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I see everywhere on the internet how to optimize loading speed of a website but no one says why it's important for SEO.

Inevitably, there are reasons why Google has decided to take this factor into account when ranking websites.

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Not just Google but visitors to your site as well. You lose on average 7% of your traffic per second that your page takes to load. –  user23252 Feb 10 '13 at 17:27
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up vote 19 down vote accepted

Google wants to provide its user base with the best experience possible when browsing the web - this is what retains their customers. A poor page load speed can have a serious effect on user experience, that is arguably the main reason Google sometimes ranks these sites less favorably.

It is also an indication that the site isn't perhaps maintained to a high standard therefor reducing the quality of that site.

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Indeed but I think this is the official reason given by Google. I am sure there are other hidden reasons, don't you think? –  Zistoloen Jan 31 '13 at 10:45
    
Personally I can't see any other reason for Google considering site speed in their ranking decision... I'd definitely be interested in hearing people's ideas though! –  Jack Lockyer Jan 31 '13 at 10:48
    
As @JackLockyer said I do think it is that Google wants (its) users to have the best possible experience and fast loading sites definitely add the the users experience. There is one thing to note though that I'd be interested to here other thoughts on. My impression is that Google is looking for users to optimise their sites but do not necessarily penalise you on network related/hosting factors but more of the on-page optimisations (thereby not penalising the poor people who can't afford dedicated servers and CDNS!). Not sure if this assumption is correct though? –  joesk Jan 31 '13 at 11:49
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The only justification needed for anyone engaged in SEO is that Google consider page speed in their ranking algorithm. It is (or was, last I knew) also a factor in Adwords Quality Score ratings, so there's benefit to PPC too. Jack's rationale for why Google do this seems perfectly sound. –  GDav Jan 31 '13 at 11:55
    
Of course I agree with Jack Lockyer but I think Maneet Puri also raises an important point (technical reason): fast websites permit to Google bots to save time for exploring the internet. –  Zistoloen Feb 1 '13 at 9:24
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Google will penalize sites that are very slow (greater than 7-10 for the page to become usable). They do this because they state that users are usually not willing to wait that long when they click and usually return to the serps. Google wants to make their users happy.

In addition to the direct penalties applied by Google, there are indirect consequences of having a site that takes more than 3 seconds to become usable. At about 3 seconds users start turning back to the serps to look for something else. Google uses this "bounce-back rate" as a major factor in the algorithm. A site with a high bounce-back rate will fall dramatically for the particular query for which it was ranking. A slow site will begin to decline in rankings due to this effect.

Again, three seconds seems to be the magic number. Webmasters that improve their site to this threshold often see ranking gains. Improving speed below three seconds may further improve user experience and may lead to higher conversions or better interaction, but it does not appear to improve rankings.

And to be clear, three seconds is for the page to become usable. That means the html has downloaded and rendered with all supporting css and javascript. The images above the fold have also all loaded. There may be some page elements that may still be loading but which are less visible to the user: images below the fold, asynchronous javascript, and videos that are buffering.

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the 3 second is really true. i do it mostly bounce back... so do the others. yes. –  Jayapal Chandran Jan 31 '13 at 13:56
    
Is there a "standard" resolution used to determine what images are counted as above the fold for this metric? There's a large spread between what a 30" x1600 monitor and an x600 netbook screen can show without needing to scroll. –  Dan Neely Jan 31 '13 at 15:11
    
Most analytics packages tell you what the common screen resolutions for your web site are. The most common for mine is 1366x768 and I have relatively few users that have greater then 1920x1080. At this point, I'm using 1000 px as the cutoff for "above the fold". –  Stephen Ostermiller Jan 31 '13 at 16:54
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First, I would like to state that websites and blog should be created keeping in mind the target audience rather than search engine ranking, which even Matt Cutts will agree. Site loading speed has only a small part in Google’s ranking algorithm, but the fact remains that websites that are fast have better ranking in the search engine. Why? To answer your question let me put it this way that a fast website is popular with the audience and second, Googlebots are able to index and crawl the WebPages of a fast site much quickly.

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Thanks for your opinion. –  Zistoloen Feb 1 '13 at 9:20
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