Scaling From $100M To $1B In Revenue With Babak Azad

Babak Azad has spent north of $700 million on ads in his career. 

He joined Beachbody (yes, that Beachbody – the makers of P90X, Insanity, Shakeology and others) at $100 million in revenue and left as they surpassed $1 billion.

He’s a direct marketing legend and has worked with brands like NOBULL, Butcher Box and Athletic Greens.

He decreased CPA for NOBULL by 20%. Helped Butcher Box make an additional $1M+ in revenue each month. And netted Athletic Greens $300K in 12 months.

What can we say? The man gets results. (For real – just check out what the brands he’s worked with have to say.)

Today, he’s the CMO of GoodRx. 

We wanted to pick his brain about what he’s been up to there and what he learned along the way.

You can tune in above👆 on Apple Podcasts, Spotify, Stitcher, or anywhere you get your podcasts.

On this episode, you’ll learn:

• Why marketing should be a part of your product development.
• Why you need 2 offers and 2 channels to scale.
• How they turned an iPhone video into ad creative in a week and a half.
• Why being on Amazon is a no-brainer.

What to listen for:

• [4:22] How he went from the analytics side of the business to marketing.
• [6:41] How the Beachbody team thinks about creative.
• [7:51] How they’re keeping product and marketing aligned at GoodRx
• [9:23] Why you need to lean in hard on the channels where you’re seeing success.
• [11:43] Should you focus on channels one at a time? 
• [13:28] Why you should be calling your customers more frequently.
• [16:34] Direct response marketing lessons.
• [22:24] How he thinks about hiring.
• [27:40] When you should start measuring brand awareness.
• [33:57] How to take an iphone video to TV and streaming.
• [38:30] The reason brands should be on Amazon.

Links to love👇👇

• Babak Azad on Twitter
• Babak’s site
• GoodRx
• Dave Gerhardt on Twitter
• The Ecommerce Marketing Show Home

Transcript

*There’s a 100% chance this has some spelling errors. I know you won’t hold it against me.

Dave Gerhardt: Hey, what's up everybody? Thanks for listening to another episode of the Ecommerce Marketing Show. I'm super excited because my guest today is Babak Azad and I actually just tweeted something about him on Twitter that I figured out would be geeking out that I get to hang out with Babak Azad this afternoon, a direct marketing legend. Most money spent and returned more on ads out of anyone I've ever talked to has to be. Beachbody alone was 100 million dollars to a billion dollar. So without knowing who else I've ever talked, how much do you think in your career you actually spent on ads?

Babak Azad: About seven, 800 million.

Dave Gerhardt: 800. Okay, so can we just give that a minute? Because I think this is where it's time to be like, okay, I might listen to this guy, he might have a couple good ideas. All right, and how much do you think you've returned on that?

Babak Azad: Well, I come from a performance background. So, not every dollar spent is profitable, but in aggregate that was profitable. So in each businesses, the goals are different. So all I would say is when running that much it's not just brand and impression and reach, its performance based.

Dave Gerhardt: Got it. Okay, good answer. At the end of the day you spent 700 million plus on ads. So the first thing I want to get into is like, I'm new to this space. I've been in marketing, but mostly on the B2B side, and this is my first real time in this space and it's interesting because I can get to go back and dig through somebody's background like yours, and your background is super impressive. It's also really interesting.

Dave Gerhardt: So you go from MIT to Stanford Business School to Napster, to Beachbody, to your own stuff, to GoodRx. How did you piece this all together? I saw something on your site that was like, you didn't think you'd ever be a marketer. How did you piece the math background at MIT all the way through to what you're doing now?

Babak Azad: It was clearly not intentional. Now, marketing is a lot more quantitative, but I certainly didn't [crosstalk 00:02:26] performance or be a marketer and be a CMO.

Dave Gerhardt: You didn't go to MIT because you were like, you know what, I'm going to go to MIT because one day I'm going to run an E-com brand.

Babak Azad: I graduated high school in '91. So there wasn't really E-com back then. So like a lot of things are just a random collection of piecing things together and then really, if you want to call it a break, was really when I got to Beachbody, because at that point, I was in investment banking. I went to business school, I started a magazine that failed. I was at Napster, but really I learned my chops on a lot of this first at Beachbody and then obviously the time since.

Literally I got a call from the only headhunter I knew in LA and it was one of those things where he called on a Thursday, I called back Friday, interviewed Monday, had an offer Tuesday and gave notice on Wednesday. I remember he called and he said, I have a position that may fit your lifestyle goals and in my head, I was like, you mean my desire to make a bunch of money and not work that much? [inaudible 00:03:22] but no, it worked out.

