Search engine algorithms are systematically driving what they consider to be content-market efficiency, but they're missing the target, and, in the process, marginalizing small businesses by the millions.
“Market efficiency” is a measurement of how closely price and value correlate. In a highly efficient market, the price of any given thing will reflect its true value. In an inefficient market, price won’t reflect true value. According to Efficient Market Hypothesis (EMH), information is the key to market efficiency.
Yelp, a popular mobile app, is iconic of a class of technologies designed to improve market efficiency by providing a more complete information profile of goods and services based on user reviews. Yelp is great for helping you find anything from the best local dry cleaning to the best bowl of red curry wherever in the world you happen to be, complete with cell-phone pics and star ratings from actual customers.
Whether Yelp is a good thing, though, is a matter of perspective. As a consumer, I love it. But what about the restaurateur serving up mediocre curry at a premium price and getting away with it? Surely, he hates Yelp, given that the app totally messes with his business model. In popular vernacular, businesses which are damaged by Yelp—or forced to evolve—are said to be "Yelpified."
Strange as it might seem, I’m sensitive to the plight of the “Yelpified,” because it’s happened to me again and again throughout my career.
As a content-marketer, a part of my job has always been to game Google, to make whatever small company I happen to work for punch above its weight in search results. Put another way, I’m paid to skew reality in pursuit of a sort of content-market inefficiency.
Suppose, for example, that I work for a smallish software company selling a premium product in a crowded space, one that happens to include some big brands. Because the large corporate customers that we target are generally hesitant to do business with small providers, job one, for me, is to make my company look bigger than it is. (Let’s be clear. We’re talking disinformation, here.) In practical terms, I pull that off by placing above my big-brand competitors in search results. Search-engine placement as a proxy for size is what I’m going for.
But Google has created an ever more sophisticated set of algorithms, all designed to increase its version of content-market efficiency—that is, aligning searchers with the content that is most relevant to them. For Google, though, market efficiency is basically a popularity contest. So articles on big-brand, high-traffic websites, regardless of quality, get more traffic. Because they get more traffic, they place higher in search results. Because they place higher, they get even more hits, which signals to Google’s page-rank algorithm that the content is, in fact, all the more important. So for a results page on any given high-traffic search term, small-company content is programmatically pushed down the page as content from big brands is pushed up it.
For Google, it’s partly about brand recognition—Just as buyers are more comfortable with big-brand products, so is Google more comfortable with big-brand content. There’s lots more to Google’s algorithmic ranking, though, and all of it is designed to winnow what it considers the “wheat from the chaff.”
And while Google’s current approach is simply the best it can do in world where millions of new articles are indexed each day, it falls far short of content-market efficiency, placing what might be the best and most relevant article for any particular search on page 13 (or page 1300) of its results because the article happens to reside on a low-traffic site.
So as I write this, millions of small companies who have come to rely on search-engine marketing are getting Yelpified, or should I say, Googified, by search engines. Good or bad, again, is a matter of perspective, I suppose. But this phenomenon is part and parcel of the business web’s systematic march toward exclusivity, along the way marginalizing all but the grotesquely large.