What Digital Marketers Can Learn From the Investment Industry
There is much that digital marketers, product developers and business operators can take from the finance industry and the world of investing. Some of these are general best practices while others are more complex ideas.
But all are financial concepts and investing principles that can serve as guidelines for those in online business, marketing and in life.
Financial Markets and Search Engines, Complex and Ever-Changing
Both search engines and public traded markets are continually changing and extremely complex. This can lead to unexpected and negative outcomes, and demands a risk-management mindset. If you consider yourself an expert in the trading space and you are wrong it can cost you your investment capital (or that of your clients).
Similarly, many people in the digital marketing space think they’ve got Google figured out. But mistakes made in an SEO campaign will not just result in a lack of gains but also in losses in ranking and marketing budget. And it doesn’t just cost you (or your client) money but also time, which is the most precious resource.
Long term success in digital marketing (and most things) requires an ability to be open-minded and adaptive, while applying good risk management and capital allocation…
The most seasoned trader will tell you that the markets are humbling and inscrutable. The moment they decide they’ve got it all figured out, that’s when the market rips their guts out. Likewise, SEO “experts” may think they have the perfect, repeatable system for getting ranked.
True experts realize, over time, that even a winning strategy comes with losses. The complexity and ever-changing nature of search engines (and markets), makes it near impossible to achieve consistent positive results from a simple, mechanical system.
Both markets and search/social platforms get more complex and volatile every day and there is no silver bullet. As with the financial markets, long term success in digital marketing requires good risk management and capital allocation skills (and capital is not just money, but labor and time as well). But just as important is the ability to stay open-minded and adaptive.
Past Performance Is No Guarantee of Future Results, in Markets and Marketing
Inexperienced traders and investors have a bad habit of cherishing their best trade and forgetting their losses. They cling to a winning idea or strategy and believe it will work over and over again. But no situation (in markets, marketing or life) ever unfolds in precisely the same way twice.
This classic notion, that past performance does not guarantee future results, is famously included in nearly all investment advisor and financial services advertisements. No responsible investment advisor makes promises of results to clients, and the best will also warn of the risk of loss.
This helps purge both the feelings of grandeur that come with big successes and the crippling paralysis that can come from defeat.
In fact, many seasoned, professional investors employ a capital management method that can help with this. They do something called mark-to-market. Doing this means that, no matter how good or bad the previous day was, they consider themselves flat; starting at zero every day.
This helps purge both the feelings of grandeur that come with big successes and the crippling paralysis that can come from defeat. Digital marketers and business operators of all types, likewise, would benefit from starting each day with no assumptions or distractions; prepared for anything.
So, once again, being flexible and adaptable is essential. Monitor and review results on an ongoing basis, and continuously research and experiment with new tactics. This makes it possible to stay ahead of the inevitable change around us.
Mastering the Markets (and Marketing) is Both Art and Science
The aforementioned research and experimentation is sometimes easier said than done. Data-driven analyses and correlation studies, combined with observational skills and fundamental analysis, are all among the tools of finance and economics. But applying so-called “hard science” methods in the markets is, in most cases, impractical.
Google and other search engines, as noted, change faster and get more complex all the time. This makes true single-variable testing extremely difficult. Yet, there are many testable scenarios and, as with financial markets, iterative testing and correlation studies can yield powerful insights. The SEO big data studies performed by Ted Kubaitis of Cora fame and others in the testing community can be a gold mine of useful information.
The digital marketing space, both on the organic and paid side, are actually awash in data. But success is never found in one testable factor or hack, or even a single method. Long term success requires a combination of tools and disciplines.
Another well-regarded digital marketer, Matt Diggity, has discussed the importance of using all available tools. Instead of trying to divine the hidden secret of the Google algos he urges digital marketers to just “do all the things.”
This simple idea also touches on the next financial maxim that marketers should remember.
Diversification is Protection Against Ignorance
Legendary investor Warren Buffet famously said that “diversification is protection against ignorance.” No one, from moment to moment, knows everything that drives the market. Every investor is, to some degree and some of the time, ignorant.
How many of us believe that our amassed knowledge of Google or other search engines also amounts to anything but ‘ignorance’? {hand raised} This is why diversification is the foundation of an effective risk management framework.
The everyday version is: don’t put all your eggs in one basket. Of course, it applies to many things in business, from team resource management, to marketing campaigns or to the number of online properties in a site portfolio.
Whether you are allocating financial capital, team resources (energy capital) or your own time capital, remember that diversification is always a good thing.
Now, the other half of Warren Buffet’s quote is “it makes little sense if you know what you are doing.” The fact behind this message is that if we are too diversified (spread across many investments) then every effort/investment we make will be small, which usually generates smaller returns. Big bets, on the other hand, generate big wins (and losses). But the punchline of Buffet’s advice is that even he limits his investments to no more than 10% of capital. He employs diversification. In fact, no one ‘knows what they are doing’ so much that they shouldn’t diversify. The question is simply how much and into what.
So, whether you are allocating financial capital, team resources (energy capital) or your own time capital, remember that diversification is always a good thing. Yes, it can potentially slow or mute gains, but it will almost always save you from disaster. When things get rough, diversification helps you survive to fight another day.
The (Digital Marketing) Trend is Your Friend
Which brings us to this old adage, which most every trader and investor knows: the trend is your friend. Catching trends early can magnify returns; fighting the trend can crush you.
Trend following is a core concept to many investment strategies, regardless of the market or asset type. Even the specialty funds that use fundamental valuation or quantitative analysis to profit in other ways don’t operate such strategies in isolation. They always consider broader market trends.
The best content and technical execution in the world will not succeed against a major, countervailing trend, whether that is a Google core update or a global pandemic.
In fact, the most successful investors leverage fundamental analysis of underlying assets together with price and volume (technical) analysis, against a backdrop of the global, macro-economic trends.
Long term success in the SERPs also depends on good fundamentals, building quality assets (that deliver good user experience). The technical and logistical steps related to a site or campaign are also critical.
However, the best content and technical execution in the world will not succeed against a countervailing trend, whether that is a Google core update or a global pandemic.
As such, successful digital marketers and investors must have an adaptive nature and the ability to take advantage of (or protect oneself from) emerging trends.
Invest for the Long Term
This is a concept that even beginner investors can understand, but many in marketing and business forget. Indeed, most people do not usually relate it to business decisions.
More than ever, there are no shortcuts to success in digital marketing (whether organic or paid strategies). Site authority in SEO, a Facebook pixel on the paid side and even personal relationships with an affiliate manager are all things that grow stronger with age.
…longer term thinking also lends itself to bigger, bolder goal-setting.
A long term investing mindset should be applied from the start of any effort, and will shape many decisions along the way. Managing a campaign or project across a longer timeline can magnify the effect of those resource ‘investments’. And budgeting for smaller, but more consistent returns over a longer time horizon can have compounding effects.
Such longer term thinking also lends itself to bigger, bolder goal-setting. It can also contribute to a culture of quality and consistency. It truly does pay dividends over time, which is another financial concept I’ll cover in the future.
With so much data and well-documented financial history, the trading and investing world is full of useful lessons and frameworks for business operators of all sorts. Online and marketing professionals, especially, can apply many of these concepts, given the similar challenges they face.
These are just a few of the things that digital marketers can learn from the investment industry.