Can a home page penalty cause a drop in rankings for all pages?
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All my main keywords have dropped out of the SERPS. Could it be that the home page (the strongest) page has been devalued and therefore 'link juice' that used to spread throughout the site is no longer doing so. Would this cause all other pages to drop? I just can't understand how all my pages have lost rankings. The site is still indexed so there's no problem there.
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yes homepage penalty means site is penalized across the board
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Yes it "could" be that your homepage has been penalized or has lost some back links. If so it would have a direct impact on the link juice flowing through to your other pages. The best thing to do is check out webmaster tools for any warnings. If you don't have any warnings then I would start digging into my link profile to see if any links have fallen off your profile recently.
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It is possible yes, your home page is where the majority of your website authority sits so if that gets penalised then other pages can be affected. Simon is right that without more details, it is hard to give you a proper answer.
If you have been doing a lot of articles recently then this may be a reason because article websites have taken a huge hit since the update in January.
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Have you had a look in Webmaster tools for any issues? Any unnatural links warnings? Have you lost any significant backlinks? There could be any number of reasons, be it Penguin or Panda - without more info people will struggle to give you suitable solutions.
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