Guys, here is a direct snippet from Matt Cutts Blog. This was from an old post from 2006.
I’d like to address those two points. I can confirm that Google has removed traffic-power.com and domains promoted by Traffic Power from our index because of search engine optimization techniques that violated our webmaster guidelines at http://www.google.com/webmasters/guidelines.html. If you are a client or former client of Traffic Power and your site is not in Google, please see my previous advice on requesting reinclusion into Google’s index to learn what steps to take if you would like to be reincluded in Google’s index.
Here is a more recent snippet of Google’s policy on duplicate content taken from this page on Google’s Webmaster Central. I realize people aren't questioning about duplicate content, but this post serves as proof that some penalties come in the form of demoted rankings and not just total de-indexation.
In the rare cases in which Google perceives that duplicate content may be shown with intent to manipulate our rankings and deceive our users, we’ll also make appropriate adjustments in the indexing and ranking of the sites involved. As a result, the ranking of the site may suffer, or the site might be removed entirely from the Google index, in which case it will no longer appear in search results.
Google has been in the business of penalizing blatant link manipulation for years. When Matt Cutts comes out and admits publicly that they will take action against link networks, and even go so far as to deindex those sites completely, why would it be any surprise or even be questionable whether or not you were hit with a penalty? It seems apparent to me that if you were ranking well before joining a HPBL and then immediately after that network gets deindexed your site drops many pages lower in the SERPs, that is a pretty good indication that some kind of penalty has been levied against you. This is especially true when so many of the affected sites experience the same radical drop in ranking. That penalty could be done algorithmically on a small scale and not necessarily manually site by site. That penalty could be keyword based on the page level and not intended to deindex anything other than the network itself. And there is no guarantee that Google is going to notify you about it. Why would they? It would make it easier for you to understand how they identify manipulation.
In the grand scheme of things, does it matter whether it is an algorithmic penalty, manual penalty, link velocity penalty or not a real penalty at all? Nope... Your pages aren't ranking anymore and it sucks regardless of why it happened. Time to get back to business.
Your thoughts?
Edited by Ted, 21 February 2012 - 09:17.




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