How Google's Panda 4.0 Algorithm Update Hurt; Is Yelp Next?

The latest update to the Google (NASDAQ: GOOG  ) (NASDAQ: GOOGL  ) search algorithm, Panda 4.0, has had quite an impact on the web. With Google serving as the main conductor of traffic around the Internet, changes to its search algorithm can drastically affect businesses.

One business that saw a significant decrease in visibility on Google is YP. Its website,, saw a 20% decrease in visibility on Google, and was in the top 10 websites in terms of absolute visibility loss, according to SearchMetrics.

Meanwhile, YP's frenemy, Yelp (NYSE: YELP  ) , is absent from the list of websites affected by the new Google search algorithm. Why was Yelp spared while Panda 4.0 tore YP apart like a bamboo shoot? Is Yelp at risk too?

Why Panda took a bite out of
Google's goal with Panda is to help reduce the number of search results with thin, non-authoritative content, while promoting those sites that offer significant value to its users.

It's hard to argue that YP doesn't have authority over the local business information category. The company has been in the yellow pages business for years under AT&T and SBC before then. The website has been around since 1996.

The problem is that there are a lot of Internet yellow pages, and is arguably inferior to many competitors. With websites like Yelp and Angie's List (NASDAQ: ANGI  ) providing superior products by engaging with consumers better, YP is losing ground to the competition and Google is taking note. There's simply not a lot of content on that can't be found elsewhere.

There's no evidence showing that YP is using spammy tactics to generate links back to its site. However, the number of backlinks to is significantly lower compared to Yelp.

How important is Google to Internet yellow pages
Yelp doesn't hide the fact that it's heavily reliant on Google for traffic. YP's website is no different.

According to, 49.6% of's traffic comes from search engines, and receives 45.7% of its traffic from search engines. Interestingly, Yelp is more reliant on Google, with 41% of visitors coming from

Google, meanwhile, has the potential to throw a wrench in the whole thing. The company has been making steady progress on its own local search products, harnessing the power of its Google Plus network to source original reviews and ratings of businesses.

Indeed, the industry's heavy reliance on Google makes algorithm changes like Panda 4.0 extremely meaningful to companies like YP and Yelp. More importantly, however, both companies need to focus on diversifying from Google and increasing the power of their brands.

Yelp is doing much better than yellow pages
On both accounts, Yelp is doing better than yellow pages at diversifying and establishing its brand. If you look at the Google Trends chart for both "yellow pages" and "Yelp," it becomes quite clear Yelp has taken a substantial lead over the standby business directory in the last couple years.

Yelp overtook yellow pages in 2012. Source: Google Trends

Yelp is doing a great job of positioning its brand as the place to go online for local business information. YP, as a result, has fallen out of favor. This means YP is more heavily reliant on organic search results to drive traffic to its site, whereas Yelp can rely on certain visitors typing in the "" address directly.

Moreover, Yelp has taken steps to diversify away from Google. The company announced partnerships with Yahoo! earlier this year to provide local search results for the search engine. Additionally, the company works with Apple to provide local business results in its Maps application, which is built into the millions of iPhones used every day.

While YP has the support of its parent company, AT&T, it lacks the strategic partnerships Yelp has with more consumer-facing products.

Avoiding the same fate as
For whatever reason, fell out of favor at Google with the latest algorithm update. To be sure, the company will see a decrease in traffic due to the decline in visibility on Google and its heavy reliance on search engine traffic.

This risk isn't unique to YP, of course, as the entire Internet yellow pages industry relies heavily on search traffic. Yelp and Angie's List are also very dependent on Google for traffic. Yelp, however, is taking the necessary steps to establish its brand, generate valuable and unique content, and diversify its risk from Google.

While no one can say for certain that Yelp is safe from Google, it's certainly in a better position than YP.

R.I.P. Internet -- 1969-2014

At only 45 years old... the Internet will be laid to rest in 2014. And Silicon Valley is thrilled. Because they know... The Economist believes the death of the Internet "will be transformative." In fact, the CEO of Cisco Systems -- one of the largest tech companies on the planet -- says somebody's going to bank "14.4 trillion in profit from one concept alone."

Click here for a FREE video that gives you what you need to capitalize on the little-known company behind this concept.

Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 19, 2014, at 2:36 PM, woody1963 wrote:

    You cannot succeed on a business model that relies on another business for success. Yellow pages were a great source on income in the past but the search engine defeats the purpose.

    Yelp provides a reliable service...yellow pages is know for not providing service

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2990729, ~/Articles/ArticleHandler.aspx, 8/27/2015 3:41:00 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Adam Levy

Adam has been writing for The Motley Fool since 2012 covering consumer goods and technology companies. He spends about as much time thinking about Facebook and Twitter's businesses as he does using their products. For some lighthearted stock commentary and occasional St. Louis Cardinal mania

Today's Market

updated Moments ago Sponsored by:
DOW 16,400.95 115.44 0.71%
S&P 500 1,967.82 27.31 1.41%
NASD 4,742.51 44.98 0.96%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/27/2015 3:25 PM
GOOG $626.12 Down -2.50 -0.40%
Google (C shares) CAPS Rating: ****
GOOGL $655.44 Down -4.30 -0.65%
Google (A shares) CAPS Rating: ****
YELP $23.50 Up +0.12 +0.51%
Yelp CAPS Rating: **
ANGI $5.05 Up +0.23 +4.77%
Angie's List, Inc. CAPS Rating: *