In June, we published a large statistical study on how Google’s local algorithm works. The study data suggested that citations did not appear to correlate with good local rankings.
Seems like just yesterday Moz local guru David Mihm called out that local citations were in fact the new link. The TL;DR was that Google was likely using mentions of a business’s information on “local documents,” which Google’s patents defined as documents that are:
associated with a particular geographic area […]. A document that relates to a business listing, for example, can be considered a local document because it is associated with the particular address of the business. […] A document … may mention a business at the location, the address of the business, and/or a telephone number associated with the business.
In the early days of Google Places/+Local/My Business, it was likely helpful for Google to use local citations as a partial proxy for links, as most local businesses had few or no backlinks. This started a gold rush for local citation work with lots of competitors.
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