Industry News

About 7 years ago I wrote about how the search relevancy algorithms were placing heavy weighting on brand-related signals after Vince & Panda on the (half correct!) presumption that this would lead to excessive industry consolidation which in turn would force Google to turn the dials in the other direction.

My thesis was Google would need to increasingly promote some smaller niche sites to make general web search differentiated from other web channels & minimize the market power of vertical leading providers.

The reason my thesis was only half correct (and ultimately led to the absolutely wrong conclusion) is Google has the ability to provide the illusion of diversity while using sort of eye candy displacement efforts to shift an increasing share of searches from organic to paid results.

As long as any market has at least 2 competitors in it Google can create a "me too" offering that they hard code front & center and force the other 2 players (along with other players along the value chain) to bid for marketshare. If competitors are likely to complain about the thinness of the me too offering & it being built upon scraping other websites, Google can buy out a brand like Zagat or a data supplier like ITA Software to undermine criticism until the artificially promoted vertical service has enough usage that it is nearly on par with other players in the ecosystem.

Google need not win every market. They only need to ensure there are at least 2 competing bids left in the marketplace while dialing back SEO exposure. They can then run other services to redirect user flow and force the ad buy. They can insert their own bid as a sort of shill floor bid in their auction. If you bid below that amount they'll collect the profit through serving the customer directly, if you bid above that they'll let you buy the customer vs doing a direct booking.

Where this gets more than a bit tricky is if you are a supplier of third party goods & services where you buy in bulk to get preferential pricing for resale. If you buy 100 rooms a night from a particular hotel based on the presumption of prior market performance & certain channels effectively disappear you have to bid above market to sell some portion of the rooms because getting anything for them is better than leaving them unsold.

Dipping a bit back into history here, but after Groupon said no to Google's acquisition offer Google promptly partnered with players 2 through n to ensure Groupon did not have a lasting competitive advantage. In the fullness of time most those companies died, LivingSocial was acquired by Groupon for nothing & Groupon is today worth less than the amount they raised in VC & IPO funding.

Most large markets will ultimately consolidate down to a couple players (e.g. Booking vs Expedia) while smaller players lack the scale needed to have the economic leverage to pay Google's increasing rents.

This sort of consolidation was happening even when the search results were mostly organic & relevancy was driven primarily by links. As Google has folded in usage data & increased ad load on the search results it becomes harder for a generically descriptive domain name to build brand-related signals.

It is not only generically descriptive sorts of sites that have faded though. Many brand investments turned out to be money losers after the search result set was displaced by more ads (& many brand-related search result pages also carry ads above the organic results).

The ill informed might write something like this:

Since the Motorola debacle, it was Google's largest acquisition after the $676 million purchase of ITA Software, which became Google Flights. (Uh, remember that? Does anyone use that instead of Travelocity or one of the many others? Neither do I.)

The reality is brands lose value as the organic result set is displaced. To make the margins work they might desperately outsource just about everything but marketing to a competitor / partner, which will then latter acquire them for a song.

Travelocity had roughly 3,000 people on the payroll globally as recently as a couple of years ago, but the Travelocity workforce has been whittled to around 50 employees in North America with many based in the Dallas area.

The best relevancy algorithm in the world is trumped by preferential placement of inferior results which bypasses the algorithm. If inferior results are hard coded in placements which violate net neutrality for an extended period of time, they can starve other players in the market from the vital user data & revenues needed to reinvest into growth and differentiation.

Value plays see their stocks crash as growth slows or goes in reverse. With the exception of startups frunded by Softbank, growth plays are locked out of receiving further investment rounds as their growth rate slides.

Startups like Hipmunk disappear. Even an Orbitz or Travelocity become bolt on acquisitions.

The viability of TripAdvisor as a stand alone business becomes questioned, leading them to partner with Ctrip.

TripAdvisor has one of the best link profiles of any commercially oriented website outside of perhaps Amazon.com. But ranking #1 doesn't count for much if that #1 ranking is below the fold.

TripAdvisor shifted their business model to allow direct booking to better monetize mobile web users, but as Google has ate screen real estate and grew Google Travel into a $100 billion business other players have seen their stocks sag.

Google sits at the top of the funnel & all other parts of the value chain are compliments to be commoditized.

• Buy premium domain names? Google's SERPs test replacing domain names with words & make the domain name gray.
  
• Improve conversion rates? Your competitor almost certainly did as well, now you both can bid more & hand over an increasing economic rent to Google.
  