Babak Azad: Honestly, I got really lucky. He didn't actually know how much I was making. I actually took 25% pay cut to go take the Beachbody role just because I thought it was a finance role at the time. It was finance and analytics, and I have no desire to be a CFO. I knew the business a little bit, and I wanted to be in health and fitness and it was just one of the thing, hey, get in there. We'll figure it out and that's kind of what happened.

Dave Gerhardt: You were at Napster but not doing anything related to marketing. It was a corporate development job.

Babak Azad: Yeah, I mean, that was the legal and public version. So this was not the Shawn Fanning version. This was gone through a couple evolutions. It was the time when Netflix was competing with blockbuster, and the iPod and 99 cent downloads were around. So this was a far cry from what most people probably associate with Napster.

Dave Gerhardt: Got it. So you take this platform, no, sure at that time. I had a feeling it wasn't the OG Napster but I didn't want to implicate myself for you. So it's okay. You take this job at Beachbody doing finance and analytics, like how long did you do that? How did that turn into a marketing job?

Babak Azad: At that time, I joined over about 100 million, which where the business was. Like a lot of businesses, the financial results outpaced the org and the structure and that's pretty common. It was not that sophisticated as whatever you might think 100 million dollar businesses, at least what I thought and that's completely arbitrary. There was someone internal, who had a lot of the quant background and he took me under his wing for a little bit.

To be honest, the CFO who brought me on, he was new, so he was doing his own thing and trying to build the team. The accounting department was three at that time. So I just literally just started digging in. I'm a curious person and I remember sitting there thinking, what am I going to do? And how am I going to create something in this role, and I just started inserting myself into meetings and conversations and doing some analysis and living in spreadsheets for a long time.

Then, like a lot of businesses when you've grown and you haven't really done that much like, layer one, layer two, layer three of analytics, you pick up stones, and you look under them, and there's opportunity. Started figuring that out and finding opportunities, which really meant places we were not optimized or could be doing things a lot better, and then realize if I was in a meeting, the analytics wasn't being done in that way. So we had to hire people and build a team.

So I built the team for the first three years, built what became a strategic analysis and then really, I wanted the more operational role, actually had a decent bit of influence and brand equity in the org, but I wanted an operational role. So after a few years, we created this role to oversee media and customer requisition. Frankly, that was a big learning curve for me because when you come from a finance background and analytics background, it's really to do the analysis and to call things out, but you don't have to go and execute it yourself.

I have a much greater appreciation and respect for operators and executors as opposed to just being the guy who's identifying problems and gaps. You need both, but I got a lot more appreciation and then I realized too, you can optimize yourself out of business, you have to be willing to take risks and if you just keep cutting stuff that's not performing without layering on more, you can get your spend down to zero very quickly there. So you got to know your numbers, but I learned to be pretty aggressive once we knew the numbers.

Dave Gerhardt: So Gary Vee always has this line and I have stolen it a bunch now and I love it, which is he talks about how creative is the variable for success and the success of P90X. It's a great product and so are you thinking about the marketing strategy as that's being filmed? Like are those things happening in tandem? Are you there saying, wow, I wonder if we can chop that up and turn it into something. How did performance marketing and brand go together?

Babak Azad: Yeah, so this was Carl and that team. I think one of the biggest lessons I learned and frankly, we're thinking about this now at GoodRx, is product marketing should be a part of product development in that process. I think that's what we did phenomenally well in Beachbody, which was the infomercial shoots started literally day one of the test group.

So there was always this idea of this is a product, here's what we think we're going to go after and here's the positioning. So it wasn't, hey, let's go create this product and then figure out how to market it. It's marketing and product were literally totally combined from the outset, and that was also how we considered what products to actually go and develop. I think a lot of people do this, which is like, create the product and they're like, I got to go figure out how to market it. You should have an idea of where you want to go with it from the outset and literally now at GoodRx, we're dealing with that and just realizing we've got a link product and marketing much more tightly together, as obvious as that sounds.

Then oh, by the way, it does help when you have phenomenal products, that makes life so much easier. I don't know who-

Dave Gerhardt: How are you doing that now, like in your current job? Now that you've learned that lesson, how are you trying to make that happen?

Babak Azad: One is we got to just make sure the conversations are happening. That's not rocket science. It's just making sure that when the product teams are working on developing stuff, that there is marketing consideration on it. We were sitting in a meeting a couple months ago, and there was an update to one of the products on our brand drugs, and we were sitting there saying, oh, we should probably take this, talk to doctors about this, talk to healthcare professionals. How are we going to do this on CRM, and the realization of we shouldn't be talking about that after it's done.

