What is Financial Modeling?
Financial modeling is the task of building an abstract representation (a model) of a real world financial situation, that helps estimate the outcome of financial decisions before committing any funds.
On Wall Street, bad investment decisions can cost millions, or even billions, of dollars in lost capital. To help minimize this risk and optimize returns, financial modeling was developed.
A common example of how financial modeling can help improve investments can be seen in retirement planning. Using data points such as a person’s current age, monthly savings rate, and preferred retirement age, you can develop an optimal investment strategy.
Individuals can use these models to determine whether pursuing a higher risk investment strategy is necessary in order to achieve their retirement savings goals. If not, they may have to make adjustments, such as working longer or increasing their monthly savings rate.
Now, let’s compare this with the world of Search Engine Optimization (SEO). Unlike the financial industry, traditional SEO workflows have been based on using reactive tools that do an amazing job at answering questions on what has happened, but very few approaches provide the predictive analytics tools that shed light on what will happen. How would this change if the same type of modeling, practiced by financial professionals, could be translated into the digital marketing world?
As a digital marketer, think about this…if you could input all your data into a proven, real-world representation of a search engine that exposes all the data that will help you optimize for ROI driven rankings before committing any funds, would you use it?
Before you answer, let’s take a look at some of the benefits that a modeled approach could have for SEO initiatives.
The Benefits Of SEO Modeling
Perhaps the biggest benefit of modeling is the minimization of risk. In the financial world, where you may be investing huge sums of money, you need to be sure you are doing whatever you can to minimize potential risk. In the world of SEO, this isn’t any different. You have worked hard to earn your current rankings and monthly organic revenue. Minimizing risks across all search engines is of major concern and one where executives heavily scrutinize. You want to be sure that the strategy you are pursuing will not put hard won rankings and earnings at risk. Market Brew’s CTO, Scott Stouffer, recently published a report showing that over $90 billion was lost by the Fortune 500 in 2014 alone, due to lack of SEO Modeling.
Reduce Wasted Time And Resources
One of the major problems with SEO as it has been practiced, is that it is difficult to know whether investing time and money into a particular strategy will result in positive ROI (Return On Investment). This results in scarce resources being put into something that “might” work. Even if the particular investment does produce positive results, it may still not be the optimal approach. Time spent pursuing a particular link building tactic for example, will have the opportunity cost of a different tactic being ignored. Modeling helps ensure that time, money and energy are being optimized.
Execute SEO Campaigns At Scale
There are plenty of SEO professionals who are great at what they do. But, there is also a large percentage who do not have the skills or experience that these professionals possess. This can make it difficult to deliver an SEO solution at scale due to a “bottleneck” of available talent. Using modeling software can be taught to almost anyone, enabling a much greater ability to execute large scale or numerous SEO campaigns.
Execute “What If?” Tests
Imagine that you have a hypothesis about SEO that you would like to test. Maybe you have a new on-page tactic that you think could help but you are unsure what effect it would have on your SERP’s. This is something that modeling is perfect for. Having a model allows you to run a “what if” scenario for that particular tactic. Because of the new approach, you can quickly test out new ideas and strategies without having to implement on live, revenue producing sites.
In the world of SEO, instant results are rare. You can implement a tactic and it can take weeks or even months before you see a result. That makes it very difficult to quickly determine whether a particular tactic or strategy is worth executing. Models can provide you with an answer for things that may take months to occur in real life. Modeling also involves automatic re-calculations so that if a single change is made to the model then all the values and formula change accordingly.
Generate Consistent Results
One of the most important elements of modeling is that if you use the same inputs under the same conditions, you will achieve the same output. In SEO this type of consistency is something that is rarely achievable. By integrating a modeling approach to common workflows, you will start to see consistent results with your SEO efforts.
Modeling isn’t just helpful for predicting outcomes. It also makes understanding those outcomes much easier as well. Financial models can be expressed graphically which makes it easier to understand the results. If you change any of the values in the model, the graph will visually interpret that change. The ability to see how things will change can make it much easier to make informed decisions. Imagine that same power of improved decision making applied to SEO.
As you can see, by integrating predictive modeling tools, SEO professionals and marketing executives are empowered to make informed decisions, before allocating time and resources. No marketing team or successful company should go without these critical tools.
So the question I leave you with, are you ready to retire antiquated processes for a proven modeled approach?
About The Author
Jesse Lara is a Director of Business Development at MarketBrew.com. Market Brew is an enterprise-grade predictive analytics tool that allows marketers to effectively see search rankings, 60 days before they happen. Mr. Lara has over 5 years of experience in sales, account management, and client management. For more information about Market Brew, visit www.MarketBrew.com.