Central Perk: 28 aug. 2012

marți, 28 august 2012

Mish's Global Economic Trend Analysis

Capital Flight in Spain Hits 15-Year High
Anti-EU, Anti-Brussels Sentiment Rises in Netherlands; Don't Expect Much From a "Merkollande" Summit
Fed a Profit Center for Taxpayers?
Government Spending as Percentage of GDP

Capital Flight in Spain Hits 15-Year High

Posted: 28 Aug 2012 09:15 PM PDT

If Spain is going to be saved, someone better convince Spanish citizens because Deposit flight from Spanish banks hits 15-year high as bailout rumours grow

Spanish banks lost €1 out of every €20 deposited with them in July, making it the worst month for deposit flight in 15 years as rumours grew that the country is edging closer to a full bailout.

News that banks were losing deposits came as Spain's statistics institute revealed the current recession is worse than thought, with the economy shrinking at an annual rate of 1.3% in the second quarter.

"The downturn in the Spanish economy is deeper than previously thought and accelerating," warned Robert O'Daly of the Economist Intelligence Unit.

Tuesday's revised figures showed recession started three months earlier than previously indicated. "The data shows the recession started in the third quarter of last year," secretary for state for the economy, Fernando Jiménez admitted.

A collapse in internal consumption in a country squeezed by government austerity and massive unemployment is largely to blame for the recession, as this fell at an annual rate of 3.9% in the second quarter.

Unemployment is already at 25% but the speed at which jobs are being destroyed quickened to an average rate of 800,000 jobs a year in the second quarter, according to the statistics institute.

That helps explain why Spaniards, and their companies, are both reducing spending and putting less money in the bank.

The amount of money Germany is going to lose when Spain and Italy decide to exit the euro grows leaps and bounds every month.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Anti-EU, Anti-Brussels Sentiment Rises in Netherlands; Don't Expect Much From a "Merkollande" Summit

Posted: 28 Aug 2012 11:17 AM PDT

Emile Roeme, a socialist running on an anti-Brussels, anti-austerity plan is likely to become the next prime minister of the Netherlands.

On the extreme right, populist Geert Wilders wants the Netherlands to withdraw from the eurozone completely.

The centrists who support the nannyzone feel squeezed in the middle, and their days appear numbered.

In a case of Dutch Discontent, Socialists Ride Wave of Anti-EU Sentiment

The economy is in trouble and unemployment is rising -- in the Netherlands as in much of the rest of Europe. Ahead of upcoming elections, the Socialists are riding a wave of euro-skepticism and may emerge as the strongest political force in the country.

According to the polls, [Emile Roeme] the former elementary school teacher could become the next prime minister of the Netherlands.

'Over My Dead Body'

Roemer owes this popularity to his skepticism about Europe. "Having even more Brussels is not the solution to Europe's crisis," he says. The Socialist rails against the European Commission's austerity targets, under which the Netherlands is supposed to reduce its budget deficit to below the Maastricht Treaty ceiling of 3 percent of GDP by next year.

"Over my dead body," says Roemer, referring to the possibility of penalties being imposed by the European Commission. It is also a jibe at the German chancellor, who used similar language to express her views on introducing euro bonds. Too much power has been placed into the hands of uncontrollable technocrats, Roemer claims. "The economic policy Brussels wants to dictate to us is downright antisocial."

If Roemer prevails in the parliamentary election on Sept. 12, German Chancellor Angela Merkel will lose one of the few supporters of her Europe-wide austerity program. The Dutch have stood with the Germans when it comes to imposing strict conditions on countries like Greece.

Now the Socialist leader wants his fellow Dutchmen to vote in a referendum on the fiscal pact, one of Merkel's pet projects, which aims to impose budgetary discipline on the 25 signatory countries. The government in The Hague, which collapsed in April over a national austerity package, has not ratified the agreement yet.

One Fewer Gold Star

Right-wing populist Geert Wilders, who is known for his anti-Islam stance, is also fighting against Europe. He opposes the euro and wants the country to withdraw from the European Union. He even says that one of the 12 gold stars should be removed from the European flag if the Netherlands were to leave the EU.

