Some businesses have followed bad advice in the past when outsourcing their SEO efforts and have been penalized for link spam. Google punishes websites for buying links or employing link spam to artificially build search ranking. The results of the Google penalty can be measured in radical search ranking drops or a notification in Google Webmaster Tools as a "manual action." Google is working hard to bust violators of it's anti-spam policies as evidenced by their recent take down of Angelo Rank.
Many businesses that find themselves dropping in rank as a result of a manual action or penalty by Google can still recover. Google allows website owners and webmaster to disavow links pointing to their websites through a tool inside Webmaster Tools. Also, Google allows for site owners or webmasters to submit a reconsideration request with Google to have the search giant review their site after changes are made in compliance with policy.
In this video, Matt Cutts, the head of Google's anti-spam effort, explains an rapid case of recovery where a company decided to disavow every link during a period of "blackhat" link spamming. This example is extreme and not recommended by Google, per se. This video provides an example of how a company could demonstrate their commitment to an earnest compliance with Google's standards for SEO.
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