A Google penalty is the negative impact on a website's search rankings based on updates to Google's search algorithms and/or manual review. The penalty can be an unfortunate by-product of an algorithm update or an intentional penalization for various black-hat SEO techniques.
Google penalties can result in the drop of rankings for every page of a site, for a specific keyword, or for a specific page. Any drop in rankings brings with it a major drop in traffic for the site.Google Penguin 4.0 Update
To find out if a website has been affected by a Google penalty, website owners can use Google Webmaster Tools as well as analyze the timing of their traffic drop with the timing of known Google updates.
History of penalties
Google has been updating its algorithm for as long as it has been fighting the manipulation of organic search results. However, up until May 10, 2012, when Google launched the Google Penguin update, many people wrongly believed that low-quality backlinks would not negatively affect ranks. While this viewpoint was common, it was not correct, as Google had been applying such link-based penalties for many years, but not made public how the company approached and dealt with what they called "link spam". Since this time there has been a much wider acknowledgement about the dangers of bad SEO and a forensic analysis of backlinks to ensure there are no harmful links.
Penalties are generally caused by manipulative backlinks that are intended to favor particular companies in the search results; by adding such links companies break Google's terms and conditions. When Google discovers such links, it imposes penalties to discourage other companies from following this practice and to remove any gains that may have been enjoyed from such links. Google also penalizes those who took part in the manipulation and helped other companies by linking to them. These types of companies are often low-quality directories which simply listed a link to a company website with manipulative anchor text for a fee. Google argues that such pages offer no value to the Internet and are often deindexed as a result. Such links are often referred to as paid links.
Paid links are simply links that people place on their site for a fee as they believe this will have a positive impact on the search results. The practice of paid links was very popular prior to the Penguin update when companies believed they could add any types of links with impunity since Google claimed prior that time that they simply ignored such links they detected instead of penalizing websites. To comply with Google's recent TOS it is imperative to apply the nofollow attribute to paid advertisement links.
These are links left in the comments of articles that are impossible to have removed, as this practice became so widespread Google launched something called the NOFOLLOW tag which blog platforms quickly incorporated to help curb such practices. The nofollow tag simply tells search engines not to trust such links.
Blog networks are a collection of sometimes thousands of blogs that aim to appear unconnected which then link out to those prepared to pay for such links. Google have typically targeted blog networks and once detecting them have penalized thousands of sites who gained benefits.
Guest blog posts
Guest blog posts became popular as a practice following penguin as these were considered 'white hat' techniques for a while. However, Google has since stated  that they consider these links to be spam.
Dealing with a penalty
Google has encouraged companies to reform their bad practices and as a result demand that efforts are taken to remove manipulative links. Google launched the Disavow tool on 16 October 2012 so that people could report to Google the bad links they had. The Disavow tool was launched mainly in response to many reports of negative SEO, where companies were being targeted with manipulative links by competitors knowing full well that they would be penalized as a result. There has been some controversy over whether the Disavow tool has any effect when manipulation has taken place over many years. At the same time, some anecdotal case studies have been presented which suggest that the tool is effective and that former ranking positions can be restored.
Negative SEO started to occur following the Penguin update when it became common knowledge that Google would apply penalties for manipulative links; such practices as negative SEO have caused companies to be diligent in monitoring their backlinks to ensure they are not being targeted by hostile competitors through negative SEO services.
In the US and UK, these type of activities by competitors attempting to sabotage a website's rankings are considered to be illegal by experts.
- BeatThatQuote.com – On March 7, 2011, Google purchased BeatThatQuote.com for £37.7 million and, within the same date, penalized BeatThatQuote.com.
- BMW – On February 6, 2006, Google penalized BMW.de for using doorway pages and dropped the site's PageRank to 0.
- Google Chrome – In January 2012, Google's Webspam team penalized the Chrome Browser's homepage for manipulating PageRank with purchased blog posts. The penalty dropped Chrome's homepage's PageRank from 9 to 7 and knocked Chrome off of the first page for important keywords such as "browser."
- Expedia – In January 2014, Expedia dropped 25% in search visibility which resulted in Expedia shares dropping 4.5%.
- Overstock.com – During fiscal year 2011, Overstock.com attributed a decrease from $1.08 billion to $1.05 billion in revenue to Google penalties
- Rap Genius – On December 25, 2013, Google penalized Rap Genius for 10 days. The result was a drop of about 700,000 unique visitors per day.
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