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So I've been looking into this HTML 5 Microdata, but I'm not sure if or when it is appropriate to use. I know that if used with rating and you search a website it will pull up things like video rating and article ratings etc. But for Microdata like People or Places, is that so useful that I should start implementing it into all my websites - big and small? How big of an impact will this really have on my SEO if I start using Microdata on everything?

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The three big search engines, Google, Bing and Yahoo (and more recently, Yandex), have agreed to understand 1 single microdata vocabulary. This is Schema.org, which has examples of placement.

This formats your results as Rich Snippets, the search engine results which have pictures and fivestar ratings, etc, displayed on the search result page. While this probably doesn't have a direct effect on SEO, early studies of Rich Snippets showed that click through rates were 15-30% higher.

Note that Google says it will not support Microformats for its Schema.org Rich Snippets.

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That links looks like Google WILL support microformats? Am I missing something? – Howdy_McGee Feb 21 '12 at 15:38
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@Howdy_McGee the 3rd point "Why microdata? Why not [...] microformats?" states: "Historically, we’ve supported three different standards for structured data markup: microdata, microformats, and RDFa. [...] we’ve decided to focus on just one format for schema.org. [...] There are arguments to be made for preferring any of the existing standards, but we’ve found that microdata strikes a balance between the extensibility of RDFa and the simplicity of microformats, so this is the format that we’ve gone with." So they are not supporting microformats. – Zhaph - Ben Duguid Feb 21 '12 at 17:14
Google does still seem to support microformats as well as RDFa for rich snippets, as their documentation has been updated for these pages fairly recently and the alternate formats are still listed. Not to mention, hCard is way more popular in the wild than schema.org's equivalent microdata format for representing people/organizations. Google simply won't be documenting these other formats on Schema.org. – Lèse majesté Feb 22 '12 at 11:03
They support RDFa and microformats officially for Data Vocabulary Rich Snippets, not for Schema.org. They unofficially support RDFa for Schema.org, but since it's unofficial, it's hard to tell if they support it for all the types and whether they will continue to support it. – linclark Feb 23 '12 at 13:05
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If there is a microformat for the data you have on your website and you wish to optimize your website for the search engines then you should use use microformats in your websites. How much of a difference it will make in your SEO efforts will vary just like every other thing that has to do with SEO. It will depend on lots of other factors. But if you want to maximize your SEO efforts then you will want to take advantage of every opportunity you have and microformats is one of those opportunities.

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