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It came as a huge surprise to everyone in the search industry when Google announced this past Monday that they will be encrypting ALL keyword data from searches. Over the past few years, Google has been encrypting search data from users who are logged into gmail and then anyone using Chrome. The rise of the "Not provided" keyword has been annoying, but it was possible to extrapolate the data from other searches to get a good idea of what your visitors were searching for in order to get to your website.
Every time Google makes changes to their algorithms or any other major change that affects the way SEOs do their work, people have complained that it is the end of SEO. This is certainly not the end of SEO, but it has a huge negative impact on both SEOs and small business websites alike. You will no longer be able to determine how your visitors are getting to your website.
Google claimed that this was to provide extra protection to searchers, but we can be fairly certain this is not the case. Why? Because Google is not encrypting keyword data for paid clicks. Many industry professionals consider this to be a move by Google to increase revenue. By not encrypting paid clicks, Google is pushing people to pay for Adwords in order to get information on search data. Another reason is that by limiting information on keyword searches, it will force websites to focus more on quality and less on targeting specific keyword phrases. Google has been trying to push the quality content over optimization route for years, and this will force many smaller websites to do just that. It won't affect the big boys with massive budgets, but it will help to clear out all the lower end SEO stuff.
Knowing where your visitors are coming from is still important. There are tons of legitimate reasons why you want to know how visitors are getting to your website, and who those visitors are. The move to encrypt all the searches will remove all this data from Google Analytics, but you will still be able to get information on searches in Google Webmaster Tools. This is not nearly as good as having the information available in Analytics, but you will still be able to see where your visitors are coming from. The downside is that it does not work as well, you can't look at the data as easily, and it is much more time consuming.
We don't know. This is a truly landmark change in the SEO industry and the availability of data on the web, and it came as a complete surprise to everyone outside of Google. There was never any indication that Google would be taking this drastic step so soon without any warning at all. Will Google make other, massive changes without warning? We don't know. It remains to be seen if this will be a good thing or a bad thing, but I am a firm believer in access to information, and having information taken away is, in my opinion, always a net negative.