The left and the right in the Netherlands are coming at the traditionally pro-European centrist politicians from both sides. "It's like a horseshoe," says a senior EU official, talking about his home country. "The extremes are almost touching each other." The center-right Christian Democratic Appeal party (CDA) and the center-left Labor Party are being overtaken by populists on the left and the right.

In a country that, like Germany, has particularly benefited from the common currency, champions of the euro have seen their numbers decline. "Some 60 to 70 percent of our income depends on exports to other European countries," says Mona Keijzer, a top Christian Democratic politician. But she too stresses that each country should address its own problems, and she roundly rejects any additional transfer of sovereignty to Europe. "We want to be a sovereign country," says Keijzer. "We are Dutch."

First Sarkozy, Now Merkollande

Former French president Nicolas Sarkozy and German chancellor Angela Merkel were uneasy allies in an effort to unite Europe. Sarkozy wanted eurobonds, an idea Merkel emphatically rejected at least 20 times.

Hollande has now replaced Sarkozy, and the alliance would appear to be even more tenuous. Not only does Hollande want eurobonds, he also wants to rework some of the austerity measures insisted upon by Merkel.

Thus it is amusing to see politicians who cannot see eye-to-eye on much of anything agree to work together on solution to eurozone crisis.

Germany and France have moved on Monday to bury months of squabbling over how to resolve the euro crisis by agreeing to form a joint policymaking body to create a more integrated economic and fiscal policy in the eurozone and structure a new banking supervision regime.

The German and French finance ministers, Wolfgang Schäuble and Pierre Moscovici, said the aim of the new working group was to produce common policies on how to deal with Greece, Spain and Italy. as well as mapping out longer-term strategies. The Germans hope this will conclude in a full-scale political union within the eurozone.

Full-Scale Political Union? Really?

OK, Hollande wants to save the euro too. Lovely. However, he does not want to cede power to Brussels.

Consider this snip from the Wall Street Journal article France Shows Caution on EU Integration on July 8.

As they debate over the pace of future political integration, Mr.Hollande and Ms. Merkel are expected to spar over whether time has come to appoint a euro-zone budget czar. German officials have called for giving the European Commission more powers to police national budget, and make sure profligate nations don't put the currency union at risk any more.

France, fearing a loss of control over its national budget, has so far rejected that idea.

Instead, Mr. Hollande wants to boost the status of the leader of the Eurogroup, the informal forum where the leaders and finance ministers of the countries that use the euro currency meet.

How Long Can the Merkolande Alliance Last?

My guess is not long given radically different viewpoints on how to get there from here.

United States of Merkel

Let's recap what I said yesterday, in Merkel Pushes Convention to Draft New EU Treaty; United States of Merkel?

Do the German people want a centralized authority over budgets led by bureaucrats in Brussels or is is it primarily Merkel?

I suggest the latter. Merkel wants as her legacy a United States of Merkel (which I define as a United States of Europe in which she gets primary credit for building). She does not care what it costs Germany as long as it gets her in the history books forever and a day.

Numerous Problems

The problems should be obvious. Many countries, especially the club-med states, do not want austerity or loss of sovereignty. They want printing.

Also note that Holllande wants to continue his tax the rich policies while lowering the retirement age and preventing businesses from firing workers.

Will Hollande's ideas work in a United States of Merkel?

Let's assume they will work. Indeed that should be Germany's big fear. Put a bunch of nannycrats together and they are likely to decide anything. And whatever rules they decide will apply to every country in the nannyzone that foolishly signs the treaty.

If the treaty is a simple majority rule treaty, Germany would be at risk of being overruled by the club-med states. If the treaty is by percentages, the club-med states would be at risk of being dominated by what is good for Germany and France (assuming of course Germany and France can agree).

Do-or-Die Political Expediency

Finally, politicians might want a nannyzone, but citizens of many countries would not, and I strongly suspect that includes Germany.

Recall that France and Germany pushed through a treaty in December (still not ratified). Also recall that Hollande ran on a platform of renegotiating the treaty.

