In the wake of the Farmer and Panda algorithm updates early in the year, Google has publicly penalized several large companies such as JC Penny, Forbes and Overstock for participating in practices that violates the Google Guidelines.
In a story we first told you about on February 24th, "Google Spanks Overstock," it seems that since the penalty was incurred, Overstock has suffered an approximate 5% drop in sales. One can speculate as to the validity of the reported figures, but a 5% drop in sales for a large company like Overstock is certainly more substantial then when compared to a small shop or business incurring a similar penalty.
Overstock.com was penalized for utilizing link exchanges that violated Google’s policies in an effort to effectively game the Google SERPs (Search Engine Results Pages). While it is not the only site to incur such penalties, Overstock is certainly one of the biggest name brand stores accused of such tactics.
Overstock allegedly offered 10% discounts to teachers and student in exchange for links on highly searched phrases such as "futon" and "vacuum cleaners" and asked them to embed links in their college and university .edu websites.
Exchanging links for a discount clearly violates the Google’s Guidelines. Google has been very clear that they penalize sites that participate in link schemes.
However, some webmasters engage in link exchange schemes and build partner pages exclusively for the sake of cross-linking; disregarding the quality of the links, the sources, and the long-term impact it will have on their sites.
The fact that Google penalizes for such activities is not new, but the post-update Google seems to be following through on their decision to crack down on webspam by making an example of well known companies such as Overstock, JC Penny and others to considering such unsavory practices.