Note: someone asked this question on Quora but when I tried to post it there, it generated an error. After that, I couldn’t find the question. Since I have already prepared an answer, I’m publishing it here.
To genuinely understand the answer to this question, you first need to understand what Google indexes and ranks? It’s content.
Now, since there may be thousands of web pages, blog posts and social media updates offerings similar type of content, Google uses an algorithm to decide which content it has indexed to rank higher than the other content it has indexed.
Now, Google cannot solely depend on its algorithm because software can always be tricked into believing something that does not exist. That’s why, people were always “hacking” their way into higher search engine rankings. Google also analyzes how people interact with and react to your content. This is called human validation. If humans don’t appreciate your content well or don’t react to it positively, you can forget about getting higher search engine rankings.
So yes, a website’s content definitely affects SEO because one, after analyzing your content, the Google algorithm should be able to make out what the content is about and for which keywords and key phrases it should be ranked in what manner, and two, it should be able to gauge how people are reacting to your content.
What does interacting and reacting mean here? Right now your content (a particular web page or a particular blog post) may be ranking on the fifth page and by some fluke, search engine users reach the fifth place and click your link. If your bounce rate is low – that is, people go to your link and spend some time reading it because it contains useful information – Google takes it as a positive attribute. It thinks that since people are spending more time on the link, the link must be useful and hence, it deserves higher search engine rankings. Your ranking improves a few notches. Conversely, after clicking the link when people immediately come back to Google and explore other links, your rankings go down.
Therefore, to improve your SEO with your website’s content, make sure that the Google crawler can rank your content easily, the algorithm can make sense of your content, and your content is appreciated by your visitors. All these attributes affect your SEO.