Germany and France are still bickering. How's that supposed to work? Does Merkel think an agreement now is likely?

I think not. Instead, her proposal is simply a matter of do-or-die political expediency and her one last chance to push for the United States of Merkel.

Don't Expect Much (Except Bickering) From a "Merkollande"Summit

While Hollande is skeptical at best, the Netherlands is downright anti-Brussels belligerent.

So please tell me again how the Merkolande summit is supposed to work given the Netherlands, Germany, and France still not have ratified the last one, and numerous countries do not want to create a United States of Merkel led by nannycrats with budgetary veto powers.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Fed a Profit Center for Taxpayers?

Posted: 28 Aug 2012 08:52 AM PDT

Congratulations to CNBC for one of the silliest economic assertions in history. Please consider this sentence from Fed steps up release of results, says first-half income up.

Its release of first and second quarter results detailed a sharp rise to $46.447 billion in its payments to the Treasury, from $40.456 billion in the first six months of 2011, reminding U.S. taxpayers the Fed has been a significant source of income.

Fed a Significant Source of Income?

Say what? From Federal Reserve FAQs

The Federal Reserve does not receive funding through the congressional budgetary process. The Fed's income comes primarily from the interest on government securities that it has acquired through open market operations. Other sources of income are the interest on foreign currency investments held by the Federal Reserve System; fees received for services provided to depository institutions, such as check clearing, funds transfers, and automated clearinghouse operations; and interest on loans to depository institutions. After paying its expenses, the Federal Reserve turns the rest of its earnings over to the U.S. Treasury.

Got that? The Fed receives interest on government debt. The more it bloats its balance sheet, the more interest it receives (from the government, courtesy of US taxpayers of course). Whatever the Fed does not waste on salaries and other expenses, it returns to the US treasury.

Somehow the authors of that article managed to turn the Fed into a significant, $46 billion, profit center for the US taxpayers. Wow.

Furthermore, by suppressing interest rates, the Fed has crucified those on fixed income. Also recall that Fed fueled the housing bubble in the first place by holding interest rates too low, too long, in its open market operations.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Government Spending as Percentage of GDP

Posted: 27 Aug 2012 11:08 PM PDT

Here are a couple of charts from Doug Short at Advisor Perspectives regarding government spending.

Federal Government Spending as Percent of GDP

Total Government Spending as Percent of GDP

I asked Doug for those charts because Paul Krugman said he would be concerned if government spending hit 50% of GDP. The trend does not look good, but by Krugman's measure there is a ways to go.

Nonetheless, I think we should be concerned now. The numbers ignore exploding national debt and interest on national debt. Interest on national debt will skyrocket if rates go up or growth estimates penciled in do not occur. Both of those are likely, although Japan proves that amazingly low interest rates can last longer than anyone thinks.

For a discussion of interest, please see Trends in Interest Rates on National Debt Suggest Currency Crisis is Coming

The figures also ignore ever-escalating costs of Medicare, Social Security, and pension promises, all of which are guaranteed to soar in the not so distant future. Romney says Unfunded liabilities amount to $520,000 per household.

I will point out that those liabilities are not debt yet. So might Krugman. However, I am comfortable in reducing benefits and slashing spending while Krugman is not.

Clearly there are many ways to spin this data but please note that government spending in France exceeds 50% of GDP. Also note that French unemployment is 10.2% and Hollande is poised to hike the top marginal tax rate to 75%.

Do we really want to imitate France?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Growing Your Audience with Random Affinities

Posted: 27 Aug 2012 07:57 PM PDT

Posted by wrttnwrd

Most of us don’t get to choose what we write about. Your new client makes pollen-resistant underwear? Congratulations. You’re now an author specializing in allergen-repelling undergarments.

This setup sounds pretty funny until you have to write 15 blog posts per month for PollenProof™’s new marketing campaign. The idea well runs dry pretty quick. How do you keep your interest peaked and idea generator fresh? Random affinities to the rescue!

