The Earth is still rumbling. Google’s Penguin update has sent shockwaves through the search industry worldwide. It is the most impactful Google algorithm update yet with the majority of commercial websites affected, in one direction or another in the search rankings since its rollout on April 24th.
Google’s updates in the past few years haven’t really penalized websites for external links pointing to the site. Panda did not create link-based penalties for websites. Up until recently, Google wasn’t doing much penalizing for “bad” links.
But with Penguin, they are looking at the type of links and the terms used in the links, which can be used to artificially pass page rank. And this is what Google has done with Penguin, which is what is causing such a massive shakeup in the industry.
Search Has Sprung Up Whole Industries
Entire industries have been built up principally around obtaining high Google organic search rankings. Besides the SEO client service industry, there are software toolmakers, publishers, brokers, service providers, and affiliate marketers among others. Cumulatively these companies and individuals earn billions of dollars in revenue, which are all affected by the Penguin update.
This update is well beyond just some “black hat” SEOs losing their livelihoods. It is larger in scope than Panda, which primarily affected low quality content sites, but also companies such as Demand Media. Companies such as Demand helped fill the demand for content on search terms where there wasn’t enough supply. Panda hit these “content farms” hard.
A lot of the sites negatively affected by Panda deserved to be hit as they provided a poor user experience but Penguin is something different. There are a lot of high quality sites with well written, interesting, and useful content that have been hit hard by Penguin. Google has dramatically changed the game. Penguin is also having a significant impact in international markets.
So no, Google doesn’t owe you or any company anything. You shouldn’t build your business model largely around the practices of another company with its own self-serving interests. But this recent update shows that Google does indeed have entirely too much power. They control about 85% of the U.S. search market directly affecting billions of dollars of commerce between others. And Rand Fishkin, Co-Founder and CEO of SEOMoz, agrees.
Google search results influence trillions of dollars worth of commerce. The company has earned its dominant place in search, but as the company increasingly looks to up its revenue, it is making changes to its algorithm and the dynamics of search more to its benefit.
Large Companies Impacted Negatively
So what larger companies are being impacted by the recent Google updates? Take a look at the stocks of publicly traded companies such as Marchex, Quinstreet, and BankRate. In the case of Quinstreet, they largely act as a broker between lead generation sites such as in the insurance and education sectors between the companies and the publishers, which run affiliate websites.
Affiliate websites have been hit particularly hard with Penguin update. Many of these sites focused on obtaining anchor text link that targeted specific keywords that would bring paying customers on to their websites via high organic search results. Many of these sites garnered more than 75% of their traffic from Google search taking advantage of the structure of the algorithm. Google wasn’t benefiting much from this in their algorithm but the publishers, companies, and their employees were.
For example, Quinstreet reported earnings of $100 million in Q4 in 2012. Their stock dropped more than 20% between April 24, 2012 and May 4, 2012. Marchex, a company that generates revenue from online advertising and publishing has seen its stock drop by more than 25% in the past 6 weeks. BankRate’s stock has also recently dropped.
On the flip side, many brands, companies, and other websites are benefiting from the changes. As always, there are losers and there are winners in any update. It will be interesting to see how things shake out and what market niches are most impacted.
A New Era
The Penguin update is like anything we’ve ever seen before. It is changing the organic search related landscape. It will likely benefit Google’s bottom line and help other companies while also devastating many companies and individuals financially and emotionally. It has also further shifted the responsibilities of an SEO and put a premium on the ability to successfully market a website outside of Google organic search.