Google is working on a restore of Panda, a "kinder, softer Panda," Google's Distinguished Engineer Matt Cutts announced at SMX last week. The aim of the next generation of Panda is to help small businesses that may have been impacted by earlier versions of the algorithm that Google has unleashed periodically since the initial launch in February 2011.
Panda was firstly launched as Google's algorithmic answer to low quality and thin content sites that had gained famous rankings in the search results.
While Panda was initially used as battling content farms, the side effect was huge for less authoritative sites, a category that many small websites fall into, regardless of whether they had stellar or poor quality content.
The Panda algorithm was mainly hard on small businesses and greatly decreased their search visibility when compared to larger or "big brand" types of sites that Google seems to favor. This is particularly true for product related searches where sites like Amazon or large retailers dominate the results and smaller sites just can't compete, even if they offer better service or prices.
The same applies for websites offering local services, such as a local real estate agent or a local exterminator. While local search can solve some of these problems, there remains the issue that their content doesn't rank well for usual searches.
On a WebmasterWorld thread on the theme, user EditorialGuy gave an outstanding description of how Panda affects small businesses, using a fake example search:
Take a query like "armadillo grooming tools." In the current Google results, such a inquiry might yield product listings from Amazon, Target, Walmart, Petsmart, Petco, and so on. If I were a Google search engineer testing that query, I'd want to see a mixture of name-brand results and results for specialist sites like armadillofancy dot com that present unique content and show a real understanding of and passion for armadillos."
Last year, Cutts seemed to acknowledge that Panda was having a pretty important impact on smaller businesses. In August he began asking for examples of small quality sites that weren't ranking well in Google. At the time, many small sites that had been negatively impacted by Panda were hopeful that an upcoming Panda update would give them a bit of a improve in the rankings.
There's no word on when webmasters might see the Panda refresh, but since it Cutts mentioned it, we can maybe expect to see it live sometime within the next few months.
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