This is a fascinating little video from Matt Cutts over at Google talking about how Tag Clouds can be dangerous to your blog. I have been wondering just how efficient Google is at determining where on the page your keywords are, and this is informative. In short, YES, tag clouds can sink your blog. There are several reasons why they can cause problems and you should be aware of this. Watch and read on:
I, for one, am disappointed in Google here. I would have thought that with all their discussion about the ability to locate where your links are on the page (header, footer, blogroll, etc) they would have gotten better and determining which keywords are in a tag cloud and weight them lower. But this video implies otherwise. Matt basically says that your tag cloud will probably cause your blog to pick-up a keyword stuffing penalty.
So I decided to experiment on a few of my own blogs
What did I find? Matt is indeed giving you good advice here. When I removed the keyword tag from 2 of my blogs their organic rankings on their head keyword came UP the rankings. This implies that they had been suffering from either a keyword stuffing issue or a link juice bleeding issue (pushing link juice off the main page rather than keeping it there). On another blog, I added the tag cloud. This took my density from 2% to 7% on the home page. The organic rankings for this website dropped (on the head term) fairly quickly.
Matt Cutts and my data imply that tag clouds are very dangerous for SEO given their impact on keyword density and link bleeding. I find this very frustrating because they are, indeed, VERY valuable for end-users. And Google always maintains that what is good for the end-user is good for SEO. Well in this case, no. Matt tries to dance around the issue a bit in this video, but it's clear that Google is currently no good at understanding tag clouds. Best to not use them or use extreme caution when you do.