Nitro-Net.com – Internet Marketing Services – A Global Marketing Group Company
Episode Overview: The true effectiveness of a study is measured by how much information is obtained from analyzing its findings, and not about if it proved the initial hypothesis true. Often studies with inconclusive findings can yield more insights. Join host Ben as he concludes SEO and EPS week with Searchmetrics’ CMO Doug Bell, SEO Strategist and Advisor Jordan Koene and Marketing Operations Manager Melanie Schott as they review the effectiveness of their EPS study and how they’re utilizing inconclusive data to revise their next study.
- Upon review of the study, the Searchmetrics team found that the small data set and having to cherry pick data and eliminate outliers affected the study’s effectiveness.
- In the next study Searchmetrics is increasing the original sample size from 62 to 1,000 companies and will examine weekly data instead of quarterly data dating back to 2014.
- Other elements like site speed performance and keyword ranking will be examined as well to identify the potential for strong, positive correlation with SEO visibility.
- The next study will examine share price instead of EPS, as it’s more sensitive to market conditions, which the team feels is a better reflection of how the market views the health of a business. This new viewpoint is correlated to company margins and the ability to show growth over time.
GUESTS & RESOURCES
Ben: Welcome to SEO and EPS week on the Voices of Search podcast. I’m your host Benjamin Shapiro. And this week we’ve been publishing an episode every day, discussing how and why your SEO efforts are correlated to your company’s earnings per share. Joining us for SEO and EPS week are two mainstays of the Voices of Search podcast. Doug Bell is the chief marketing officer at Searchmetrics, which is an SEO and content marketing platform that helps enterprise scale businesses monitor their online presence and make data driven decisions. And Jordan Koene is an SEO strategist and advisor to Searchmetrics.
Ben: We also have a third, very special guest today, Melanie Schott, who is a marketing operations manager at Searchmetrics. And she’s gone ahead and done some analysis on the correlation between EPS and SEO performance. So far this week, we’ve talked about why SEO is impactful for EPS. We also looked into the difference between SEO and paid search’s impact on EPS.
Ben: We talked about whether it was the person leading the marketing team, the CMO’s tenure, and how that impacted earnings per share. And yesterday we dug in a little deeper talking about why SEO is more important to EPS for ecommerce and retail companies than it is for enterprise B2B companies. And today we’re going to talk about getting into finding the real truth about EPS and SEO. Okay, here’s the last episode of SEO and EPS Week with Doug Bell, Jordan Koene and Melanie Schott from Searchmetrics. Searchmetrics team, happy Friday, and welcome to the last episode of SEO and EPS week on the Voices of Search podcast.
Doug: Hi Ben.
Jordan: Hey Ben.
Melanie: Hi Ben, happy Friday.
Ben: All right. We have a quorum, happy Friday, everyone. Look, we’ve covered a lot of ground. We did this great study that looks at what impacts EPS. Is it SEO? Is it paid search? Isn’t the CMO? The data was a little inconclusive. We found that there was a slight correlation that SEO impacts EPS positively, and a slight correlation that paid search impacts it negatively. And then the CMO’s tenure doesn’t really matter. Unless you’re an ecommerce company, then it really matters. But if you’re a B2B company, it might not matter at all. There’s a lot of data that we’ve discussed over this entire week. Melanie talk to me about the right way to collect more data. And how do we get to statistical significance?
Melanie: Yeah, so, there were a couple of limitations with the first analysis here. The first one being that we were working with a small data set. Again, pulling from 2014 to 2019, we just had quarterly SEO visibility and EPS data. Secondly, we really had to cherry pick our data to see that strong correlation that we wanted to see. We had to limit it to recent years. We had to eliminate outliers.
Melanie: So there’s this discussion around are we seeing significance because we have a limited number of data points or is there a real correlation there? So as a next step, there’s a couple of different things we’re doing. We’re increasing our list size from 62 to a list of around 1,000 different companies. And then we’re also looking at weekly instead of quarterly data dating back to 2014. And we’re additionally going to be examining other things that we should see strong correlations for, to back up our efforts here. So things like site speed performance, keyword ranking that we would expect to see a strong, positive correlation with SEO visibility. Just to strengthen our methodology here.
Ben: So it sounds like the underlying point here is that we need more data. And so we’re going to look at a larger set of companies over a longer period of time to get more data points. Doug, talk to me about your thoughts now that we’ve conducted the study and reviewed it. Where do we go from here?
Doug: So as usual, Mel nailed it, we have a sample size that is too small. It’s irredeemably small. And I think that we also picked the wrong metric, believe it or not, earnings per share. And so Mel talked about looking at the Retail 1,000 because we understand that the strongest correlation was with companies that are ecommerce and retail focused. We understood that especially important when companies have a stronger brick and mortar retail component, they’re also tending to be much more SEO visibility correlated. But the other thing we’re doing, Ben, and I’m really excited to talk about it. I know Mel’s not super excited about pulling the data together because it’s quite an effort. But what I’m excited about is that we’re going to shift from an earnings per share to share price. And taking a look at whether or not we think there’s correlation.
