The lessons of Google’s Panda algorithm update launched on February 24 are simple:
(1) Don’t do black hat SEO.
(2) Think hard about the risks of grey hat SEO.
(3) Do what Google tells you in their extensive guidance pages.
(4) Design good website usability. That is, put your human audience front and center.
Google’s Panda update justly punishes sites that have more than one of the following, but a single item that is especially abused may be enough alone to cause demotion:
- Scraped (or stolen) text content.
- Websites with lots of pages without unique content. When there are too many such pages, probably the whole site is demoted, not just those pages or categories.
- Excessive SEO keywording.
- Excessive intra-site links.
- Maybe more punishment then prior based on poor incoming links, according to some researchers.
- Maybe poor code. If not, expect this to play a greater role over time, because Google rightly assumes some correlation between a site with good code and a site with good content.
- Poor usability. It’s unclear what site features Google’s algorithms would identify as a proxy for poor usability, but here again, it makes sense that Google would see a correlation between good usability and searches being satisfied with Google when the searchers find first a site that pleases the brain.
Some of the above items are debatable and still being investigated by SEO researchers (including DISC), but the consensus is that items 1 through 4 almost certainly prompt demotion. And they all entail black hat or grey hat SEO.
White hat SEO endures for years, without risks which reduce the current value of your company. DISC has always practiced white hat SEO, and so far we have not found a single current client of ours punished by Panda (although a long dormant client who did much of their own SEO has come back to DISC for help in redressing a 40% drop in business starting on the day Panda went live).
In some forms of managerial accounting, risks are factored into ROI projections of capital investments and into the current value of the company. This logic applies to investments you have already made, so that the risks of those investments failing at any time in the future reduce the current value of your firm. Some simple math illustrates this principle.
- $100,000 capital investment (in a new machine or in SEO, for example) is predicted to improve profits by $500,000 in one year.
- But there’s a 50% risk of failure (in equipment or SEO) causing, in turn, a 50% reduction of the $500,000 ROI.
- This means $275,000 ROI, not $400,000 (subtracting the $100,000 investment from the pre-risk-adjusted $500,000 increase in profits)
However, black or grey hat SEO can risk decreases in current organic-based profits, never mind the risk of not achieving increases. That math looks like this:
- $100,000 capital investment in SEO is predicted to improve profits by $500,000 in one year.
- But there’s a 50% risk of failure in SEO causing no increases and a 50% reduction of the, say, current $1,000,000 in annual organic-based profit.
- This means negative $100,000 ROI (loss), which is $600,000 less ROI than would be the case if you eliminated the 50% risk.
While it is impossible to predict exact ROI and risks, the principle of risk nonetheless holds, and it should guide your SEO investments. If you take no SEO risks and, per Panda, you invest in website usability as well, or if you invest in eliminating all current risks, then the present value of your company rises immediately.
Business, like equity investments of all kinds, is all about reducing risks. Less risk of future losses via white hat SEO and usability enhancements adds current value to your business portfolio — and certainly to your peace of mind.