So for example, we're looking for a product marketing role and that's the bridge product and marketing. So part of it, it just makes sure marketing is part of that conversation. And then there's feedback both ways. So as we see stuff from the market, that should inform product and when we're developing product, we should have a sense of what the customers pain points are, who are going to message, who are the different stakeholders?

Again, I don't think it's rocket science, but it just is a gap. I think GoodRx is similar to Beachbody in the sense of like, from the perspective that financial results have exceeded the organizational structure in some of these areas and when it's smaller, everyone's in the same room and as you grow, people are in different rooms, and you need a little more specialization.

Dave Gerhardt: One thing that I was thinking about is you weren't there from the ship to go on demand, but you were there from the course like if you just think about when you were there, 2007 to 2015, that was like the rise of online digital advertising, online ads, and you've mentioned that you might not have been great there but you had to have been doing-

Babak Azad: We missed the boat entirely.

Dave Gerhardt: Did you really?

Babak Azad: Yeah, but here's the thing. We had a network marketing business that grew to be quite sizable, I don't know the numbers are but there were probably like 400, 500,000 distributors and that many people on Shakeology. So, this is one of the things I've learned which is hopefully, I have a big thing about two offers two channels. I think what it takes to scale is you need two offers, and you need two channels and everyone wants to be risk diversified and be in four different channels and seven different products, I actually think that's a negative.

Babak Azad: When I was a consultant, my view was if you have four channels, whatever they are, and they're all 25% of your spend, I actually think that's a problem. Because what I found is companies that have succeeded, where they have success, they lean in hard, and that means you're exposed and that means you're leaving other things on the table. So I have friends who would laugh and mock me for what we were missing out on digital, and at the same time TV infomercials and network marketing were monster channels, and we grew.

Babak Azad: So yes, we missed, but we were leaning in on things that were working and I think you have to do that. I think when you are trying to always have the next channel up, but you're not maximizing the ones that are working, that's actually one of the biggest mistakes I think a lot of people make, and you want to be risk diversified, but the reality is, you're going to be exposed. That's just the nature of it and I don't know. I feel like every company that I've worked with and seen that has scaled, and maybe it's not 100%, you got to lean in, and that means you got to leave other things on the side.

Dave Gerhardt: I love that. In my world, I do a talk at Harvard Business School every year to a group of like 100 product managers that are going to go and it's basically like they're going to be founders. So how should you think about marketing, and the analogy that I always use is like, you don't want to be the Cheesecake Factory for marketing where you have a menu that has 500 things on them and each one of them is okay.

Dave Gerhardt: You want to be like, nope, we're known for the burger, and if you really want something else, you can also get the shake. I think that's good advice because especially our audience here is small and growing brands. You're not going to have the bandwidth to think about 15 different channels, five different channels. Be great at one and think about how you can expand. I like that framework. So two offers, two channels. Do you do them both at the same time? Or is it like you start you scale, you have a main offer and you think about adding on a second?

Babak Azad: Look, I think you oftentimes, it's hard enough to get one thing to work. So if it's not working, I'd rather not get to the second. Sometimes you're just testing a couple different offers, and if hopefully both of them take off, that's awesome. Again, it's one of those things where if you can get one to work and you can start pushing it, you do so and then you realize, hey, I'm exposed, I got to go get another one, but I don't want to underestimate how hard it is to get an offer to work and a leading product to work.

Babak Azad: So having a great product and then having the creative, if you don't have those, it's probably just very, very difficult. The other side is, I don't know who said it, but the best way to kill a company with a bad product is to run a lot more advertising. So good product makes just a little bit of a difference.

Dave Gerhardt: That was a Gary Vee thing I heard yesterday with, might have been Toby from Shopify, but he said like, nothing exposes a bad product faster than marketing. Marketing exposes the truth.

Babak Azad: Yeah, people are going to get it. So if you have a great product you want to get in people's hands. If you have a bad product, look, that's for me, when you talk about earlier about bridging, performance and brand I think we didn't really, at least I, let me put it this way. I didn't speak to the word brand much when I was at Beachbody, and I think that's where hopefully my evolution as a marketer and a business person shifted was how do you blend those two and started talking a lot more about it.

Babak Azad: For me, it's really about customer experience, and what is the experience you create for a customer around products and taking care of them and all those other things, but I think they are not mutually exclusive. It's not either or, it's and, I just think you have to be more mindful of it, at least if you want to build something sustainable. If you're [inaudible 00:13:24] I guess, but that's not really where I focus.

Dave Gerhardt: So on this topic, this might have been a headline reading. So either somebody wrote a click baity headline for a video that I saw of you on YouTube, but I was just trying to find some stuff about you. It seems like I saw a video clip that basically said you don't think that enough marketers or people in E-com are actually out there talking to customers.