Random affinities

This term is 100% made up by me with a lot of help from some colleagues. I’m not so worried about protecting it – just beware that if you decide to use it and get laughed out of the room, your only reference is a sweaty, pale marketing guy who spends his spare time training his cats to play fetch.

Two topics have ‘random affinity’ if they are connected only by a common audience. For example: the fact that I like cycling may mean I’m four times more likely to watch "Adventure Time." There’s no subject connection between cycling and "Adventure Time" - Jake and Finn never ride a bicycle. The only connection is the fact that an unusual number of people are interested in both.

indirect affinities

A few other (potential) examples:

Cyclists are more likely to own tablet computers.
Cyclists worry more about skin cancer and skin protection.
People who belong to a PTA or PTO are more likely to be aquarium or zoo members.
People who attend boat shows are more likely to watch extreme sports on TV.

Don’t overthink it. Two ideas + no obvious connection except audience = random affinity.

So what?

This is the part where you say: So what, Ian? You writing a new book or something? Why are you wasting my time with all this fake academic marketing crapola?

The answer is this: random affinities are another way to attract and keep your long tail audience. I don’t buy a bicycle every month (not for lack of trying). I buy one every few years. You can try to catch my attention at just the right time for a bike purchase. But you’ve got a better chance of selling to me if you catch and hold my attention throughout my bicycle buying dry spell. You can do that by speaking to the random affinity topics I like. I’m over 30, plus I sunburn under full spectrum lighting, so skin protection is pretty important to me when I ride. I own a tablet computer, as well. And, if you occasionally talk about "Adventure Time," there’s no question that I will remember your company when I head for the local bike shop for my next toy.

Use ‘em right, and random affinities can increase your likelihood of:

Building rapport with potential customers
Helping folks remember you
Giving you something to write about besides pollen-proof skivvies

Company and sanity savers. They’re dang handy.

Finding random affinities

Way back before the Internet, when I lived in a rolled-up newspaper and got paid in fish heads, we found random affinities by a) guessing, or b) interviewing random people and hoping they weren’t screwing with us. Times were tough.

With the Internet, tools are abound. You can’t click a link without knocking one over. Here are a few of my favorites for finding random affinities:

First, use your brain. This is marketing. After conducting all the math and pretending we can computerize it all, it’s still about looking at the product, looking at the audience, and seeing the connections. Don’t treat these tools as automatic marketing machines. If you come crying to me because you got fired after you tried to sell granola bars with articles about camel spiders, I’ll just laugh. And probably write about you.

Facebook Ads are my #1 source. Sign into Facebook, then select Create An Ad. It doesn’t matter what your first ad is about; you’re just using it as a tester. Then, scroll down to ‘Precise Interests.’ Start typing, and pick the interest that makes the most sense. You’ll see a list of suggested likes and interests:

facebook precise interests

Explore to your heart’s content. Keep in mind that Facebook might not always help your exploration, so be sure to keep it creative. I once searched for "yurts" and found nothing. That’s OK, keep searching! Moving on to the next tool...

Amazon.com is a freaking gold mine. Go search for the top books on your topic. Then scroll down to "Customers who bought this item also bought." It saved me when I was yurt-hunting. Apparently a lot of yurt shoppers also care about composting, ergonomic furniture, getaways, and my favorite, alpacas:

amazon

There are some loose semantic connections here, but if you’re yurt-impaired like I was, these are great new topics. I’m not sure many people would make the connection between yurts and ergo furniture. And while I might picture alpacas frolicking about my yurt, I wouldn’t have considered them potential topics.

Google suggest can sometimes help you connect unexpected subjects that are linked by audience questions. I could write a lot of articles about this one:

google suggest

Though I have to admit, the question alone pushes yurts down on the list of Future Places Ian Might Live. **Shudder.**

Reddit is fantastic. Take a look at the subreddits for any topic:

I never would’ve thought of Burning Man. Or Occupy Wall Street, for that matter. These aren’t really random affinities, but the search sure helped me come up with more material. And, I can now search Burning Man random affinities to find even more to write about. Evaporative air conditioners, anyone?

