April 8, 2011, 4:42 PM

In Google’s penalty box, Overstock takes a 5% hit on revenue

It’s taking Overstock longer than expected to get beyond Google’s problem with search links.

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Six weeks after getting penalized by Google Inc. for using promotional links with university web sites that boosted its natural search rankings, Overstock.com Inc. says the penalty—a drop in its Google natural search rankings—has resulted in a 5% drop in revenue, according to the retailer's filing today with the Securities and Exchange Commission.

“We now estimate that it will be at least another two to three weeks before Google will end the penalty period,” Overstock says in the filing. “During the penalty period to date, we have experienced an approximately 5% negative impact on our revenue, which we anticipate will continue during the penalty period.”

Overstock says Google notified it Feb. 22 that it would get penalized for using a system of links to Overstock.com that were outside of Google’s natural search guidelines. The links were from Overstock promotions on university-related web sites—those with a web address ending in “.edu”—that offered discounts to the site operators, such as student bloggers.

“If a promotional code is given to university sites, it made sense to use,” says Jonathan Johnson, president of Overstock. “But Google felt it was in a gray area.”

Johnson says the retailer believes it has corrected all its links according to Google’s guidelines and notified the search engine company, but that Google has been slow to respond. “It’s not a real open dialogue,” he tells Internet Retailer. “We’ve been scrubbing our links and sent two notes about the results to Google, and we’ll send a third note as soon as we get past scrubbing what we think could possibly be offensive links.”

Google declined to comment specifically on Overstock’s SEC filing today. But a spokesman said: “Our webmaster guidelines are designed to protect users, and when a site violates them, we take action to preserve a good user experience. This helps ensure that in the long run people can find the best possible search results on Google, and web site owners can compete on a level playing field for traffic.”

Johnson says Overstock, No. 28 in the Internet Retailer Top 500 Guide, will continue to have links from university web sites, but will steer clear of the same kind of promotional links.

Sreeram Ramachandran, senior software engineer at Google, will speak at the Internet Retailer Conference and Exhibition 2011 in a session entitled “Do your web pages need a new fitness regimen?

 

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