Babak Azad: Yeah, people don't. People love to sell, especially when you're in E-com. It's, I basically create an ad, look, I don't mean this disrespectfully at all, and we're all working home right now. So it's even more so, but you create this ad, you do this thing, get out to the market, you ship it, where is the customer, like direct customer interaction, and what I mean by that in particular is not just the email you send or the chat back, it's, do you actually have a conversation with your customers?

Do you call them up? Do you actually go back and forth? Oftentimes, the people who have the most direct communication with customers is customer service and oftentimes, they're the lowest people and it's kind of like this afterthought, as opposed to they are hitting the frontlines of it. What I worked with a lot of my clients before I came into this role was how often do you ever call a customer?

It's not cheap, but get your employees to call customers once a quarter and they can do five or 10 calls. One, customers don't expect it and literally, it's not a sales call. It's I'm just calling just to say hi. See why did you buy, so far does it meet your expectations? What are you hoping to get out of it? Who does that these days? No one does that. So one, you're a differentiator and two you actually get a dynamic conversation with your customers about what they're going through and oftentimes what you'll hear is not what you expected and what you thought.

So that's feedback, and you have to decide how you want to use it. I think in general, people shy away. I know a lot of people who they make it as difficult as possible to contact or when a customer reaches out, they're annoyed, or they're concerned, right, as opposed to, here's an opportunity and you can't make everything perfect and right but there's a lot more opportunity there to be had with that interaction.

Dave Gerhardt: There's even like, there's so much marketing, even if you don't want to talk to customers. Think of it as a way to get marketing content because when you talk to them, that's where your best headlines are going to come from, ad creative ideas are going to come from, is their actual word.

Babak Azad: Yeah, well, that's what using reviews, some of the best headlines, just look at your customer reviews or look at your competitor reviews about the pros and the cons and you can use that language themes in what you do. So that's another way even if it's not direct, you're getting that feedback.

Dave Gerhardt: So even though you missed the boat on digital, in some cases like you didn't really miss the boat, you didn't need the boat, so it was fine. Even though you missed that boat, the reason I got interested in Beachbody was because of the whole like Carl connection and [inaudible 00:16:26] and I got obsessed with Dan Kennedy and direct marketing and info marketing. You definitely have to have, I want to tap into this [inaudible 00:16:34] at least, you have to have some like deep direct response marketing lessons that are not even based on technology, but just like psychology that you've taken with you that you now been able to pass on to your clients and your teams, right?

Babak Azad: Hopefully. So what do I say my learnings are? One, have a great product, makes a big difference. Focus on in the message. Look, I'm a basics and a fundamentals guy. So I don't think anything I'm going to say is rocket science or like a newsflash, but I think this idea of your customers don't care about you, they care about themselves. So, speak to them and speak to that point. I think focus and messaging, it's really easy to try to cram a whole bunch of stuff.

At the end of the day, find the core thing that you got to lead with, and that's hard, by the way. So, but working that from a, I'm not a copy guy, so I'm not going to try to give copy advice. You should not listen to my copy advice at all, frankly. Then, ultimately, you got to like, this is a bit of a grind to business and business model. So from a performance side, you got to be in there, you got to be digging in and that's where it's, whether it's the quant side or the qual side and listening to your customers and how do you use that.

Ultimately it's also, how are you going to differentiate yourself? That's a big, big thing, which is, especially these days, you got all the drop shippers, and again, I got no judgment on that but it depends on what your goals are. So if you want to build a business and something that's going to last, you got to stand out and you got to figure out what that is, whether it's product or community or tapping into identity or whatever that thing is, you got to find what's going to be different. I don't think that's performance driven. That's just running a business.

Dave Gerhardt: Well, especially today, you mentioned dropshipping, whether you agree with it or not, one thing that it's done is like, it's basically commoditized almost any product that you can be selling. There's always going to be a cheaper version and so if you can't, just clouding up that perception in a consumers mind. It's like, well, I'm not sure. So I'm just going to go with whatever, I google and there's an ad and it's cheap and whatever, where a brand is about, brand is your opportunity to differentiate and especially today.

I was looking at your website, right? Basically all the brands that you had as a consultant or any of the successful DTC brands say, they're all mission driven brands and that is the differentiator.

Babak Azad: Look you have to lead with something and that's going to connect with your customer and it's got to stand out. I don't like the whole play to the bottom and lowest price thing. I've always been in this premium for premium model, my wife has a mommy and baby products business and a couple of our products are 50 to 75% higher than the competition on Amazon. She's like Amazon choice on some of these. So with better products, you can do that. It's not easy but, you've got to find something that's going to connect with the consumer.

