RetailMeNot Lands on the List of Google Search Victims

by James Brumley | May 27, 2014 9:26 am

Last week, online-coupon and sale-offer website RetailMeNot (SALE[1]) saw its shares sink 19% in one day. The prompt for the plunge? Digital marketing data provider Searchmetrics reported RetailMeNot’s visibility within Google’s new search algorithm was 30% weaker than it was before the search engine’s overhaul[2].

If it were the first time Google (GOOG[3]) had up-ended a company’s place in the search engine giant’s web-query results, it may by dismissible as just a little bad luck; the fact that Google also happens to compete with the up-ended organization could be chalked up as coincidence.

But RetailMeNot isn’t the first e-commerce site to suffer a sudden and unexpected setback in its Google search results. Likewse, SALE stock owners aren’t the only investors who have paid the price when GOOG decided it was time to shake things up in an arena where it just happens to be working (albeit indirectly) to strengthen its presence.

Just for the sake of discussion, is it at least possible RetailMeNot is another victim, not just of circumstance, but of Google’s willingness and ability to put its own interests first?

SALE Faceplants

Google routinely changes where — and how — websites appear in its search results. While the world’s largest search engine never says precisely why it revamps the way its search queries work, it’s not difficult to assume it largely does so to both improve the relevancy of its search results and weed out the lower-quality and lower-relevancy sites from its query results. For whatever reason, RetailMeNot was deemed to be not-quite-as-relevant under the new GOOG algorithm.

Considering Google owns two-thirds of the U.S. search engine market share, it’s no small setback for RetailMeNot or for SALE shareholders.

Perhaps even more concerning is that Google just so happens to make good money by selling ad space for terms like “coupons” and “discount offers” … terms that would presumably be used by someone looking for a site like RetailMeNot. With the site now even further away from the search engine’s top results for coupon-seekers, Google is arguably in a position to benefit from the competing site’s stumble.

Perhaps worst of all, this isn’t the first time, or even the second time, Google has somehow managed to trip up its competition.

Google Strikes Again

If the whole shebang seems vaguely familiar, it may be because Google put online travel-booking site Expedia (EXPE[4]) in the proverbial penalty box in January[5]. That is, Google punitively — although only temporarily — shoved Expedia out of the search engine’s top “travel” results.

Though GOOG rarely explains why things happen with its search engine, it’s widely accepted that the web search giant didn’t care for the “unnatural” links (web spam) it was seeing from Expedia around that time.

And it was indeed a short-lived setback for Expedia. Interestingly though, a mere three months later, Google announced it was wading deeper into online travel-booking waters by licensing Room 77’s hotel-booking software.

Coincidence? Maybe, though it’s difficult to believe GOOG just up and decided to go head-to-head with a website it had proactively penalized just a few weeks prior. It becomes downright challenging to believe it’s all a mere coincidence, however, knowing that eBay (EBAY[6]), yellowpages.com, and ask.com were also among the biggest losers of Google’s most recent update to its search algorithm[7]. Each one of those sites competes directly or indirectly with Google.

Bottom Line

In all fairness, it’s not as if the biggest victims of the recent round of Google’s search algorithm changes are guilt free; it’s entirely possible all of them were crossing the line of spamminess and may have deserved to be called out on it.

There’s a philosophical flipside to the impact such changes can have, however — Google ultimately gets to pass final judgment on what’s acceptable and unacceptable traffic-driving behavior. It’s a philosophical impasse mostly because Google is often perceived as an unbiased web-search tool even though it can and does benefit greatly by tweaking the results of what’s easiest to find using google.com and what’s difficult to find.

Case in point: Now that Google benefits from being a middleman within the travel-booking world, it would be better served by quietly making Expedia and Priceline (PCLN[8]) a little more difficult to find on the web (and remember, it has already dinged Expedia once). Ditto for eBay.

What does any of this have to do with SALE now? Although Google officially shut down its online-couponing venture Google Offers back in March, it also somewhat looked like it was losing interest in its own online travel presence by refusing to do anything fruitful with its 2010 acquisition of air-travel booking platform ITA Software. The company reversed that apparent disinterest just a few months later though.

By mid-2013, Google barely even had a measurable presence in the web-based world of flight searches[9]. Less than a year later, though, by adding Room 77 to its repertoire[10], Google is ready to cause some real trouble for the likes of internet travel agents like Priceline and Expedia. So it wouldn’t be shocking to see Google make a similar jump back into the online coupon business, and it would be much easier for GOOG to win that war if it found a way to keep RetailMeNot suppressed in its search results.

None of this is an accusation. It’s just something to think about in an environment where investors constantly clamor for big growth.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

Source URL: https://investorplace.com/2014/05/retailmenot-google-search-victims/

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