April 26, 2011, 4:50 PM

Google ends its punishment for Overstock’s attempt to boost its search rankings

The retailer used promotional links from college sites to gain a higher search profile.

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Overstock.com Inc. this week officially was granted leave from Google’s dog house after the search engine penalized the online retailer for encouraging links from university web sites in a bid to boost its search rankings. The Google penalty depressed Overstock’s natural search rankings and resulted in a 5% drop in revenue for the retailer during the period the penalty was in force, according to a filing in early April with the U.S. Securities and Exchange Commission.

Overstock,  No. 28 in the Internet Retailer Top 500 Guide, says it was notified by Google in February that it would face penalties for developing 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 they linked to Overstock. Google has not commented specifically on Overstock, but the search engine dislikes it when retailers pay for links designed to boost natural search rankings.

“Our webmaster guidelines are designed to protect users, and when a site violates them, we take action to preserve a good user experience,” Google says in a statement today. “We typically don't comment on how specific web sites rank in our search results.”

The search engine does not typically offer public comment about how it applies such penalties to retailers that try to game Google’s search algorithm, the constantly changing and secretive formula that determine how highly companies place in natural search results. The penalty applied in this case was a manual demotion performed by Google, industry insiders say. Google also would not say if Overstock would face increased penalties for future violations related to natural search rankings.

“We understand Google's position and we have made changes to remain clearly within their guidelines," says Overstock.com CEO Patrick Byrne.  Neither Overstock nor Google specified how much damage the retailer’s search rankings suffered during the penalty.

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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