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One of the SEOs I work with finished an audit of links he bought on sites that had a toolbar PR drop (or even elimination). I'd appreciate it if we don't divert this post into a discussion of the irrelevance of toolbar PR.
(We did the audit so as to remove links that appear to be wasting money).
Here's the shocker:
A site launched a few months ago had all of its links purchased on TLA.
25 links were bought. 20 of them had the PR hit.
But it hasn't effected the site's ranking.
Planet Ocean reported last month that the toolbar update was "cosmetic", but I fully expected Google would be negating the link juice.
We're still pulling our link buys in anticipation of Google negating the link value.
But I'd like to know if anyone else has observed a loss of efficacy in paid links?
So I will go back to my original conclusion.
This has and never had anything to do with "better SERPS"
It has to do with Adwords, FUD, stock prices, and dividends.
Since AdWords, stock prices, and dividends are strongly influenced by the number of people who come to Google (and keep coming back to Google) for search results, I'd say that it has everything to do with "better SERPs."
The PageRank formula (Google's unique selling proposition) treats links as "votes," and vote-buying skews the results of elections. Google has good reason to feel that vote-buying is detrimental to its SERPs and its search audience, so it would be surprising if Google didn't want to make examples of sites, SEOs, or brokers who sell votes.
Thanks to grant for sharing the results of his audit. Others seem to confirm - paid links are still passing juice, even from domains that have had their PR downgraded.