Back at the start of 2011 of the biggest US retails JC Penny & OverStock.com were penalised by Google for the practice of buying links to influence and manipulate their organic search rankings. Why this is still of interest is that it was only recently that JC Penny was moved out of the Google sinbin and back into the organic search results. Being that it’s a new financial year I thought it was still a good opportunity to examine what happened, what was the financial impact and did business learn anything from this public flogging?

The background starts with an unusual twist in that the manipulation was not discovered by a Google’s anti-spam algorithms but by one of their retail competitors. Typically in the search industry such practices as “dobbing in others” are seen as promoting bad karma but this type of dirty play is nothing new to the traditional marketing channels so it’s surprising that it did not happen earlier based on how obvious JC Penny’s tactics were.

The real JC Penny issue blew up so quickly and Google cracked down hard was due to the massive coverage initially provided by journalist David Segal of the New York Times but also the sheer scale of the impact on quality of Google’s search results which also embarrassed the Google quality team.

The NYTimes article did place blame solely on SearchDEX, who were at that point the search agency of record for JC Penney’s online marketing campaigns, but missed the mark when they talked about the black-hat techniques employed, as it just amounted to lazy link building. It was interesting that there was so much hype around JC Penny, it also raised questions about similar practices by another online competitor. OverStock.com which was flagged by The Wall Street Journal later that month for the same sketchy link building practices. The practices involved building a number of keyword friendly links from a number of questionable websites. That’s not really cutting edge and not really blackhat, it’s just lazy.

How did these sites get caught?

It’ fairly easy to use any number of free tools such as OpenSiteExplorer for sites to see their back links profile and understand how they are trying to game the SERPs. I wanted to get a better insight into how obvious the blocks backlink purchases were using MajesticSEO and you can see the massive growth in backlinks leading up to December which does not appear natural. The other point around the link data that stands out is the slightly higher than average number of educational links pointing to these sites, as Educational/University domains don’t typically point to commercial properties like JC Penny or Overstock.com unless there is a commercial incentive.

 

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What amazing insight into SEO?

With some hindsight, the fast rise of JC Penney in the search rankings around so many generic terms did not take a genius to gain the insight that maybe something was suspicious especially leading up to the business shopping period of the year Christmas. The journalist also had some assistance from another search agency who was happy to highlight what was hiding in plain view.

What JC Penney did wrong?

JC Penney fired the search agency that had been at the heart of their whole online strategy to buy links and entice educational websites to link back to them to receive discounted products. The biggest problem with firing off your search agency is that they had a detailed understanding of what was being done to game the Google SERPs and they were in the best position to rectify the issue quickly.

The knee jerk reaction was a rookie mistake by the management team at JC Penny because SearchDEX understood what links would need to be removed as part of a re-inclusion request to be re-included in the Google index. Any new agency brought on board may struggle to sort through the thousands of links trying to find the handful that trigged the punishment, similar to trying to find a needle in a haystack. Not to be disgraced easily, the CEO of SearchDEX still claims innocence via an official statement on their blog, but a quick check of one of their other clients by myself shows they also seem to have a similar sketchy backline profile.

JC Penney said it wasn’t me?

While this is cute when Bart Simpson says it on TV, this is clearly not a satisfactory response from such a large retailer who was caught red handed benefiting from the link scheme. The problem is many businesses still hold onto the twisted idea that if ‘I don’t know about it, I can claim innocence’. This naive and reckless attitude amounts to sticking your head in the sand while singing “I can’t see you so you can’t see me” all the way to the bank. Shifting the blame does not make the problem go away and put’s your shareholders and investors at risk but also makes it look like you are not in control.

The problematic factor is that ‘just don’t tell me if you are doing something sketchy’ is a fairly common statement from companies looking to get the most possible traffic from organic search, and it’s possibly the last statement any company should make. The problem is that if you push and push your agency or staff to get blood from a stone, something will usually break and it might be your online business model. The practice of pushing too hard or too fast to get results is not a sustainable practice and will not lead to a long term sustainable business model.

