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I've been reading a lot of information saying that hidden elements are bad and that search engines penalize pages for using them. I started to get really worried about it when I realized that MOST of my pages use them.

This is the basis as far as I know of all CSS based cascading menus. The submenu have 'display:none' until the parent is hovered.

The same is true of places where there are multiple tabs in a page (like browser tabs but within a page) to show multiple contents on the same page.

So, is it true that the page ranking would be penalized?

If so, is there a way to mark this somehow to not get penalized?

I'd like to keep these features without resorting to less efficient methods such as Javascript or worse.

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You'll be fine. Hidden text is only a problem when it is done for the purposes of manipulating the search engines. It's not what you do but why you do it that causes most penalties and this is a perfect example of that. Hidden text in this example allows for the menu to be more user friendly. Countless websites do this without penalty. You'll be fine.

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Mind-reading search engines? ;) How is intent determined? I really like the CSS menu since it lets one navigate from every page to every section of a huge website but I'd like more concrete evidence that it does not trigger a penalty. –  Itai Mar 27 '11 at 16:41
    
Intent is hard to programmatically detect which is why Google still has human reviewers. Search engines just don't want people manipulating their results. That's why the "why" is more important then the "how". If the "how" was what they did to determine what is bad then anyone with hidden content for any reason would be penalized. Obviously there are lots of good reasons to hide content and yours is an example of that. –  John Conde Mar 27 '11 at 17:29

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