mean creating a community where you get something that feels special and then cultivating that because it takes extra work to cultivate it like to run the program to do the early launch right you got of plan around it.

28:10So like tactically it's a little more difficult, but, but, uh, but totally important, but like, like decision filters, I always kind of come back to, right. So like, how do we make this feel fun? How do we make this feel like I'm a part of something special? How do we make it feel like I'm getting more than just paying less for a thing? Cause that just gets harder. It's a harder game to play over time. Cause the 20 % you do this year, 20 % next year is generally going to be less effective. So you got to amp up to 25 and it's just a, it's a scary path and to the extent we could just do things that yeah feel fun feel different feel like i'm a part of yeah like like special skews limited to black friday like bundling limited to black friday like something like christmas like giveaway like christmas gifting bundle that we only run on black friday cyber monday like something that feels like fun to the brand, not just like I go to your site and I could purchase the same shirt on Black Friday as for 30 % off that I could have bought a month ago for a full price, which is to me as a consumer, I would be saying to myself, Hey, why don't I just wait a month to buy that shirt instead of buying at full price right now which if it's not available on that then it might be a different story yeah totally so i want to just come and keep like double leg down on this like topic of why to run brand because i think i'm a big fan of brand i i think like that's what keeps a legacy businesses going um forever and like you said i'm wearing alohad i wear it because other people are wearing alohad and it's a it's a community driven thing in public you wearing chubbies i know you were co-founder but you're also a super fan of your own brand and when you see other people wearing chubbies it's community in the streets too so and that's brand but i want to talk about you were bringing up a little bit about road and i know there's that celebrity aspect of road but can we talk about like what you saw that made it so special as a brand and why it got acquired so fast because of its brand appeal.

30:30For sure. Yeah. So for context for, for listeners slash watchers or whatever. So they got acquired for some massive number. I don't remember what it was, billion or something by elf beauty. And, um, the, as part of the public, uh, filings they had to do, they released the financials of road and I'm going to get some numbers wrong, but the point is still the same where, you know, they were spending less than, I think they were spending like 11 % on ads, whereas many brands are spending 25, 30 % kind of thing. And they were growing fast, had like a 34 % EBITDA margin, right? We're talking about profit, sexy, like that is sexy, man.

31:10That is amazing. That is a great business. And I think one of the things that was called out was like, they didn't spend anything on paid media for the first two years. Now, I don't know how true that is, blah, blah, blah, blah, blah. But like focused the first two years on like organic community building. That's like, what does that mean? You can come up with what works best for you, but like just creating a tribe around your shit is like the key. And, um, and so I think, I don't remember what the multiple was, but it was like multiple times revenue, which not a lot of brands are getting multiple times revenue.

31:43Maybe you get an even though multiple on acquisition, but, um, just pretty crazy that, that, that, that happened. And then the idea is like, oh, but they've got Haley Bieber. And it's like, well, maybe, but like up level that, like, what is that? That's a lot of free reach. So it's like you don't need a celebrity to get yourself free reach or to generate a lot of memories. You just have to find creative ways to generate a lot of memories. Like that's ultimately what it all ladders up to. So like Chubbies was not started by some famous person, right? But like now I think a lot of what we did in the early days was like try to just get a lot of reach with our organic social.

32:20and to make our emails funny to where people would forward them and do stuff like that and do funny promotions or like group buying things or just fun things to take part of. Now, I mean, you've got George Kittle, you know, 49ers tight end. You've got a little bit of the Kelsey's hanging out. You've got this big thing that they're doing with the NFL and fantasy football and creating all this content. And now it's less people internal creating content. it's like these creators who are just making these awesome videos, but that fit the chubby's vibe and reach their audience and all their people.

32:59And that's a way that you're running brand. It's not like a Facebook reach campaign or whatever. And so like variety of ways to do it, but it should all ladder up to like, I just got to reach a lot of people with really cool experiences to generate a memory when they're not actively shopping so that when they are shopping, they automatically think of me right the best business to own in my opinion if you're an e-com is or even not but is like a when all of my purchases come not having to discount in theory right but b if i'm e-com like it should all ideally could all come from just people searching my brand name back to the thing we were talking about at the beginning right that's the best business to own and like like for chubby's like the vast majority of new customer acquisition when we were acquired was coming through people who were searching the brand or coming direct to the site, right?