Why SEO matters more to eComm & Retail EPS

Quotes

• “When we limited to specific years and limited to e-commerce companies, we saw a stronger correlation, so theres the debate of, are we seeing stronger correlation because we only have very low number of data points and its by chance that they are looking correlated and as we add more data that correlation weakens? Or is this a matter of becoming relevant in more recent years.” -Melanie

• “The time of digging into that question a little bit more, we looked at one of these companies individually in addition to the overall summary. What we found is, out of the 62 Fortune 500 companies that we examined, only 9 individually showed a significant correlation, again being asked with visibility and EPS.” -Melanie

• “Those 9 companies include Best Buy, Burlington, CarMax, DollarGeneral, Home Depot, Home Goods, Overstock among others. Those all had very strong positive correlation again r value being .8 or above. And also in measuring IBM, they had a very strong negative correlation here with an r value of negative .85.” -Melanie

• “Again only 9 out of 62 individually showed the strong correlation. These results play more over the theory that as we add more data points, this has weakened and the fewer that we looked at, its just by chance alone that we are seeing this strong correlation.” -Melanie

• “This is the bit of data that really intrigued me. We first started looking at data a couple of months ago and if you look at that sample size what they have in common is, even for e-commerce and retail these are businesses that have extremely low margins.” -Doug

• “Its probably not that surprising but the lowest margin businesses have the highest dependency on SEO and recognize the importance of SEO because at the end of the day, they are marketing mixes, specially their digital marketing mixes are going to be much more cost-effective. In other words, they have no choice, its the evolution of marketing if you will and frankly if theyre not good at SEO, theyre probably not in business.” -Doug

• “That makes sense. If the company has low margins, they can afford to invest in paid channels because their LTV to CAC ratio would be totally off.” -Ben

• “The fundamental reality here is that SEO is the foundation for these kinds of companies. If you are not able to generate the awareness and then ultimately the transactional traffic that SEO can provide ecommerce, retail and other businesses then youre really going to struggle to find a way to grow with your digital mix because you are just not going to have a capital to really invest in other digital marketing strategies. You need SEO to bolster the other digital marketing strategies.” -Jordan

• “Ill give you a quick example. There are a lot of businesses who started their online strategy with a paid strategy so they start with paid exclusively. But as you see those companies mature, the months and the years go by, they quickly divert their time, attention, and focus on organic channels. Obviously, the largest organic channel is SEO and so that is just a critical need for businesses to survive and have a strong digital marketing mix.” -Jordan

• “We have a sample size here that has traditionally been brick and mortar and these companies are beginning to make the transition from brick and mortar to ecommerce, so youve got a hybrid model here as well. What they have is even more price sensitivity or much more sensitivity in terms of relative margin to EPS.” -Doug

• “I think a lot of the businesses that are moving from retail to ecommerce and right now into the hybrid model, they learned from their e-commercebrethren. Based on that lower margin business and the fact that they can skip, if you will, a telecom giant and just go right to the digital network or cellphones network.” -Doug

• “There were five different companies that specifically, when we removed them from our data set, we saw a stronger correlation overall. Those were CISCO, IBM, Oracle and TechTarget.” -Melanie

• “Their core businesses tend to be very, very high in margin and every company described has some high-margin product and that product typically has huge differentiators in the marketplace. In other words, they are not selling commodities.” -Doug

• “I would think that it has to do with the marketing mix and the type of product where if you are selling a million dollar set of servers or acloud marketing system, thats a relationship-driven marketing channel. It is not one that starts to convert with search. There are very few people that are looking, youre not looking for lots of conversions and if youre not looking for lots of conversions, you are doing your outbound, cold calling, hand-shaking, it is another marketing strategy and thats why SEO wouldnt have an impact.” -Ben

• “I think that the marketing mix is certainly a driver here and without a doubt, many of these software and in some cases hardware type companies that are selling these large engagements have different marketing mixes and expect to work in different marketing channels than SEO but, and this is a big but, I know that many of these companies have come to realize the value of awareness through SEO and they have invested heavily to become relevant and useful.” -Jordan

• “As we get into these larger companies they do recognize the value of SEO but it is about disability not our metric SEO visibility but their awareness in the marketplace, their ability to position their brand.” -Doug

• “Whats interesting about how these companies tend to operate is, they are in high-margin businesses and periodically they have these spasms of desire to extend their brand into B2C products.” -Doug

• “This is why I feel like there is something here, I feel very strongly that that something is the fact that for the most SEO visibility sensitive businesses in retail and especially those in the below margin, they value SEO, they invest inSEO and the proof is in the numbers.” -Doug