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I think I figured out exactly what is going on with my website and why it lost so much ranking. It has nothing to do with content vs ads, amount of content on a page, page speed, or any of that other stuff webmasters have been talking about.
It is a combination of a few things: authority, web address, and links.
Authority:
My website doesn't have too many links to the homepage. Other sites ranking higher have more links to the homepage and less on the inner pages. To remedy this, I need to simply get more links to the homepage.
Web address:
Sites ranking higher have the keywords in their web address. Mine only has partial. I'm not going to change this. I'm sure this is something Google will tweak sometime anyway.
Links:
Some of the links which were giving the website so much power are now gone (host went offline or directory listing deleted) or the links have been given less power by Google for whatever reason. Either way, I can't control it. I can only try to get more links.
I've been hitting my head against the wall ever since the Panda Update to find out what the hell happened to the website. But these seem to be the only true reasons.