It doesn't have to be necessarily a Tom's model, where it's that kind of mission driven, but it's got to be something that's going to connect to, I think it's really the strongest thing is like tapping into identity and community. With GoodRx, certainly is a heavy financial components, right? It's comparison shopping for prescription drugs is our core, we're launching telehealth or we've launched that. So I don't know if we tap in necessarily identity community in that way yet, because it's healthcare. That's a totally different conversation, but there's got to be something that's a key, key differentiator for people.

Dave Gerhardt: Let's talk about GoodRx for a little bit, because I think, so were you doing consulting and then you went full time back in here? Why do you want to go back?

Babak Azad: So I spent five years, I left five years ago yesterday from Beachbody, went to go start something, the team fell apart pretty quickly. Then I started picking up clients. So I was basically a one person shop. Really personal reasons I didn't want to build an agency or consulting company and I actually love hiring and managing but GoodRx was one of my clients. So co CEO, his son and my son were in preschool together and near the end of the school year, we started talking and I came in to help with TV at that time.

There was a woman internally and got an analytics guy and we started doing more. So I spent basically two plus years between TVs and stuff on Facebook, retention efforts and then Trevor reached out six, seven months ago, a little bit more than that now, and said they were going to bring, they tried to bring me in earlier. I had no interest. I was not looking. I was one of those people who said, I'm never going to say never, that I won't ever go back in because I never saw the point of being that absolute.

So there was certainly a component like you can be nice too but things change. Trevor reached out and said they were going to bring on a CMO and was I interested in was the first time I actually really engaged them, was interested. It's a phenomenal business. People are awesome. The culture is great. I love what we do. Particularly now, I'm certainly grateful and appreciative. I think we're actually doing something.

We kind of exist because a lot of things about healthcare busted, but between giving people options on pricing, they can save 80, 90% sometimes, and now telehealth and working on mail order, there's just a lot of things that we're doing that are innovative I don't like using the word disruptive but we are and I was surprised, as I need to be interested because I was not looking, I didn't go shop it to other things, I didn't go interview.

Frankly, last year was my best year ever as a consultant. So it was just the right time and I thought it was phenomenal and I still do, I think it's a phenomenal opportunity, both to be a part of something with great people. There are also professional challenges for me and that keeps it interesting. You have to.

Dave Gerhardt: How do you think you've changed? If you look back over the last decade, so now you're a CMO. I'll tell you my perspective why I'm asking this question. So this is my second time now running marketing at a company and I'm now feeling this like, oh my God, I get it. I get why experience matters, because now that I've seen it somewhere else and from tools to text that to hiring to people. I'm like, oh, this is why experience matters. Because the second time around, it's a little bit easier. There's different problems. So what's changed for you over the course of a decade? How do you operate? How do you run your team differently now than you did maybe two three jobs ago?

Babak Azad: One, so building team is not easy, duh but I think part of that is learning to get what is it really you want in getting A players, and A and A+ players. I think that's, again, it sounds so obvious but that makes life a lot easier when you have good people and people you trust. It's a lot easier to manage and by the way people you don't trust you speak to them in a different way. So I'm always cognizant of my levels of trust with my team and frankly, with other people. Because I think most people will think about this. I think that people you trust and you don't trust, the way you communicate is very, very different.

Dave Gerhardt: That's a good tell. I'm just thinking about myself, that's a good tell for like, oh, why am I talking like that? Oh, because deep down I don't trust this person.

Babak Azad: Yeah, and when you don't trust someone, you speak much more granular. You try not to be condescending, but sometimes that slips. We're human beings, but whatever that level is. I think I have a lot more empathy and, look, I left a great business and a roll at Beachbody, went to a startup, told everyone I was going to go do this and then we literally just couldn't get off the ground.

So you got humble pie, and I've had humble pie a few times. The magazine I started after business school, I'd say was the best 25 grand I ever lost, lived with my parents for a couple years, and rather than being really grateful, I was embarrassed about it. So there's definitely been some necessary humble pie, but I would say, I think part of it is also, you got to have great people, you got to empower them, I think. I am hands on without being micromanaging, which I think is a delicate balance.

I love actually not being that granular. Because also as CMO, you shouldn't be, it's not beneath me. Just I should have teams. So I'm always focused on that. I will say the professional challenge within GoodRx for me is, one, we're scaling media. So these are new levels that I've really not done, and as we bridge from performance to brand as an org, and I mean at some point, you start spending a certain amount that it's you can't do spot level and granular level attribution.

