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My question: How important is the data gathered by the spiders at the Level 3 to the ranking of the index page at the highest level?
Trying to figure out how much effort to put into SEO at the deeper levels, which have not gotten high ranking on the search engines to date. Also, I am thinking about making the Level 3 pages dynamic (currently static) and want to weigh the potential for disaster on the Level 1 and 2 pages which are doing very well in ranking.
Your Level 3 pages should eventually be able to rank on very specific "longtail" terms, and that traffic will convert at a much higher rate (percentage) than generic keyword traffic - because the searcher knows exactly what they want and they see that you've got it.
It's not just for Google - it really pays to be meticulous about your product level pages. That's where the rubber really meets the road.
I still am not clear if Level 3 information can help higher level pages or possible hurt them. For example: Is the Home Page ranking based on Level 3 ranking, content, etc. or does it rank base only on its own merit? If there is a connection, how great is the Level 3 influence on higher level pages?
All these questions stem from considering changing my Level 3 static pages to dynamic pages.
As with anything, you can mess around too much with a site and cause problems. But if you are asking "can it hurt the home page to have more Level 3 pages start to rank?" I'd say the answer is no.
So if your Level 3 pages are getting fewer SERP impressions than they used to, that might have a small downward influence on other pages, including Home.
Note that I did say the downward influence is "small". Google still ranks pages most of all, and not "sites". A strong Home Page is still a strong page, no matter what else the site holds. Weak pages deep within a domain are no big deal - unless they used to be strong and some change you made has weakened them.
One factor I would take careful stock of is preserving vertical integrity in a site - in other words, don't do a lot of cross linking between Level 2 and Level 3 pages - especially Level 3. Some cross-linking is natural, but too much can turn the site into a mish-mash that makes ranking more difficult.
Does that help?
-- The age of the domain
-- The overall size of the site, including the total amount of content
-- How well the content on different pages adheres to the site's general theme or subject
-- The "trustrank" of the site
-- The naturalness of the overall link profile, including a natural distribution of incoming links over the various pages
-- Occurrences of main keywords and keyphrases on multiple pages and in various contexts
-- Structure of the internal linking between pages, and the anchor text used in these links