Does reducing content length on a page effects ranking?
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5000 words on one page is, to me, too much so it's a good thing that you are shortening it.
1000 words should be enough to write the informative content you need, with the appropriate keyword content What I wouldn't do is try and talk about too many things whilst sticking to a stringent word limit. Rather than that seperate them out into seperate pages as you see relevant. That way your content will still be relevant, good and focussed.
Something to think about regarding effects on page rankings. If you cull your content too much, so much so that it is no longer good content, then I could see this affecting your bounce rate significantly. Be careful about over do-ing it, but I would much rather see a page with 1000 words of content than 5000.
It would be the knock on effects of shortening your text I would look at, rather that the sole issue of 'less text'.
Danny
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Well the content was written by specialists in respective areas but was not updated for long time. content was also very long between 1500-5000 words like a long essay. We are re-writing content but keeping it max 1000 words.
The most valuable content that I have written is really long articles with a lot of photos, graphs and art to support it. Chopping that down to 1000 words would be the very absolute last thing that I would do to fight a panda problem or solve any type of search engine issue. It would be like throwing the treasure chest overboard!
What else could be causing your panda problem? I can't answer that but would consider duplicate content, thin content, ad density above the fold. Or, maybe your problem is something other than panda?
Has someone republished your content without your permission, have you given your content to article sites, maybe the content was not original when you placed it on site.
Don't burn down your house to get rid of the mice.