When Google needs a solution to a problem, the first criterion is that it scales. Actively penalising (rather then just ignoring) Paid Links scales. Here's why.
Google has a problem- its core product is being systematically vandalised. Money is changing hands in order to destroy a product Google has spent many years developing. The vandalism is deliberate, and is being perpetrated by a group of people that should be grateful for the service that Google is providing for free.
Such is Google's view of the Paid Link market. You wonít agree, of course. No one does. But the visceral desription goes some way to understanding their mindset.
Here's how it used to be. Google couldn't detect paid links. They could spot them manually though. When it was spotted, sites got banned or penalised. It wasn't proportionate- it wasn't meant to be. Google wasn't running a ranking competition. It was trying to send searchers to useful places. If you didn't want to play by Google's rules, that was fine. They just wouldn't include you in their index. Far easier than paying costly engineers to design and implement a solution. The only problem was that it didn't meet the key criterion. It doesn't scale.
The next stage was to build tools to help spot link schemes. This improved the problem of scalability, but still requires humans to use the tools. And then came the same bans or big penalties.
Then there was automation. Not of the bans, but in the creation of lists of suspects sites. These could then be reviewed by humans in batches, rather than "live". The era of Paid Link Purges had begun. Google was up front with what they were doing, in keeping with their early commitment to webmaster communication. And they were highly vocal- they didnít want people to become unwitting victims.
But why penalise? Why not just ignore? Itís simple really. Firstly, Google doesnít like vandalism. Itís a bit like just asking the shoplifter to leave the goods behind when theyíre caught. Thereís no sense of justice, and no deterrent to others. That deterrence is the second factor- and it is especially important when youíre not good at spotting the theft/vandalism in the first place.
However, during this defensive action, something else was happening. SEOs started talking about the dangers of Paid Links. All of a sudden, the world split in two. The people who pursued Paid Links despite the risks, and those that refrained for fear of penalisation. Regardless of how effective Googleís detection was, the Paid Link market was suppressed, by nothing more than press releases and public statements. Thatís scalable.
FUD is a word that gets thrown around a lot. I used to use it frequently, until I realised that people were reading as a synonym of "nonsense". It's not.
Fear, Uncertainty, Doubt is a perfectly efficacious method of controlling a problem. It seeks to alter behaviour. Ideally, it will ďgo viralĒ and become an instinctive response in the general population. For many, many years FUD controlled paid links, so Google could simply ignore the problem (not improve detection), and in most cases, not issue penalties. Two great things came out of this: Google worked on other ranking factors to dampen the Paid Link effect, improving the experience of both users and white-hat SEOs; and they could legitimately claim no one could hurt your rankings.
Then Caffeine arrived. Suddenly Google had a much greater capability. Quality analysis was within their computing power. There was no mention of Paid Links- they were going after the sites that buy links, but using other indicators. Low quality was going to disappear. Paid Links were dead, if only by association. There just wouldnít be any point.
A year later, they rolled out Panda.
Did it work? Anyone? No? Funnily enough, that was when they started beating the drum about paid links again, after quite a long period of letting SEO bloggers preach the faith alone.
Which brings us back to FUD. Paid Links are now scary again. So scary you worry not just about your own, but hypothetical ones from third parties. You police your own link profile. Dammit, youíre probably even going to disavow some. Nice, juicy data to seed a new detection algo from, by the way, those disavowed links.
For FUD to work, there has to be fear- youíre already scared, so tick that one off.
There has to be uncertainty. Thatís why they donít tell you exactly whatís what, or which links are hurting, or why.
Doubt? Is it effective? Will it hurt? Youíre there.
In short, the Paid Link hysteria is exactly what Google wants. They changed their wording to encourage it, then got Cutts to mention it. Iím not sure Negative SEO is cost-effective or offers a significant ROI. But I am sure Google wants us talking about it. Especially Larry, who's eponymous PageRank is the factor under assault.