The black and white animal updates (Panda, Penguin, my bet for the next one: "Orca") and blocked referrer data have many in our industry crying "Foul." The narrative goes that Google is making life hard for SEOs with the intent of biasing results in favor of big businesses (read: big advertisers) at the expense of small businesses.
Is this valid criticism?
By itself, the fact that big advertisers often outrank smaller companies proves nothing. We have to distinguish between bias and merit.
On the other end of the spectrum of small businesses are these folks:
Without question, Google's actions are intended to make life difficult for Diamond Jim, and I say: more power to them! There are inherent challenges in determining whether businesses that are somewhere in the middle should be classified one way or the other -- a "grey wolf" update trying to parse shades of grey is a more accurate metaphor than separating black from white. It is also true that making these determinations algorithmically based on measurable signals is fraught with peril and will result in some businesses being flagged incorrectly.
Nevertheless, I think the answer to today's question is minimally: "Yes, Google is absolutely biasing results against what they believe to be BAD small businesses. In doing so, they've inadvertently hammered some good ones, too."
But is Google also targeting the other end of the spectrum? Is Google making it more difficult for the honest small businesses to win against the big guys?
Let's split honest small businesses into two classes and look at this first from the perspective of the Mom and Pop generalist, and second from the niche business's point of view.
The Mom and Pop Generalist
If Google devalues and even punishes low quality links and unnatural link and link text profiles, forcing competition towards quality content that generates links and social shares naturally, does that disadvantage Mom and Pop?
Absolutely! If by Mom and Pop generalist we mean businesses that provide thin coverage over a relatively broad array of services (the general store, a small staffed news organization trying to compete in the general news business), then clearly the larger competitors have far more resources to bring to bear on content creation. With fewer resources to cover the same scope the overstretched business has no chance. Mom and Pop cannot hope to compete on quality or quantity of content.
But can't Google legitimately claim that for those very reason's Mom and Pop search results probably aren't what most users seek? Mom and Pop don't spend much on advertising compared to the big players, but that's generally because they can't. They can't compete effectively because they don't monetize traffic as well as their bigger, broader, deeper, less expensive competitors. They lose the online battle for the same reason they're losing the brick and mortar battle: consumers of their services prefer more choices, more content and better prices.
The barriers for Mom and Pop aren't evidence of Google's bias towards big advertisers, it's evidence of Google's bias towards providing the results that users prefer. It is, by extension, evidence of consumer bias against Mom and Pop.
The Niche Small Business
What about the second category of quality small businesses: the niche player? Do the changes in Google's algorithms make competing impossible for them?
The answer has to be "no!" Suppose Joe has a website devoted to fly-fishing in the Ozarks. Why would ESPN enjoy any advantage over Joe in content creation about that subject? If Joe is a good writer, and knows his stuff, he should be able to bury the occasional ESPN sport-fishing coverage of the Ozarks. If Joe can't attract quality links from relevant pages, nor generate followers in the world of social media, maybe the reason Google doesn't rank his site as well as the more generic fishing sites is that Joe isn't very good at it, not that he doesn't spend as much in advertising. Joe should be more like Brian.
Similarly, if Sheila sells fly-fishing gear, why should Bass Pro Shops have a wider, or deeper selection than her? Why should they have better service or more knowledgeable salespeople than Sheila when they have to carry and sell a much wider array of products? The answer is: they shouldn't. Sheila ought to be able to provide a better customer experience in her niche than the generalist, and if she can't then maybe that's a referendum on her business execution, not evidence of Google bias! Maybe Sheila doesn't deserve to outrank the big guys.
Ability to Spend as a Proxy for Quality
What's interesting here is that in many respects the ability to advertise effectively against the big guns is really a pretty decent proxy for having a high quality, relevant website. Bubba's business offering guided Ozark fishing tours, can't spend as much cost effectively as a national fishing tour company overall, but he ought to be able to compete very effectively on the more targeted regional searches, and if he can compete in the paid search arena, he should. If he can't compete in paid search on targeted keywords, that suggests that what he's offering or the way he's offering it isn't what people want.
If advertisers all behaved rationally, and Google's organic algorithms were perfect, we should expect to see the organic rankings match the paid ad rankings perfectly. The best at monetizing traffic should be able to win the auction, and Google should also recognize that they offer the best user experience as evidenced by behavioral data. Google claims not to use analytics information on user behavior in their algorithm, but maybe they should!
The point of this is: there are plenty of reasons Google might favor bigger companies over smaller companies that have nothing to do with relative advertising spend and everything to do with user preferences. Walmart beat Mom and Pop offline and for the very same reason, make it difficult for Mom and Pop online.
In our experience, quality niche companies seem to do just fine using quality white hat approaches to SEO. They also do just fine in PPC. Niche companies that do well in PPC and stink in organic ranking generally stink for identifiable and correctable reasons that have nothing to do with spending even more in PPC.
I would be convinced that something nefarious was at work if there was a clear pattern of quality niche companies ranking better or worse depending on their spend levels with Google. I haven't seen that pattern. Until compelling evidence is presented of Google cooking the organic results based on ad spend rather than crawlability, quality content, and general usability, the verdict has to be "Not Guilty."
No doubt there are some examples of screwy organic results, but I haven't seen a pattern that suggests a bias against anything but poor quality sites.