Overstock.com has had a lot of financial trouble over the years as a direct result of how its content shows up in Google search results. It is perhaps one of the best examples of how drastically a reliance on Google traffic can hurt a business when things go wrong.
Overstock released its financials for Q3 this week, with earnings down a reported 11% thanks in part to algorithmic changes at Google. This wasn’t the only problem the company pointed to, but it was a significant one.
In the actual earnings report, Overstock said, “We are experiencing some slowing of our overall revenue growth which we believe is due in part to changes that Google made in its natural search engine algorithms, to which we are responding. While we work to adapt to Google’s changes, we are increasing our emphasis on other marketing channels, such as sponsored search and display ad marketing, which are generating revenue growth but with higher associated marketing expenses than natural search.”
CEO Dr. Patrick Byrne told investors on a conference call, “Third of the problem was the Google search change, as it affects everybody. It affected — it was a little bit different this year than it was in previous years in some respects in who it helped and who it hurt. But we think we’ve already learned our way out of that.”
These comments did not thing to help the company’s stock price, which immediately tanked by 17%.
Overstock was famously penalized by Google for its search tactics in 2011. The company had been encouraging websites and colleges to post links to Overstock pages so students could get discounts. Before the penalty hit, the program had already been stopped, but thanks to a slow removal of links from some participating sites, Google caught wind of it and dealt a major blow to the company, leading to an ugly financial year for Overstock. They went from having top position search results to page five and six results.
That debacle happened because of what Overstock did. These were unnatural links, and the company learned the hard way that Google won’t stand for them. This time, they just got hit by the algorithm as so many often do.
Image via Overstock