• Invest in brand awareness? Google shows ads for competitors on your brand terms, forcing you to buy to protect the brand equity you paid to build.

Search Metrics mentioned Hotels.com was one of the biggest losers during the recent algorithm updates: "I’m going to keep on this same theme there, and I’m not going to say overall numbers, the biggest loser, but for my loser I’m going to pick Hotels.com, because they were literally like neck and neck, like one and two with Booking, as far as how close together they were, and the last four weeks, they’ve really increased that separation."

As Google ate the travel category the value of hotel-related domain names has fallen through the floor.

Most of the top selling hotel-related domain names were sold about a decade ago:



On August 8th HongKongHotels.com sold for $4,038. And the buyer may have overpaid for it!

Google consistently grows their ad revenues 20% a year in a global economy growing at under 4%.

There are only about 6 ways they can do that

• growth of web usage (though many of those who are getting online today have a far lower disposable income than those who got on a decade or two ago did)
  
• gain marketshare (very hard in search given that they effectively are the market in most markets outside of China & Russia)
  
• create new inventory (new ad types on Google Maps & YouTube)
  
• charge more for clicks
  
• improve at targeting by better surveillance of web users (getting harder after GDPR & similar efforts from some states in the next year or two)
  
• shift click streams away from organic toward paid channels (through larger ads, more interactive ad units, less appealing organic result formatting, etc.)
  

Wednesday both Expedia and TripAdvisor reported earnings after hours & both fell off a cliff: "Both Okerstrom and Kaufer complained that their organic, or free, links are ending up further down the page in Google search results as Google prioritizes its own travel businesses."

Losing 20% to 25% of your market cap in a single day is an extreme move for a company worth billions of dollars.

Thursday Google hit fresh all time highs.

"Google’s old motto was ‘Don’t Be Evil’, but you can’t be this big and profitable and not be evil. Evil and all-time highs pretty much go hand in hand." - Howard Lindzon

Booking held up much better than TripAdvisor & Expedia as they have a bigger footprint in Europe (where antitrust is a thing) and they have a higher reliance on paid search versus organic.

The broader SEO industry is to some degree frozen by fear. Roughly half of SEOs claim to have not bought *ANY* links in a half-decade.

Anonymous survey: have you (or your company) purchased backlinks - of ANY quality - for your own site, or any of your clients' sites, at any point in the past ~5 years?— Lily Ray (@lilyraynyc) October 24, 2019

Long after most of the industry has stopped buying links some people still run the "paid links are a potential FTC violation guideline" line as though it is insightful and/or useful.

Some people may be violating FTC rules by purchasing links that are not labeled as sponsored. This includes "content marketers" who publish articles with paid links on sites they curate. It's a ticking time bomb because it's illegal.— Roger Montti (@martinibuster) October 24, 2019

Ask the people carrying Google's water what they think of the official FTC guidance on poor ad labeling in search results and you will hear the beautiful sound of crickets chirping.

Where is the ad labeling in this unit?

Does small gray text in the upper right corner stating "about these results" count as legitimate ad labeling?

And then when you scroll over that gray text and click on it you get "Some of these hotel search results may be personalized based on your browsing activity and recent searches on Google, as well as travel confirmations sent to your Gmail. Hotel prices come from Google's partners."

Zooming out a bit further on the above ad unit to look at the entire search result page, we can now see the following:

• 4 text ad units above the map
  
• huge map which segments demand by price tier, current sales, luxury, average review, geographic location
  
• organic results below the above wall of ads, and the number of organic search results has been reduced from 10 to 7

How many scrolls does one need to do to get past the above wall of ads?

If one clicks on one of the hotel prices the follow up page is ... more ads.

Check out how the ad label is visually overwhelmed by a bright blue pop over.

Worth noting Google Chrome has a built-in ad blocking feature which allows them to strip all ads from displaying on third party websites if they follow Google's best practices layout used in the search results.

You won't see ads on websites that have poor ad experiences, like:

• Too many ads
  
• Annoying ads with flashing graphics or autoplaying audio
  
• Ad walls before you can see content

When these ads are blocked, you'll see an "Intrusive ads blocked" message. Intrusive ads will be removed from the page.

The following 4 are all true:

• Google buys entire businesses, guts them & sells them for parts.
  
• Google's core business model is selling paid links with ever lighter disclosure.
  
• Some SEOs suggest selling links or exposure is beneath them.
  
