Google conspiracy theory: Adwords bidding wars?

I’m not really one for conspiracy theories but the recent changes in Google’s ranking algorithm along with the drive for more AdWords revenue has me wondering… (note that the Panda update is only affecting US websites at the time of writing)

Google has been heavily promoting its AdWords vouchers over the past few months, and this week, I noticed that they had increased 50% from $50 to $75. It’s free money, so I’m sure a lot of websites that have never advertised before will be jumping at the chance and creating accounts. (Contact me if you want to find out more!)

At the same time, they’re doing this, the Google webmaster forums are filled with people complaining that the recent Google “Farmer update” algorithm change (affectionately referred to as the “Panda update” by the rest of us), has destroyed their rankings and dropped their web traffic. Some by as much as 90%!

Many of these website owners rely on income from their websites generated by AdSense advertising, which is hugely dependent on maintaining regular high-traffic flows. Without this income, businesses are under pressure, jobs at risk and bills don’t get paid.

At first, I thought that perhaps all these people (there are pages and pages of them) were the spammers and content farmers that Google was trying to hit, but a quick check of their websites shows that isn’t the case. Many of them are very well-established websites of 5-10 years standing, offering a genuinely valuable service or product with good quality content. Some have taken the time to give real examples of their rankings before and after the Panda update.

One website owner that caught my notice was a website offering home improvement advice. His website previously ranked very highly for a number of search terms including one he gave examples of: “Basement Insulation”. The site that he gave as an example of a bad result was a single-page website that was entirely focussed on the adverts over the advice (which was poor). There is no way a site like that should outrank the home improvement site. This guy’s web traffic has dropped over 40% of his web traffic and consequently, a similar drop in advertising revenue.

Don’t get me wrong, a lot of the sites that have suffered, deserved to. From the numbers I’ve seen, a lot of the content farms are taking big hits. They’ve been full of low-quality, duplicated or article spun content for too long and they’re paying the price.

Having explained the effects, what will be the results? If a large number of genuine websites with original content have been affected, how will they react? If I were them, I’d be updating my website to try and reduce the effects of the changes but (at least in the short term), I’d be pumping a lot more money into AdWords to try and regain some of that lost web traffic. Now, remember that this is happening at the same time Google has decided to give away free money for new advertisers. These newcomers won’t care about how much they’re bidding for keywords as they’re not really paying for it. The result will be a massive upturn in CPC (Cost per Click) bids and Google will make a killing.

Did they do it on purpose? Maybe not, but it will certainly make for some interesting conversations in the marketing department.

The big question this raises for me is; How realistic is it to build a website where the revenue from it relies heavily on a free listing from a search engine or website like Google where you have only tenuous control over where you rank? As so many have found out, they are extremely vulnerable to sudden changes in the Google algorithm.