Panda updates are the changes Google makes to its search algorithm. They are designed to return better results for people using the search engine. The intent behind these changes is pure and honest -- the company is always trying to create a better user experience and deliver stronger search results.
However, that does not mean there are not unintended consequences. Turning a ship as big as Google even slightly can wreak havoc on its many partners, and that has happened with previous Panda updates.
Now Google is releasing one of its biggest changes ever, one that could wipe out smartphone traffic to smaller sites that are not mobile-friendly. Losing this audience could be a significant blow, as roughly half of Google searches come from mobile, according to CNN Money (some of those searches are from tablets, which are not affected by this change).
That is bad news for a lot of small and even mid-sized players, but it could be a boon for leaders like Amazon, Target, Wal-Mart and other large retailers that already pass the test.
What is Google doing?
The company is trying to ensure that when someone conducts a search from a mobile phone, they receive results that look good. The company explained its plans in a blog post:
Have you ever tapped on a Google Search result on your mobile phone, only to find yourself looking at a page where the text was too small, the links were tiny, and you had to scroll sideways to see all the content? This usually happens when the website has not been optimized to be viewed on a mobile phone.
This can be a frustrating experience for our mobile searchers. Starting today, to make it easier for people to find the information that they're looking for, we're adding a "mobile-friendly" label to our mobile search results.
Google, which often does not share the content or intent of its algorithm updates, posted about this one in its Webmaster Tools about two months ago. While some updates seek to penalize people trying to game the system, Google was clear this time around that it just wanted smartphone users to receive results they could actually view on their handsets.
The search company even laid out criteria for what makes a site mobile-friendly:
- Avoids software that is not common on mobile devices, such as Flash.
- Uses text that is readable without zooming.
- Sizes content to the screen so users don't have to scroll horizontally or zoom.
- Places links far enough apart so that the correct one can be easily tapped.
Google also offers a tool through which users can check whether their sites meet the criteria.
Why does this matter?
While large retail sites already comply with the above criteria, many small and even mid-size companies do not, and it can be expensive to upgrade. Take, for example, the thousands of local book and record stores that compete with Amazon. Individually, none of these retailers are a threat to the e-commerce king, but together, these small-time players make up a meaningful share of the market.
Under this new algorithm change, if someone is searching for a book or CD, Amazon, Target, and other major retailers will obviously come up but not so for some smaller competitors, unless they make the necessary changes to their site.
It is not just mom-and-pop websites that will feel the effects. According to a report from The Economist, "40% of the leading sites failed Google's 'mobile-friendly' test and could be down-ranked in search," citing market research firm Portent.
What happens next?
Webites that wish to stay competitive with mobile search will need to bite the bullet and comply. Until that happens, the bigger websites are going to profit from this Panda update -- perhaps substantially.
Google is probably doing the right thing by its search business here. Returning useful results no matter what platform is used makes the company stronger. But this move will hurt a number of retailers, while making their biggest competitors even stronger.
Daniel Kline has no position in any stocks mentioned. He owns websites which have suffered through Google updates, but he still finds Pandas adorable. The Motley Fool recommends Amazon.com, Google (A shares), and Google (C shares). The Motley Fool owns shares of Amazon.com, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.