So how do you bridge that part? How do you start to build brand in the org, and again, we haven't had a brand role, but to be clear, for me brand is about customer and products. So we absolutely care about that but you don't hear like, what we're working right now is on brand strategy, brand positioning, things like that and really bringing that much more to the forefront to what we do. By the way, we're on board with it. It's just now a matter of getting the right people to help us with that.

Dave Gerhardt: Can you explain that to me? So eventually, you have to spend enough money where you're on channels where you can't measure that it's not direct response, like TV? So you have to start measuring brand awareness and can you actually try to explain that to me?

Babak Azad: So at some point and this is usually doesn't happen for a while, you're running so much media and they're overlapping that it's very hard to isolate signal and noise from a specific channel or a specific media type.

Dave Gerhardt: Got it. So like, saw your TV ad but then Googled you, then clicked on AdWords campaign and then the attribution there is going to say AdWords when that's actually TV. Got it.

Babak Azad: Yeah. So like for TV, for example, we do spike analysis, like what happened pre post the spot airing, things like that, but when you layer that with, we don't do podcasts yet, but podcasts and direct mail and search, it just becomes much more challenging. So this idea of a blended CAC and blended CPA gives me at times a lot of uncertainty, but at some point, you're going to have to move there. That's a good challenge, and as you start to scale, at some point that's going to hopefully kick in, and by the way, there's a lot you can do before that and I've been amazed at how I mean, this analytics team at GoodRx is by far the strongest I've ever worked with.

It's just an amazing, amazing team, which makes, again, my job easier, but as we start to bridge into conversations about brand agency, brand positioning, brand campaigns, is to figure out how to navigate that in a world where business that's run very performance driven for eight years, now starts to think about blended as opposed to that and certainly, awareness becomes one of our KPIs. That's the first year it's ever been that unaided awareness is actually one of the things we're tracking this year.

Dave Gerhardt: This is why I love doing this. I'm literally taking notes for my own, this is great. I wrote this one down. So I'm going to follow up on this one first. So this is the first, how did you determine like, I've always been fascinated like when do you know this is the year we're going to spend 50 grand on an agency and they're going to do this or maybe you're doing it in house or whatever, but what was the tipping point where you needed to go and measure aided versus unaided awareness?

Babak Azad: I don't think there's a great answer to that question and arguably, maybe we should have done it two years ago. I don't know. I don't know if it's right and wrong. I think at some point, so I think they're confluence of a bunch of different factors. We have a really strong position in the market. Our board and Silver Lake is one of the bigger investors but we have Francisco and Spectrum on board, too. They are phenomenal.

Babak Azad: I've been really quite impressed. At Beachbody, we had some outside folks, but I really didn't know it. I've been very, very impressed with the board and how much they're encouraging of it. So that makes it better and I think at some point, you start realizing, we've got to start leaning into this. I don't know if there's any specific milestone or events, I think just probably you start thinking about it, you're like, all right, is it the right time?

Then you also got to figure out what is the way to blend this into the org. Again, an org that has been so performance driven and especially when it comes to our marketing dollars, you want to figure out can you inch, do you have to do step function increases? So how do you balance that tension, and I don't mean tension in a bad way between the roots of the business from a marketing side being performance driven to how do you start to think more about brand?

Something that frankly, like if you look at most of our marketing, it's very utility transactional functional. It's savings on your prescription drugs. We haven't done a great job of conveying that broader mission and that broader brand message, and we're working on that. We have some components but I think we could do a much more, it can be better aligned across the org. We've been talking about and finally just said, look, it's time. We got to start making some headway and frankly, there's apprehension, I think, to a certain extent, because you just don't know.

At some point until you get in there and you start doing some stuff, then you figure it out, and you can always be apprehensive but until you get in there, that's the only way you really find out if what the value of this, like whether you like it or not, and whether It's working for you.

Dave Gerhardt: So it's basically like the bigger your brand grows, the bigger blended CAC you're looking at, it becomes harder and harder to isolate a specific channel?

Babak Azad: We start looking more at blended CAC. So we have certainly performance by channel, by TV, by direct mail or whatever. We also look at blended CAC, but the reality is, if some parts of your spend start to increase, you're going to have to look at things on an overall basis, which by the way, again, that's not a comfortable place to be if you've come from the performance side. Because it's all about what's the most granular layer of reporting and optimization that I can manage to, which I agree with 100%. Look, there's a good amount of spend to be had before that and so we're getting closer to that point where it's going to be more difficult. We have to start prepping now.

Dave Gerhardt: All right. I could talk to you forever. I have 1,000 questions and selfishly this is going to turn into like a secret way to get consulting advice for me, don't worry about it. We're never going to publish this. This is just for me. So it's gotten easier-

Babak Azad: So much for 10, 15 minutes of my time.

