If you run a business which is on the internet or you invest in such businesses, you might already be aware that over the past year Google has made dramatic changes to how its search engine works. These changes have changed the direction of internet traffic in favour of certain websites and taken away traffic from other websites (thus dealing their chances of commercial viability a potentially fatal blow). This long article from the BBC explains why Google made these changes and seismic consequences of the changes for millions of enterprises.
Google seems to have two reasons for changing the way its search engine works. Firstly, it wants to reduce the prominence in search results those sites which use SEO (or Search Engine Optimisation) to game how Google’s search engine works. The BBC’s Thomas Germain writes: “For millions of businesses that rely on the mechanisations of the Search machine, SEO can be an unavoidable game.
The trouble is SEO can be abused. Enterprising website owners realised you can sometimes make more money by making content designed to please Google’s algorithms, rather than the human beings it’s ostensibly designed to serve.
Google’s efforts to address this issue aren’t always successful. If you’ve ever been frustrated by what comes up when you search for something like “Best Sneakers for Women”, you know the issue. Often, the results for popular search terms are crowded with websites that contain very little useful information, but tonnes of ads and links to retailers that earn publishers a share of profits. What’s often lost is what you’re probably looking for when you open up Google: information from people who are knowledgeable and passionate about their topic.
Google’s war on spammy Search results has ramped up. In 2022, the company issued a “Helpful Content Update” to its algorithm meant to weed out content created solely for the purpose of ranking higher on Search. Google issued a subsequent update in September, 2023, and a third algorithm tweak in March of this year. Google says the result is “45% less low-quality, unoriginal content in search results”. It could be viewed as a wild success.”
Secondly, Google wants to bring AI into its search engine. Mr Germain of the BBC writes “Last week, Google CEO Sundar Pichai stood in front of a crowd at the company’s annual developer conference and announced one of the most significant moves in the search engine’s history. Going forward, Pichai said, Google Search would provide its own AI-generated answers to many of your questions, a feature called “AI Overviews” that’s already rolled out to users in the United States. “The result is a product that does the work for you,” Pichai said. “Google Search is generative AI at the scale of human curiosity.”
AI Overviews are just one of a slew of dramatic changes Google has made to its core product over the past two years. The company says its recent effort to revamp Search will usher in an exciting new era of technology and help solve many of the issues plaguing the web. But critics say the opposite may be true. As Google retools its algorithms and uses AI to transition from a search engine to a search and answer engine, some worry the result could be no less than an extinction-level event for the businesses that make much of your favourite content.”
As you might have guessed, Google-search is a zero-sum game i.e. as some websites get more traffic due to the rebuilt search engine, others are by definition going to get less traffic. So, who are the winners in this new world?
“….there’s one platform you’ll be seeing much, much more of: Reddit. According to SEMrush, Reddit saw a surge that amounted to a 126% growth in traffic from Google Search. The company is already feeling the benefit. Reddit just announced its first quarterly earnings since becoming a publicly traded company in March 2024. Its revenue totals $243m (£191m), up an eye-watering 48% from the year prior.
“The increase in traffic Reddit is seeing is unprecedented on the Internet,” says Lily Ray, vice president of SEO strategy and research at the marketing agency Amsive, and a celebrity in the world of SEO. “Cooking content, adult content, video games, gardening, fashion, everything is all just Reddit.”…
Reddit isn’t the only winner after Google’s recent algorithm updates. SEMrush data shows that other user-generated sites such as Quora and Instagram saw similarly astronomical rises, and there were impressive spikes at LinkedIn and Wikipedia as well.”
And, finally, who are the losers whose traffic has dwindled after Google retooled its search engine? “…data from the analytics tool SEMrush suggests that the website for New York Magazine lost 32% of its Google Search traffic in the past six months, while GQ.com shrank 26%. The data indicates Urban Dictionary, a wildly popular crowdsourced dictionary of English language slang, dropped some 18 million page views, amounting to more than half its Search traffic. OprahDaily.com was down nearly 58%. (SEMrush is an industry-standard tool, but its numbers are estimates and this data only measures traffic coming from Google Search, specifically.)….
“Google’s just committing war on publisher websites,” Ray says. “It’s almost as if Google designed an algorithm update to specifically go after small bloggers. I’ve talked to so many people who’ve just had everything wiped out,” she says.
A number of website owners and search experts who spoke to the BBC said there’s been a general shift in Google results towards websites with big established brands, and away from small and independent sites, that seems totally disconnected from the quality of the content.
The change was instant for Daniel Hart, editor-in-chief of the UK-based entertainment news site Ready Steady Cut. “After Google’s September update, our traffic halved immediately, and it’s only gotten worse. We’ve just been blitzed by the Reddit stuff in particular, but we’re also being replaced by spam websites that are stealing our content. It makes no sense,” Hart says. In the months following, the lost income forced Ready Steady Cut to reduce its team of 20 writers and editors down to just four, Hart says.”
Google’s spokesperson is quoted in the BBC article as saying “the company’s recent updates have dealt a major blow to spammy, unoriginal content, and Google keeps a close watch on evolving abusive practices that lead to low-quality information in Search”. So before you decide to invest in an online business, you might want to read the BBC article in full.
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Note: The above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. The information provided is intended for educational purposes only. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India (SEBI) and is also an FME (Non-Retail) with the International Financial Services Centres Authority (IFSCA) as a provider of Portfolio Management Services. Additionally, Marcellus is also registered with US Securities and Exchange Commission (“US SEC”) as an Investment Advisor.
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