• Ex-Google employees leverage their past gains to buy well linked sites like Money.com.

And, as a bonus, to some paid links are a crime but Google can sponsor academic conferences for market regulators while requesting the payments not be disclosed.

Hotels have been at the forefront of SEO for many years. They drive massive revenues & were perhaps the only vertical ever referenced in the Google rater guidelines which stated all affiliate sites should be labeled as spam even if they are helpful to users.

Google has won most of the profits in the travel market & so they'll need to eat other markets to continue their 20% annual growth.

Some people who market themselves as SEO experts not only recognize this trend but even encourage this sort of behavior:

Zoopla, Rightmove and On The Market are all dominant players in the industry, and many of their house and apartment listings are duplicated across the different property portals. This represents a very real reason for Google to step in and create a more streamlined service that will help users make a more informed decision. ... The launch of Google Jobs should not have come as a surprise to anyone, and neither should its potential foray into real estate. Google will want to diversify its revenue channels as much as possible, and any market that allows it to do so will be in its sights. It is no longer a matter of if they succeed, but when.

The dominance Google has in core profitable vertical markets also exists in the news & general publishing categories. Some publishers get more traffic from Google Discover than from Google search.

Publishers which try to turn off Google's programmatic ads find their display ad revenues fall off a cliff:

"Nexstar Media Group Inc., the largest local news company in the U.S., recently tested what would happen if it stopped using Google’s technology to place ads on its websites. Over several days, the company’s video ad sales plummeted. “That’s a huge revenue hit,” said Tony Katsur, senior vice president at Nexstar. After its brief test, Nexstar switched back to Google." ... "Regulators who approved that $3.1 billion deal warned they would step in if the company tied together its offerings in anticompetitive ways. In interviews, dozens of publishing and advertising executives said Google is doing just that with an array of interwoven products."

News is operating like many other (broken) markets. The Salt Lake Tribune converted to a nonprofit organization.

Many local markets have been consolidated down to ownership by a couple private equity shop roll ups looking to further consolidate the market. Gatehouse Media is acquiring Gannett.

The Washington Post - owned by Amazon's Jeff Bezos - is creating an ad tech stack which serves other publishers & brands, though they also believe a reliance on advertiser & subscription revenue is unsustainable: “We are too beholden to just advertiser and subscriber revenue, and we’re completely out of our minds if we think that’s what’s going to be what carries us through the next generation of publishing. That’s very clear.”

We are nearing many inflection points in many markets where markets that seemed somewhat disconnected from search will still end up being dominated by Google. Gmail, Android, Web Analytics, Play Store, YouTube, Maps, Waze ... are all additional points of leverage beyond the core search & ads products.

Google is investing heavily in quantum computing. Google Fiber was a nothingburger to force competing ISPs into accelerating expensive network upgrades, but beaming in internet services from satellites will allow Google to bypass local politics, local regulations & heavy network infrastructure construction costs. A startup named Kepler recently provided high-bandwidth connectivity to the Arctic. When Google launches a free ISP there will be many knock on effects causing partners to long for the day where Google was only as predatory as they are today.

The Wayback Machine has a cool new feature for looking at the historical changes of a web page.

The color scale shows how much a page has changed since it was last cached & you can select between any two documents to see how a page has changed over time.

You can then select between any two documents to see a side-by-side comparison of the documents.

That quickly gives you an at-a-glance view of how they've changed their:

• web design


• on-page SEO strategy


• marketing copy & sales strategy

For sites that conduct seasonal sales & rely heavily on holiday themed ads you can also look up the new & historical ad copy used by large advertisers using tools like Moat, WhatRunsWhere & Adbeat.

A Change to Nofollow

Last month Google announced they were going to change how they treated nofollow, moving it from a directive toward a hint. As part of that they also announced the release of parallel attributes rel="sponsored" for sponsored links & rel="ugc" for user generated content in areas like forums & blog comments.

Why not completely ignore such links, as had been the case with nofollow? Links contain valuable information that can help us improve search, such as how the words within links describe content they point at. Looking at all the links we encounter can also help us better understand unnatural linking patterns. By shifting to a hint model, we no longer lose this important information, while still allowing site owners to indicate that some links shouldn’t be given the weight of a first-party endorsement.

In many emerging markets the mobile web is effectively the entire web. Few people create HTML links on the mobile web outside of on social networks where links are typically nofollow by default. This reduces the potential signal available to either tracking what people do directly and/or shifting how the nofollow attribute is treated.

