Uctqnde - 1:29 pm on Oct 26, 2011 (gmt 0)
Definitely. You are absolutely right that it's a site wide issue. Vanessa spoke about this at SMX East and it was quite interesting and also imperative to keep in mind. I do think Google is giving back traffic to put the onus back on the SEO/SEM, but they definitely are picking and choosing the type of traffic and I think it is Step 1 on a long road as you say.
Interestingly enough, I have seen drastically improved rankings (based on my weekly ranking reports) in areas we have never been in the top 50 before, but are now ranking well on. I have also seen improvement on other core terms that are of value to us. I find this puzzling since this isn't reflected in the SERPS. Not sure what the relationship with increased rankings on quality kw's is with that of this low-quality traffic?