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4 Companies Affected By Google's SEO Crackdowns

  +Follow July 8, 2013 12:17PM
Tickers Mentioned:

The term “Search Engine Optimization,” or SEO, has become a catch-all for appeasing Google’s (GOOG) search algorithm. That is, SEO is anything and everything a company does to make sure their company’s web pages coincide with highly used search terms, and thus appear highly on Google search rankings. And being on top of those rankings is big business. Because in internet advertising, Google is king.

Google accounts for 56 percent of the entire world’s internet ad revenues. That’s a lot of money sitting out there, and a lot of internet companies are vying to take their slice. If a website is not a transaction-based business and relies on advertising to make its money, solid SEO is what catapults your company over your competitors. The first page of a Google search get 58.4 of all the clicks, and the number one result alone gets 36.4. The website with the highest rankings, wins.

But what does “win” mean? Win means you got that click, and thus the ad revenue from AdSense or one of Google’s other advertising platforms. The content – that is, what the user sees after the click – is almost besides the point. If you get the click, you get the money.  Having the right keywords, link stuffing, provocative titles, all are fair game in that quest for the top spot.

But those days of low-quality content engineered to get the most clicks might be completely on the way out. In May 2013 Matt Cutts, the head of “web spam” on Google’s Search Quality team, announced that Google would be deploying Penguin 2.0, an algorithm update that would close out the less savory SEO practices. Before Penguin was the update Panda, which also targeted SEO content. The implementation of Panda cost Demand Media (DMD) 6.4 million in the fourth quarter of 2011 alone.

While none of these companies engage in so-called “black hat SEO” – providing zero content and maliciously tricking people into clicking their links – the following companies do rely heavily on appearing highly on Google searches to generate revenue. And if they don’t continue to keep their content levels to a standard Google sees fit, they could suffer more with every new Panda or Penguin update. For as prominent SEO analyst Adam Torkildson predicted in 2012, “SEO will be dead in two years.”

Local Corporation (LOCM) Local.com relies on promoting local business links to generate ad revenue. Local promotes themselves by asserting they make sure “your business is listed correctly across the web” – that is, that they’ll maximize your business’ SEO. Their stock is down 1.33 percent to hit $1.48 a share. Their stock has steadily tumbled, and is down 27.80 percent on the year and 77.58 percent from its price three years ago.

Demand (DMD) Demand has famously built their brand on fast, disposable content. And when Google tweaks their search algorithm to drop low quality articles, their stock takes a hit, as it did in 2011 with the rollout of Panda. Demand is up 5.22 percent to $6.65, although the stock is down 28.42 percent this year.

AOL Inc (AOL) While AOL has branched out considerably, in 2011 their “master plan” to maximize SEO leaked, and revealed their content generation process. It focused heavily on search-focused content and upping the frequency of web publications – a classic SEO strategy. AOL’s stock is up .46 percent to $36.92 a share. The stock is also up 24.69 percent on the year. AOL’s renewed focus on content so far has been largely successful since they spun off from Time Warner (TWX) in late 2009.

Yahoo! Inc (YHOO) Yahoo has remade infamous content farm Associated Content into Yahoo! Voices, and upped the standard of their content considerably. Associated Content suffered dearly during the first waves of Google’s SEO crackdown, and over 75,000 old articles from the site have been “retired” in an attempt to legitimize the viability of Voices’ content.

Yahoo’s stock is up .19 percent to $25.73 a share. They’re up 29.65 percent on the year.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.

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21 Sep 14 12:44:58
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21 Sep 14 12:40:15
RT @GloveDotCom: It feels like $YHOO will/should buy Buzzfeed before $AOL ? cc @semil @sean_a_rose @JuliusBryant
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21 Sep 14 12:33:47
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21 Sep 14 12:25:14
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21 Sep 14 12:24:20
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21 Sep 14 12:15:20
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21 Sep 14 12:12:37
Not getting this. Now that $BABA is public, why can't $YHOO just spin off the shares tax-free to shareholders? http://t.co/p6anCr8T9X
21 Sep 14 12:09:10
Depending on share price $YHOO core is approaching a zero or even a NEGATIVE valuation.
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21 Sep 14 11:30:45
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21 Sep 14 11:28:06
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21 Sep 14 11:16:33
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21 Sep 14 11:15:43
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21 Sep 14 10:49:20
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21 Sep 14 10:35:48
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21 Sep 14 09:59:20
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21 Sep 14 09:54:14
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Fred Twick
21 Sep 14 09:31:27
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21 Sep 14 09:08:40
RT @zozotrader: $YHOO $BABA Yahoo could have 35% upside, Barron's says
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21 Sep 14 08:55:43
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21 Sep 14 08:50:52
@onodigtvetande @gunthermarder Investorer shortet $YHOO for å hedge posisjonene deres i $BABA.
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Fred Twick
21 Sep 14 08:47:53
Of course, NOW the Market will start looking to the future. Imagine we'll see $YHOO move a bit more lock and step with $BABA soon.
Fred Twick
21 Sep 14 08:46:19
Reason being, in my opinion, that the Market had decided $YHOO $42.59 was a price that accurately factored in $BABA being worth $100/Share.
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21 Sep 14 08:45:07
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Fred Twick
21 Sep 14 08:42:05
Commented on StockTwits: .WilliamT Maybe but $YHOO didn't start falling until it was clear $BABA was topping for ... http://t.co/StkONqBUh9
21 Sep 14 08:28:28
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21 Sep 14 08:14:07
“@mikep051: Anxious to see where $BABA and $YHOO goes this week” I don't trust $BABA.
  +Follow July 8, 2013 12:17PM



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