If your site, or any other relevant site, or any of the sites dealing with any of the random affinities you found get a decent amount of traffic, the DoubleClick Ad Planner can help you find even more. I searched the Burning Man web site in the Ad Planner and found some pretty useful stuff. First, and article or three about photo sharing and photography might be worth testing:

Ad planner

It’s possible yurt fans look for concerts more than the average person, too:

Ad planner

I’ll see what I can dig up about musical interests for my audience and test a few articles about best soundtracks for life in a yurt.

If you’re not saying what the hell, you’re not doing it right

Alpacas? Concerts? Desert events where visitors sunburn their unmentionables? It all seems… random. Right? Exactly. Truth is that the yurts example is a little bit on the fringes of the mainstream consumer audience. Try bigger B2B and B2C topics and you’ll get even better, harder-to-find random affinities.

Is it working? Getting buy-in from the boss

Your boss doesn’t care about your creative genius. She’ll just want to see the money. Or the stuff that’ll turn into money. So make sure you look at the data. I wrote a piece about Dungeons and Dragons and marketing, way back when. Affinities don’t get much more random. When it comes to short-term traffic, it sure worked:

Google Analytics traffic, daily view

My success metric is sustained growth, though. Zooming out a bit more, it looks like I got a nice surge that lasted for at least a few weeks:

Google Analytics traffic - weekly view

Visitors even stuck around to read the whole thing:

They read it! They really really read it.

If I were padding anything except my ego, I’d look at sales and other conversions, too.

Of course, before you can even write, you’ve got to convince your boss this is a good idea. Be super-clear. Show her the audience overlap. I’ve found CMOs and similar to be really receptive to random affinity marketing because it fits with traditional best-practices so well. One suggestion before you begin: start with milder stuff. Don’t sell yurts with Burning Man photos if you can do ergonomic furniture. Move on to the photos after you’ve proven the concept.

No autopilot

Again, this strategy can be messy. It’s not perfect. But random affinities will give you a whole different way to access your audience and keep your content fresh. There are three keys takeaways to making random affinities work:

Don’t make this your whole strategy. At most, random affinities can drive 20% of your editorial calendar. You need a few directly-related topics, too.
Set expectations. It’s a lot easier to sustain your effort if no one expects a miracle. Make sure everyone knows this isn’t a miracle marketing solution (like those exist). But also make sure they know that, in the budget spectrum, this stuff’s low-cost and low-risk. Worst case scenario is that no one reads it.
Above all: If you’re still using scripts to spam links on 10,000 blogs or ensuring that your keyword is 3.5% of every page on your site, random affinities are not for you. This is the stuff that blurs the lines between SEO and marketing. Which is why I like it so much. And why it works so damned well.

Sign up for The Moz Top 10, a semimonthly mailer updating you on the top ten hottest pieces of SEO news, tips, and rad links uncovered by the Moz team. Think of it as your exclusive digest of stuff you don't have time to hunt down but want to read!

Preparing for Hurricane Isaac

Your Daily Snapshot for
Tuesday, August 28, 2012

Preparing for Hurricane Isaac

As Isaac gathers strength in the Gulf of Mexico, forecasters with the National Weather Center are tracking the path of the storm, while federal disaster response teams are already in place throughout the Gulf region, coordinating with state response centers.

FEMA is providing regular updates about efforts to prepare for Isaac at FEMA.gov. The National Weather Service and the National Hurricane Service are also providing new severe weather watches and warnings as they gather new information.

You can learn what to do before, during, and after a hurricane at Ready.gov.

Located in the Gulf region? Make sure you and your family are prepared for Isaac.

How will Google’s ‘transition rank’ patent affect SEO?

How will Google’s ‘transition rank’ patent affect SEO?

Posted: 28 Aug 2012 05:03 AM PDT

Recently, I read an interesting blog post by Barry Adams titled “The Adversarial Relationship between Google and SEO“. He argues that Google’s not an SEO’s friend but rather an adversary and cited quite an interesting patent filing by Google titled 'Ranking Documents'. If you’re an SEO I’d strongly suggest you take the time to read this document in full. Also, Bill Slawski provides an excellent analysis of how this new approach will affect a page’s rankings.

