Legendary physicist Albert Einstein is attributed to saying that compounding interest is both “the greatest invention in human history” and “the most powerful force in the universe.” While Einstein’s sentiments may have been intended as financial advice, I believe these famous remarks can provide important insights for today’s internet marketers, bloggers, and competitive webmasters as well.
What is compound interest?
In a traditional sense, compound interest occurs when the interest earned from an initial investment is automatically reinvested back into your investment. As a result, the interest you’ve earned begins to collect interest on itself. In other words, the interest on your investment begins to compound.
Compounding interest is one of the most frequently articulated benefits of starting a traditional savings account. As an example, let’s say you deposit an initial investment of $100 into a savings account at 3% interest rate. After one year, your initial investment will have accrued interest and grown to a whopping $103. If you continue to keep money in your savings account over the course of the following year, you’re $3 in of earned interest will actually start building interest upon itself as well. That’s the power of compounding interest! (Wikipedia has a good primer to understanding this concept if you’re interested in learning more.)
Interesting stuff, you might be thinking. But what connection does this have with online marketing? Not unlike money in a bank account, time and effort put into developing your digital assets (website, blog, e-commerce store) will start to compound over time as a result of consistent content development and link building.
The more unique content you publish on a blog or a website the more traffic search engines will send your way. Like interest in a bank, the traffic from search engines to your website may start slow and seem insignificant at first. But if you’re able to stay consistent and continue to publish more content your time and effort will begin to compound in ways you might not originally expect.
Pat Flynn of SmartPassiveIncome.com uses a slightly different analogy to make a similar point about compounding content. Flynn compares each blog post to planting a tiny seed on the interweb. The seed might collect 1 visitor, 10 visitors, or 1,000 visitors from search engines and other referrals each month, but either way each content seed you’ve planted is out there forever working for you without an iota of time or effort from you the content creator (as long as you keep paying those hosting fees of course).
If you’ve got the commitment and determination to be able to plant a hundred seeds of content, it’s easy to see how the growing and compounding effect of content will start to deliver substantial traffic over time.
Compounding Inbound Links
Similar to publishing content, the full benefit of building inbound links won’t be immediately noticed. But trust me, proactive link building is a long term investment with interest that becomes more evident over the long haul.
Of course the first advantage to consistent, long-term link building is the additional authority and trust that’s continually built for a website. As the weeks and months of link acquisition progress, you’ll see a continual lift in rankings and search traffic from your efforts. This is the result SEOs are hoping for when they recommend “getting more links.”
But there are more perks that come from long-term link building than link love from search engines. You’ll also get trickles of traffic from numerous websites and make connections with other webmasters while you’re at it–both of which are great compounding traffic incentives!
While Einstein himself–who died in 1955–never got the chance to surf the internet, his sound wisdom about compounding is advice that’s still applicable today and a lesson online entrepreneurs will be rewarded to take action on.