It’s not a free market

The factor that many businesses fail to grasp is that Google & Bing are commercial products that allow the public to use its resources to find products and services online. Since they are run for profit, they make their money on advertisers paying for sponsored placement on their AdWords/adCenter platforms not on the organic traffic that JC Penny was manipulating. Search engines are always concerned that any loss of trust in the quality of their search results impacts on their business model and can discourage advertiser’s spending money on their Ad platform as they might shift budgets to other areas to game the search results.

So a key learning is that if you violate the search engines terms and conditions, you actually have no recourse or legal avenues for grievance, as they are commercial companies that let you benefit from traffic they drive to your website. So you can choose to play by their rules or you don’t get to play at all.

Buying links to punish competitors?

One constant rumour circulating around is the idea that companies can buy suspect links that might negatively impact on your search rankings, which is always a great PR move to shift blame away. But this impact has been repeatedly talked down by Matt Cutts and his team but it’s still a large concern for business.

The interesting twist on the JC Penny issue is that the spokeswoman said it was not them who did it, but you would question who or why would someone else provide JC Penny such a massive benefit to their search rankings for such high traffic terms?

The investment required by a competitor to shift the Google search results that much by just buying links would not make the project cost effective. To put this concept into perspective, JC Penny has around 5.18 million backlinks from around 70,000 different domains and OverStock.com has around 41 million backlinks from 142,000 different domains. The amount of links purchased to even cause a minor bump based on their backlink profile is more than most companies spend on their entire annual marketing budgets.

JC Penney claimed it was a competitor?

While they are technically correct, it was likely a competitor or competing search agency that first highlighted something was going on to the NYTimes reporter. The recurring issue is that many companies still work on a flaw metric that good search rankings is a pure numbers game and resort to brute force acquisition of links as their only strategy. Basically it seems a combination of laziness by a few people on the either the JC Penny online marketing or search agency team or someone managed to dropped the ball and was caught with their pants down after several months.

Are your competitors buying links?

A common issue for business trying to improve their online market share is that it seems to be that Google’s spam team is slow to respond to complaints of competitors clearly buying links and building low quality spam blogs to rank higher. There is also the fact that there are millions of spam reports that are processed by their team, and if you read any SEO blog or even the Google forums they do take action eventually.

The only factor that you are not always taking into account is that only the Google algorithm knows how much of your competitor’s sketchy efforts actually help improved their ranking and the rest might have been some of the other 200+ factors they use to calculate their search rankings.

I believe that slowly marketers are slowly accepting that Google often works to use algorithms to reduce manipulation of its search results as they don’t want to be seen as judge, jury and executioner by punishing individual websites or companies. I do know that Google tries to avoid what you might coin punitive punishment and seeks to take “corrective action” to reduce the impact a particular techniques might have on its search ranking algorithms.

What was the impact of the gamble?

The impact outside of bad PR for JC Penny was limited because the penalty was not enforced until February, which was well after their big Christmas season the impact may not be noticeable until this Christmas period. Early review of the gamble seems from their financial statements was that this time the gamble might have paid off as JC Penney’s online sales revenue rose 6.7% and overall the company profits grew 36%. The downside for the Google spam team is that it increases the chances that other retailers will take the risk come this Christmas.

Dead in the water?

Because they are such a big retailer, it’s unlikely JCPenney.com would be dead if they stayed out of the Google organic results. According to KeywordSpy data they have an average daily AdWords spend of at least $43,792 buying them over 100,000 daily visitors. This much spend on AdWords will help keep the cash registers ringing and, based on my research, a bulk of the organic keywords driving visitors are JC Penney are brand terms that would not have been impacted by the penalty.

It’s a slightly different story with Overstock.com who recently announced they would be rebranding to O.CO so did their link buying punishment have a larger or potentially long term effect that sped up the rebranding decision?

Google’s reaction to it?

I reached out to Google Australia to get a statement about the issue, while they were unable to comment on specifics around the retail sector or about government regulations, because they are a business, they were did provide a broad statement about the paid links stance.