In layman's terms, this patent document specifies how Google intends on making rank changes to its search engine results pages (SERPs). Instead of allowing the algorithm to use its ranking factors to decide how documents (or pages) are ranked, Google will randomly initiate a "transition" period between when a rank change happens.

For example, if I have built links to a site in the hope that it will improve rankings – say from rank 8 up to 3 – Google will notice that there's been “rank modifying” techniques implemented and instead of making the actual algorithmic change, Google will arbitrarily change the rank of the page during its "transition" period from 8 to say (hypothetically) 45. Google will then observe how the "spammer" behaves (whether they would go on to undo any “rank modifying” techniques) and after an “unknown amount of time” let the algorithm make the organic change based on its actual ranking factors.

Here’s Google’s description within its patent:

When a spammer tries to positively influence a document’s rank through rank-modifying spamming, the spammer may be perplexed by the rank assigned by a rank transition function consistent with the principles of the invention, such as the ones described above. For example, the initial response to the spammer’s changes may cause the document’s rank to be negatively influenced rather than positively influenced. Unexpected results are bound to elicit a response from a spammer, particularly if their client is upset with the results. In response to negative results, the spammer may remove the changes and, thereby render the long-term impact on the document’s rank zero. Alternatively or additionally, it may take an unknown (possibly variable) amount of time to see positive (or expected) results in response to the spammer’s changes. In response to delayed results, the spammer may perform additional changes in an attempt to positively (or more positively) influence the document’s rank. In either event, these further spammer-initiated changes may assist in identifying signs of rank-modifying spamming.

(emphasis mine)

If implemented, this will have a significant impact on our jobs as SEOs. We depend a lot on testing in order to reverse engineer specific aspects of the major search engines. With “transition rank”, this becomes incredibly hard. Also, try explaining to your client who spent their online marketing budget on “optimising” their website for search engines only to see their rankings plummet from number 8 down to 45 (albeit temporarily). For websites competing in extremely competitive neighbourhoods, there’s no way a drop in rankings wouldn’t affect the business financially. So in this hypothetical scenario, an SEO is stuck between a rock and a hard place.

Considering the significance of this rank modification method, I decided to ask industry thought leaders for their views on this patent filing.

I asked Danny Sullivan, Barry Adams, Aleyda Solis and Will Critchlow on why Google would go as far as setting up “transition” rankings?

Danny:

From what I understand, setting up a transition ranking is a useful way for them to better detect spam. It gives them a period of seeing how the spammer might react and do other things beyond what they initially detected.

Barry:

Obviously to ensure no external party can discover too much about the inner workings of Google’s ranking algorithm. There is an increasing level of professional quality research (I shy away from calling it ‘scientific’ just yet) being applied to search results by various SEO parties – be they agencies or tool developers – and there are many tests that can be performed to observe exactly what changes result in which ranking effects in Google. With sufficient proper tests, Google’s ‘black box’ will become more or less transparent. And that is something Google wants to prevent at all costs.

Aleyda:

It’s a really strong action against what they call “rank-modifying spamming techniques”, to better identify their signals and patterns. Such a strong action means that they really see these as a very important issue of course. I would rather see Google focusing on enhancing their filters to identify high quality, relevant and popular content that really fulfills the users need instead of investing their time on “confusing” spammers to catch them easily.

Will:

It’s classic game-theory. They are working to improve their spam detection, but it makes sense to consider throwing a little extra confusion into the mix. It’s not the first time they have taken action like this – they have obfuscated toolbar pagerank scores in the past in an effort to dupe people into incorrectly classifying the success of certain tactics.

Let’s glance back at the patent document’s description of what Google refers to as “rank-modifying spamming techniques”:

Some of the techniques used by rank-modifying spammers include keyword stuffing, invisible text, tiny text, page redirects, META tags stuffing, and link-based manipulation.

As you might notice above, it's very difficult to deny that this patent tries to stop or discourage people from trying to manipulate their rankings. Although they have stated some obvious blackhat techniques here – which are already frowned upon by the industry – Google's reference to "meta tag stuffing and link-based manipulation" is too vague that it could cover some legitimate 'white-hat' techniques too. Does this mean that Google views all SEO as spam?