Dave Gerhardt: I don't know. Let's see. I'll post my Venmo. I'll post your Venmo after. So it's gotten much easier to launch an E-commerce business, right? Any idiot like me could go set up a Shopify store tonight and start selling hoodies. Why do you think E-commerce marketing is hard then? You can't just have a product and make money. Where's the marketing? Speak to the entrepreneurs listening to this who are like, marketing, I can hire my 16 year old cousin to do that.

Babak Azad: With all due respect, if you feel like your 16 year old cousin can do it, try it out and see what happens. I think look, business is not, there's all these things like well, business is business and you don't have to over-complicate things. There are a lot of components to making a business work and making marketing work. I remember there was a thread I jumped in on where someone was asking, what are your biggest challenges with agencies and why do agencies not work?

Babak Azad: My comment was like, oftentimes it doesn't have to do with agency. Hiring good people internally is difficult. Marketing's not the easiest thing, and especially people talk about it, like Gary Vee talks about it. There's so much going on in the world that you grab someone's attention these days, is just very difficult. So that first thing of what are you doing to grab people's attention and then people's attention span, even once you got it for a moment is a tab away and how many different devices they have.

So one, the level of distraction is just enormous. We all know that. Two, even when it wasn't and that was one of the beauties, frankly, of the infomercial business. Whereas, when people are watching a show on TV, yeah, there may be changing channels, but there's a stark contrast to being in brick and mortar retail when you see everything. You have 100 different options right in front of you and so the comparison is there.

With an infomercial, you have a captive audience and you're trying to compel them to purchase. I miss parts of those days. I think marketing is tough stuff, you got to get people's attention, you got to draw them in, there's a whole bunch of technical stuff like, how good is your website? Is it easy for people to check out? All these kinds of things. Is your product good? Are you actually communicating need and value to them? There's a lot like, marketing is not easy and there are a lot of components.

That's why I say copy, I'm working with Doug, our co CEO on a spot right now. The fact that I am helping on creative and production and copy is really disturbing. Because I got too much respect for, really, I have too much respect for the craft. I think once you start doing it, and you've seen other people are phenomenal, you really start to appreciate it, but we kind of got no choice right now. So you have to do it.

Dave Gerhardt: Wait. So, is the CEO writing copy?

Babak Azad: Doug and I are co writing-

Dave Gerhardt: Love that.

Babak Azad: Yeah, we did a spot where we were actually, I guess we were the first pharma company, we're considered pharma in some roles. We don't sell the prescription drugs ourselves, but right after we went, I talk to Doug about doing it at home spot. So literally, it's Doug in his office, shot it on his iPhone, and we're running that on linear broadcast TV, as well as on streaming. You talk about creative earlier in the conversation, we spent not that much money, Doug's not getting any royalties for that spot and it was editing basically.

I look at that, we did it in like a week and a half, not even, from start to finish, and got that out there and that creative is actually working pretty similar to the ones that we've spent months on and a decent chunk of money on. Again, this is a different time and hopefully we'll get back to some new normal, but there's enough in there that's compelling. Doug, and we got a couple other folks on my team, certainly, that we're working this, but I just got too much respect for the craft to think that I'm the creative guy.

Dave Gerhardt: That's awesome. So for you both actually writing the copy and to be doing an iPhone video filmed in the CEO's house that's going to be on broadcast TV and streaming, that's pretty awesome.

Babak Azad: Well, here's the thing. You kind of got no choice. To put together, but here's the other part. If you're in health care, health tech, and you're trying to help the consumer be healthier, to even do something that looks like you put together a big production suit is both irresponsible, arguably, and also off brand. Because if you're trying to promote healthiness, and getting people together right now and be in tight quarters, that's not a good idea.

Then I think you just have to figure out how to be creative, and I think a lot of people are dealing with that today, which is, especially people who've done bigger shoots in production efforts, whether it's digital, I mean, photography or video, but the idea of like, how do you leverage this kind of thing. CEO at home, UGC, animation, we've got to be more creative, piece together B roll footage. We're putting together a telehealth spot right now, which is another one Doug at home, but then we're going to layer in animation or visuals. So it's not just him. So, you've got to figure out a way to be creative and navigate because you need to develop new stuff.

Dave Gerhardt: You're trying to act on video because you can't shoot it because everybody's at home right now. It wasn't the first idea. Well, first idea because of this circumstance.

Babak Azad: We didn't have a massive urgency around the next creative. We're fortunate that our creatives generally knock on wood, but it felt authentic and it was and I think we spent actually a lot of time about tone and making sure there was respect and empathy in that because that was early on. That was like, March 20 or so, give or take, which was the second week, I think of work from home for the US, for many people. So we had to work on tone and just direct a camera to the CEO.