Doug: And the reason we believe that’s a good idea is what we talked about a couple of days ago, which is when you look at earnings per share, it can be heavily influenced by externalities, let’s say COVID-19, or it can be really influenced by internalities. Let’s say you lose the best small companies CMO any company has ever had. That’s me.
Ben: We know who you’re talking about, Doug. We know.
Doug: Slapping myself in the back. Yeah, okay, right. So way too much of earnings per share is influenced by this combination. And what tends to be more sensitive to market conditions, what we think a better reflection of exactly how the market feels about the health of business, which obviously is very correlated to its margins and very correlated to its ability to show growth over time with high margins is share price. So we’re really interested to how that lands for us.
Doug: And that does really two things for us. One, it gives us a better metric to track against, in this case share price. And the other thing is we suddenly have this very large sample size that we don’t have to look into and cherry pick from in order to make sure that we’ve really got the data right. The other thing we’re going to look at is what are the secondary metrics beyond SEO visibility that might also help us understand and correlate the share price.
Ben: Jordan, when you think about this study and the correlation between SEO and earnings per share, we came up with statistically insignificant, but directional data. At the end of the day do you believe that SEO has an impact on the overall business value, the overall business performance? What do you take away from this study?
Jordan: SEO absolutely has an overall impact on the business. I think that it’s often misread. The other thing that I know for a fact, I mean, we’ve done a lot of work with investors, institutional investors. I mean, some of them use Searchmetrics data. They’re just beginning to learn the questions to ask. And the reality is that the street is largely dictated by these investors. And so fundamentally as the entire community that’s behind the driving forces of share price starts to understand SEO, they’ll be able to see who the winners and losers are.
Jordan: And be able to make better decisions, which will drive not just earnings per share, but also stock price up as a whole, as companies perform really well. And we have seen some companies follow this trend. I mean, TripAdvisor’s a good example. Expedia has had a couple of stories in the media. So it’s not like it’s a lost concept, but it is certainly by no means a common practice.
Ben: There’s a lot that goes into figuring out the value of a stock and what its earnings per shares are. When we just look at the marketing impact, SEO is an incredibly important channel. It is a low cost, predictable and scalable channel. And I think that the most telling thing from this study, even though the data is statistically insignificant, the difference between the paid search and SEO impact to me, looking at the same data set, indicates that if you invest in SEO over times, yes, this is directional you will have a better impact on your business’s performance. As opposed to if you rely on performance marketing channels over time, you’re going to negatively impact your business. You’re going to overspend.
Ben: And even if you are able to get a lot of users, get a lot of traffic, get a lot of conversions, you have to pay the price for that at some point. You have to develop your marketing foundation and your content marketing strategy and your SEO to be successful as a Fortune 500 company. Jordan, Doug I’ve agreed with you multiple times, this was a record. Can I get an amen?
Doug: Amen brother.
Ben: Melanie, any last words on the study? Anything that you’re looking forward to coming back and talking to us about in the future?
Melanie: Yeah. I’m just really excited to get my hands on this larger data set. Like Doug mentioned looking at a slightly different metric and just circling back and having this conversation again in a month.
Ben: All right. You guys want to chime in, add anything else?
Doug: Mel, you said next week.
Melanie: We’ll see.
Ben: Okay. Before Mel gets herself into trouble, I’m going to land the plane here. That wraps up this episode of the Voices of Search podcast and SEO and EPS week. Thanks for listening to my conversations with Doug Bell, Jordan Koene and Melanie Schott. We’d love to continue the conversation with you. So if you’d like to get in touch with Doug, Melanie or Jordan, you can find a link to their LinkedIn profiles in our show notes.
Ben: You can contact Doug or Jordan on Twitter. Doug’s handle is marketadvocate and Jordan’s handle is JTKoene. Of course you can always visit searchmetrics.com or you can visit Jordan’s personal website, which is JordanKoene.com. Just one more link in our show notes I’d like to tell you about. If you didn’t have a chance to take notes while you were listening to this podcast, head over to voicesofsearch.com, where we have summaries of all of our episodes and contact information for our guests.
Ben: You can also send us your topic suggestions, your SEO questions. You could even apply to be a guest speaker on the Voices of Search podcast. Of course you can always reach out on social media. Our handle is Voices of Search on Twitter and my personal handle is BenJShap, B-E-N-J-S-H-A-P. And if you haven’t subscribed yet, and you want a daily stream of SEO and content marketing insights in your podcast feed, we’re going to publish an episode every day during the work week. So hit that subscribe button in your podcast app, and we’ll be back in your feed tomorrow morning. All right that’s it for today. But until next time, remember the answers are always in the data.