Google shifting how nofollow is treated is a blanket admission that Penguin & other elements of "the war on links" were perhaps a bit too effective and have started to take valuable signals away from Google.

Google has suggested the shift in how nofollow is treated will not lead to any additional blog comment spam. When they announced nofollow they suggested it would lower blog comment spam. Blog comment spam remains a growth market long after the gravity of the web has shifted away from blogs onto social networks.

Changing how nofollow is treated only makes any sort of external link analysis that much harder. Those who specialize in link audits (yuck!) have historically ignored nofollow links, but now that is one more set of things to look through. And the good news for professional link auditors is that increases the effective cost they can charge clients for the service.

Some nefarious types will notice when competitors get penalized & then fire up Xrummer to help promote the penalized site, ensuring that the link auditor bankrupts the competing business even faster than Google.

Links, Engagement, or Something Else...

When Google was launched they didn't own Chrome or Android. They were not yet pervasively spying on billions of people:

If, like most people, you thought Google stopped tracking your location once you turned off Location History in your account settings, you were wrong. According to an AP investigation published Monday, even if you disable Location History, the search giant still tracks you every time you open Google Maps, get certain automatic weather updates, or search for things in your browser.

Thus Google had to rely on external signals as their primary ranking factor:

The reason that PageRank is interesting is that there are many cases where simple citation counting does not correspond to our common sense notion of importance. For example, if a web page has a link on the Yahoo home page, it may be just one link but it is a very important one. This page should be ranked higher than many pages with more links but from obscure places. PageRank is an attempt to see how good an approximation to "importance" can be obtained just from the link structure. ... The denition of PageRank above has another intuitive basis in random walks on graphs. The simplied version corresponds to the standing probability distribution of a random walk on the graph of the Web. Intuitively, this can be thought of as modeling the behavior of a "random surfer".

Google's reliance on links turned links into a commodity, which led to all sorts of fearmongering, manual penalties, nofollow and the Penguin update.

As Google collected more usage data those who overly focused on links often ended up scoring an own goal, creating sites which would not rank.

Google no longer invests heavily in fearmongering because it is no longer needed. Search is so complex most people can't figure it out.

Many SEOs have reduced their link building efforts as Google dialed up weighting on user engagement metrics, though it appears the tide may now be heading in the other direction. Some sites which had decent engagement metrics but little in the way of link building slid on the update late last month.

As much as Google desires relevancy in the short term, they also prefer a system complex enough to external onlookers that reverse engineering feels impossible. If they discourage investment in SEO they increase AdWords growth while gaining greater control over algorithmic relevancy.

Google will soon collect even more usage data by routing Chrome users through their DNS service: "Google isn't actually forcing Chrome users to only use Google's DNS service, and so it is not centralizing the data. Google is instead configuring Chrome to use DoH connections by default if a user's DNS service supports it."

If traffic is routed through Google that is akin to them hosting the page in terms of being able to track many aspects of user behavior. It is akin to AMP or YouTube in terms of being able to track users and normalize relative engagement metrics.

Once Google is hosting the end-to-end user experience they can create a near infinite number of ranking signals given their advancement in computing power: "We developed a new 54-qubit processor, named “Sycamore”, that is comprised of fast, high-fidelity quantum logic gates, in order to perform the benchmark testing. Our machine performed the target computation in 200 seconds, and from measurements in our experiment we determined that it would take the world’s fastest supercomputer 10,000 years to produce a similar output."

Relying on "one simple trick to..." sorts of approaches are frequently going to come up empty.

EMDs Kicked Once Again

I was one of the early promoters of exact match domains when the broader industry did not believe in them. I was also quick to mention when I felt the algorithms had moved in the other direction.

Google's mobile layout, which they are now testing on desktop computers as well, replaces green domain names with gray words which are easy to miss. And the favicon icons sort of make the organic results look like ads. Any boost a domain name like CreditCards.ext might have garnered in the past due to matching the keyword has certainly gone away with this new layout that further depreciates the impact of exact-match domain names.

At one point in time CreditCards.com was viewed as a consumer destination. It is now viewed ... below the fold.

If you have a memorable brand-oriented domain name the favicon can help offset the above impact somewhat, but matching keywords is becoming a much more precarious approach to sustaining rankings as the weight on brand awareness, user engagement & authority increase relative to the weight on anchor text.