There was this sense of, and there is like relatability. He's at home, everyone's at home, it was authentic. I mean, Doug is phenomenal on camera. He is in person, the same person he is on camera. He's very authentic. Very nice. There's a very strong heart. The whole business, I feel like most people are, if not, everybody is like that, but Doug, he communicates that very well to the audience.

So it's meant to be authentic, but it is authentic and it was relatable. We just said, look, let's take a shot. Let's see what happens and it was worth it and we're working on another one. At some point, you can't just keep doing the same thing. So we'll have to figure out what the next iterations of this are, but you put it out there and you see and even if we had gotten the same performance and a little bit worse performance, but we got a brand lift, we also felt like that was an angle.

Even on that one, the CTA is not as aggressive as some of our other spots because it didn't feel appropriate to be saying this thing of like, you maybe at home, you may be out of work, you may need some additional help on paying for your prescription drugs, and then go, download the free app today. There's got to be some-

Dave Gerhardt: At goodrx.com

Babak Azad: Tone appropriate. So you can't do the same CTA on that kind of spot. It doesn't make sense.

Dave Gerhardt: Okay, I have one last question. If you can't answer it, it's okay, but on your website, I took a screenshot of a quote from Athletic Greens, which I take every day. So free plug. The quote says one of your first suggestions which took us only four days to implement is going net us 300k in 12 months. Can you share what that change was that only took four days?

Babak Azad: Sure. It was get them up on Amazon. They weren't selling on Amazon.

Dave Gerhardt: That's how I buy it. That's how I've been buying it for about a year. It's on subscription now the Amazon.

Babak Azad: Look, I have a very strong, very strong feeling that every physical product business should be selling on Amazon. I know there's a lot of dialogue of like, you can't build your brand on Amazon all this stuff and I get that, I understand that argument and yet there are Amazon only buyers. It is a tab away and another big, big reason to be on Amazon is it is a review site and people use it that way. So even if your pricing is better, people many times will go to Amazon, look if you're there, look at the reviews.

What are people talking about, and that is going to inform their decision. So even the whole brand thing, I get it, but you're also, look, I just think there is major, major incrementality with very little cannibalization, and I totally appreciate that Amazon will knock off products and all this kind of stuff. They do that selectively but even then, there are Amazon basics, like some categories have struggled and some have done better.

So it's not a given that they're going to go after you and they're going to beat you necessarily, but we've got them set up on FBA and they saw lift across the business and it didn't really affect their DDC sales.

Dave Gerhardt: That's awesome. Wouldn't you just, as a marketer, wouldn't you just think of it as a distribution channel? I'm not in E-commerce? I know the pros of Shopify and Amazon thing, but it's the biggest place where people shop online, would you not want to have your product?

Babak Azad: I think people either are concerned about cannibalization. They're concerned about this point about like, I can't build the brand. I don't control the experience. I don't own the customer, which is true. You don't. There are many customers who were not going to buy from you if they can't buy from Amazon, and particularly if you're a newer brand, but even if you grow. So people just want to go there, and it's easy. I think even for a month right now, some people saw some DDC increase because of all the delays at Amazon. That's short lived.

Amazon's got their stuff together. They're back to normal and they're going to go back and so take that lift and by the way, there's oftentimes halo from channels, like when you're on Facebook ads, there's a halo to your site, obviously, but there's also a halo to your, not halo to your site. People go to your site, there's a halo to Amazon. So that's another part people oftentimes miss, that attribution that some of your paid media isn't showing up in website sales.

It's showing up in Amazon sales and so you can navigate that part but ultimately, look it's for most businesses if you're in physical products, and especially if you're smaller, being on Amazon, I think it's just a no brainer. Going FBA, that seller central route, you control your pricing, you control the listing, and I still feel very strongly about that. In fact, you can launch on Amazon too, and I know people who've built pretty darn big businesses on Amazon, and haven't been able to figure out Shopify. So that's another side.

Dave Gerhardt: Well, all right, I got my money's worth. Thank you for doing this. I appreciate it. We had a little hiccup in the middle which we'll splice it together. We got a whole crew, I'm just kidding. We just put it up on Fiber. We'll take care of it. I have so many notes I've been typing during this. I'm excited to get this out. We'll plug all your stuff for you. You don't need to do your plug. Thanks for coming. I really appreciate it.

Babak Azad: Of course, Dave. It was great to be here.

Dave Gerhardt: All right. I'll talk to you soon. I'll see you on Twitter. Adios.

Babak Azad: Take care.

Topics:
Ecommerce Marketing
Podcast