Google penalty
252 days ago
 

Markets slam Expedia over a reported Google penalty, but revenue impact may be tiny

Expedia Inc’s stock (EXPE) was pummelled earlier today by 4% in early US exchange trading.

The selloff was in response to a report that the flagship site, Expedia.com, may have lost as much as a quarter of its visibility in search results due to a Google penalty for unsavory link practices.

But the market may be over-reacting. Expedia Inc’s results may be hurt from the traffic loss by less than 1%, says one leading analyst.

Search Metrics is claimingaccording to a report in Search Engine Land – that Google punished Expedia for allegedly participating in “paid linking schemes” to manipulate its ranking in Google organic search results for most of their generic keywords.

It is unclear as to the process behind the alleged activity – indeed, if Expedia’s in-house SEO team or an outsourced agency, or a combination of both, could be the culprits.

Google penalty

It is difficult to verify the report of a Google penalty, which cites “cheap hotels” as a natural search term where Expedia has been booted down to 11th position.

Expedia sites outside of the US and Canada are understood to have not been affected by the slump in performance in search engine rankings.

In tests, Tnooz sees it at 4th place currently. Search Metrics says its ranking data doesn’t take platform (desktop or mobile) into account.

As of this morning, two main organic search affected are “hotel” and “hotels”, which in unscientific searches are gyrating wildly in position, but are not dramatically far down the page.

That said, SEM Rush, another analytics service, is also seeing a decline in overall volume for key commercial words.

Brian Nowak, analyst at Susquehanna Financial Group, released a report this morning forecasting that Expedia Inc’s revenues would be harmed by less than 1% because of the estimated drop in search traffic (presumably due to a Google penalty) in the fourth quarter of 2013.

Nowak wrote:

To gauge the potential impact of a Google traffic drop-off, we looked at the Comscore U.S. desktop traffic source/loss data. In it we found that Google U.S. desktop traffic to Expedia fell ~1.5% Y/Y in 4Q:13 after being up ~11.5% in 3Q:13, a notable degradation.

First, Expedia.com is the only entity to be affected, which we estimate makes up 50% of total Expedia revenue.

Also, this impact would only affect desktop traffic, which we estimate is 85% of the total.

In addition, we estimate ~20-25% of Expedia.com’s business is sourced from Google.

In aggregate, this means the fall off in 4Q:13 traffic is only impacting ~11% of the base.

As such, assuming a 10% degradation of growth would be an estimated 1% hit to EXPE 4Q:13 revenue.

The incremental margin on this revenue is difficult to determine, but using our 4Q:13 incremental margin of ~41%, we estimate it would impact our EXPE 4Q:13 EBITDA by ~2%.

Nowak’s calculations came too early to include today’s announcement from Sabre Corp, the owner of online travel agency Travelocity, that:

by December 31, 2013, the majority of the online hotel and air offering had been migrated to the Expedia platform, and a launch of the majority of the remainder is expected in early 2014.

That faster than expected transition to Expedia powering Travelocity’s sales could boost Expedia’s revenues by the tens of millions of dollars in the upcoming quarters.

Rumors of Expedia not completely following Google’s stated webmaster rules have dogged the company lately, such as in recent discussions on Tnooz.

But the most severe accusations of shady link building tactics came in December from a blog post at nenadseo.com which received a partial, unofficial response at Webmarketing School and in comments on Hacker News.

Google is know to often crack down on organisations for such frowned-on behavior, but often the penalty is more of a temporary shot across the bows, with penalties soon lifted and results returning to normality.

In response to this latest saga, Google says:

“We typically don’t comment on specific companies regarding search rankings.”

Expedia says it has “nothing to add” to the story.

For full details on the Expedia Google penalty report, see Search Engine Land’s post “Expedia Lost 25% Of Their Search Visibility In Google Possibly Over Unnatural Links“.

EARLIER:

 
 
Sean O'Neill

About the Writer :: Sean O'Neill

Sean O’Neill is a New Jersey-based reporter for Tnooz. He's also a regular contributor to BBC Travel.

Follow him on Twitter, Google+, and his personal site .

 

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  1. Nikita

    Expedia seems to be in a lot of bad publicity. Over refunds and unsavory link practices. There seems to be a lot of dissatisfaction over how Expedia operates.

     
  2. Timothy O'Neil-Dunne

    There are two baddies in this story. Yup – both Expedia and Google. The financial impact is probably small as Sean opines here but underneath there is probably a lot going on.

    This story exposes that Google’s role as rulemaker, judge, jury and executioner must be subject to suitable oversight. The internet is no longer a commercial only environment. it is now a utility and it must be managed and regulated as such. Clearly self regulation by Google is not sufficient. Google must either perform or pay a penalty (in the form of taxation) to ensure that it does perform. Clearly Google’s failure to participate fully in the net neutrality law suit shows how duplicitous they are.

    Expedia’s Black Hat tactics were – well – stupid. I do hope that someone takes the fall for this because it was out and out bad. This sort of behaviour is unforgivable and should be stamped on.

    This is bad for all of us. We are not talking creativity and innovation here – we are talking basic fraudulent behaviour.

    Yours disgustedly

    Timothy

     
  3. Stuart McD

    Another report surfaced earlier today:
    http://www.linkresearchtools.com/case-studies/expedia-google-unnatural-link-penalty/
    It makes for rather interesting reading to say the least.

    You have to ask, WTF are Google doing? Expedia isn’t a small under the radar player, yet they’ve seemingly had a free pass to spam away with a gladbag of textbook blackhat tactics for years. Are Google’s detection methods oh so bad? Would there have been any action at all had they not been outed by the original blog post that outed the actions?

    What is a fitting penalty? For how long?

     
    • Sean O'Neill

      Sean O'Neill

      Belated thanks, Stuart.

       
      • Stuart McD

        You’re welcome. What do you (or Tnooz) feel would be a fair penalty for this kind of deplorable behaviour?

         
        • Timothy O'Neil-Dunne

          Clearly since capital punishment is no longer legal in most jurisdictions – at the least public humiliation would be mandatory (oh wait that already occurred). ;-)
          Seriously – this opens up two forms of class action. The first is that Expedia should be challenged for engaging in this behaviour There could be a case that the consumer was duped into clicking these links. The second I believe is more germane to the practice at issue – that Google took so long to address the topic where as it was far harder on smaller sites sooner. Thus that Google had favoured Expedia at the expense of the smaller travel providers who were “policed” earlier.
          Cheers

          Timothy

           
        • Sean O'Neill

          Sean O'Neill

          I am just a humble hack. I defer to smarter people for analysis.

           
  4. Matthias

    If of interest, we analyzed the back link structure of Expedia, and there are quite some interesting details:

    http://blog.searchmetrics.com/us/2014/01/22/seo-analysis-why-expedia-com-lost-25-of-their-visibility/

     
  5. Pepe

    @5pct discount – BUY BUY BUY !

     
  6. Timothy O'Neil-Dunne

    Some phoney science at worst – questionable science at best. All says that SEO and Google are in such control that the metrics are all pretty useless at the end of the day.

     
 
 

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