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In balancing the simplicity of only showing time-relevant posts vs. the completeness of showing all posts, which do you think is closest to user expectations?

Some background … on our websites, retailers can post news. News items are short and timely, usually intended to call attention to sales, deals, or in-store events that expire or end within 30 days. Since these posts are so ephemeral, some colleagues argue they should simply disappear after a month or so. Others believe it would be good to show an archive of older posts.

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I don't really see a huge benefit to archiving / deleting old posts. Just because a post isn't currently relevant doesn't mean it isn't interesting. It's good to know that a website covers stories as they happened, it gives you a good indication of the type of articles they post - You know that when a sale is on they're likely to post a news article about it, so if there's no active article at present about a sale/promotion it means they probably don't have a sale on.

Not to mention the benefits to SEO of having all that content there. Someone visitors might land on a 10 year old out-of-date irrelevant post on your site, but from there they're already on the site and can explore to read the current relevant posts. It's a way into the site for them that shouldn't be closed off.

The cost of storage space would be the only reason I can think of for removing old posts, but unless each article is a huge video file or something I don't see this causing much impact.

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What you keep and what you show are two different issues here. You should keep historical information, but whether you show that by default or hide it behind some sort of advanced search is another question.

If the information being posted loses it's relevance after an amount of time (e.g. A sale until the end of November, loses relevance in January), then I would do two things.
1. Mark clearly when it has expired
2. Archive it after a period of time after the expiry. The exact period depends on the application, but in general I would use about 2-4 weeks.

If the information however is not time sensitive (e.g. XYZ company has a new CEO), then I wouldn't archive it.

There is a difference between archiving something and simply not showing it in your default view. Your default view should be what you think will be most relevant for your customers, and the age of content is one of the considerations there.

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