A site’s ranking in Google‘s search results is automatically determined by computer algorithms using hundreds of factors to calculate a page’s relevance to a given query. Ourwebmaster guidelinesprovide general design, technical and quality guidance. More detailed information can be found at our webmaster tools helpsite.

Many owners of high quality sites can and do get their site listed well in Google‘s search results without any outside help. Most often, some basic, relatively simple tweaks go much farther than any secret “tricks”; for instance, using a journalistic mindset to write page titles — concisely answering who, what, where — can be of great help to both users and search engines. Understandably, some site owners prefer to have someone else check and optimise their site, and for these folks we’ve published some guidelines relating to evaluatingSEO companies. We also have a GoogleSEO Report Card which has some ideas to improve certain web pages.

In cases in which we feel that sites are violating our webmaster guidelines, we make adjustments to counterbalance and also discourage those efforts, including lower ranking or removal from the index. We have algorithms in place designed to detect spam and automatically take action. In addition, if we see a site that violates our guidelines or a get a valid spam report, we will take manual action against that site. If webmasters feel that their sites have been removed or otherwise significantly impacted due to violations of our guidelines, we encourage them to stop the violations and visit Webmaster Central to fill out a reconsideration request.

Sites sometimes violate Google‘s webmaster guidelines in an attempt to game our algorithms and trick their way to the top of our results. If they succeed, this hurts the search experience for people coming to Google, because high-quality information gets buried by spammers and sites don’t get to compete on a level playing field. Our webmaster guidelines are designed to protect users, and when a site violates them, we take action to preserve a good user experience. This helps ensure that in the long run people can find the best possible search results on Google, and website owners can compete on a level playing field for traffic.

-“Google Australia 20th May”

Where Google and industry groups differ

One of the big points of contention is that Google wants paid links “nofollowed” so they don’t influence their search results but most industry groups are focused on enforcing the mandatory disclosure to consumers that it’s paid link. The UK is leading the charge with the Advertising Standards Authority and Committee of Advertising Practise requiring full disclosure if they have placed paid links on their website so normal consumers visiting the website know that it’s a paid link and they can see the clear relationship between blogger and advertiser.

The UK Office of Fair Trading last year took steps to secure a precedent around blogging disclosure and confirming its previous views that any paid-for promotions that are not disclosed are deceptive under fair trading laws. Their focus is not around manipulation of organic search results but more on transparency for consumers to make informed decisions on how to spend their money.

Paradox of Disclosure?

The interesting paradox is do advertisers/websites focus on seeking to stay within Google/Bing guidelines on their links to ensure they don’t risk penalties, or do they disclose paid links and potentially highlight them to the search quality teams? It’s becoming tougher for advertisers and websites who now have to make business decisions, as they risk upsetting the search engines that drive traffic to their website or the industry groups that regulate the advertising industry and may incur punitive punishment.

Disclosure for who and where?

I spoke with Darren Rowse of ProBlogger at a recent Blog For Good event about disclosure, because he has guest bloggers, paid writers and advertisers to deal with each day. He has built a successful business around blogging, but even he found the issue was not easy to give a simple answer as he said he always worked to stay within search engines guidelines, but also had to now consider not falling afoul of regulatory issues in different parts of the world.

He said there are times when writers come back around the issue saying that they have to disclose this or that based on their country of residence, but there is not always one correct answer. The curve ball in all of this is that other factors such as what country your web hosting is based may also start to play a role in what disclosure is needed by websites/blogs.

There are still so many questions that still seem un-answered and I would welcome your views on…

  1. If the paid links are clearly disclosed, will Google still seek to enforce a penalty?
  2. Should Australian retailers think they are immune from being punished for buying links?
  3. Do small retailers/websites still see it as the big boys are too big to fail?
  4. When will Australian organisations such as ADMA, AIMIA, ACCC, IAB begin to examine following the UKs lead on disclosure?; and
  5. Do you think government regulation of the advertising/advertorial industry make it more transparent/easier for business?

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David Iwanow
BY David Iwanow ON 13 July 2011
With over six years digital marketing experience consulting to Australia's biggest companies and marketing agencies, you can now find David working as a SEO Product Manager at Marktplaats.nl