Danny:

Google doesn’t see all SEO as spam. You’re reading way too much into meta tag stuffing and link manipulation to make that into best practices. The meta tag stuffing reference is just odd because Google doesn’t use that. It reads like whoever wrote the patent just shoved in whatever they could think of to be safe. Link manipulation to me reads as targeting spam links.

Aleyda:

They don’t specify it. They talk about “rank-modifying spamming techniques to increase their ranks in the list of search results” (what if the “document” is really relevant and high quality?) and give examples of some blackhat techniques but don’t go into specifics (what if the techniques applied are not against their quality guidelines?). My opinion, of course is that they shouldn’t but I would really like to have a clear confirmation from their part.

Will:

No. Not in my opinion. There will always be individuals within Google who view it that way, but as a company they have created tools for webmasters, engaged with the SEO community and profited from the work of (good) SEOs who have helped companies create better, more indexable websites.

I got in touch with Google regarding their patent filing and queried if this was aimed at SEOs specifically? A spokesperson for Google responded saying:

We file patent applications on a variety of ideas that our employees come up with. Some of those ideas later mature into real products or services, some don’t. Prospective product announcements should not necessarily be inferred from our patent applications.

So are we panicking unnecessarily?

Barry:

No. I believe this patent is already being applied – and has been for quite a while – in one form or another. Any SEO who keeps track of rankings knows the unpredictability of the results that Google serves. SERP monitoring tools such as SERPmetrics and more recently Mozcast are reporting wildly fluctuating rankings on a daily basis, often without rhyme or reason. In light of these observations, a rank randomising algorithm makes perfect sense. Many SEOs already suspected some sort of randomisation at work. This patent just proves them right.

So this leads to the question of whether SEO agencies will need to start rethinking their business models if “transition rank” is implemented?

Danny:

This is probably already implemented, probably before the patent was even filed. Given that it’s probably been in use for several years, SEO agencies out there already thriving probably don’t need to worry about it.

Barry:

It’s not a matter of “if” – this patent is already in effect. And SEO agencies have needed to rethink their models ever since SEO began, so this is nothing new. We’re a fragmented industry and Google wields all the power.

What worries me is that Google is ramping up its efforts to undermine SEO. All we can hope for is that Google overstretches and gets slapped down by legislators – which seems to be happening with all the various antitrust cases being brought forth – and that another search engine comes in to fill the void, making the search landscape interesting again. Because as long as Google monopolises search, SEO will become ever more marginal. Google wants us out of the picture as much as it can manage.

Aleyda:

Business models? Why? If they do SEO (and not spam) I don’t think so. What they should be is more careful before assessing the result of any implemented technique -leave more time before drawing conclusions. Of course, this is another reason to stop doing low-quality or spammy work and stop focusing too much on achieving specific rankings instead of consistent organic traffic and conversions growth.

Will:

This actually hits a very targeted subset of SEO professionals – those who carry out extensive testing of borderline techniques. If you don’t test rigorously you aren’t going to notice if they play with you in this way.

I guess it would place even more of an onus on us to be skeptical of individual (n=1) case studies of short-term gains arising from techniques that we would expect Google to classify as manipulative. But we should be healthily skeptical of all case studies we read on the internet already.

Rand Fishkin:

I don’t think SEOs or agencies will be out of a job, but I do think this, along with the great work they’ve done with Penguin, will lead to a lot less craphat SEO and a lot more authentic content marketing and high quality SEO. And that’s a really good thing.

(emphasis mine).

I’d like to open the floor to hear your perspective on Google’s “transition rank” patent. Have you seen random rank fluctuations within the SERPs lately? How do you think this will shape our SEO strategies? Please do share your thoughts and add to the discussion below.

Authors note: I’d like to thank Danny, Barry, Aleyda, Will and Rand for being so kind in taking the time to contribute to this discussion with their insight and thoughts.

Image credit: patentgenius.com.