Penguin updates are generally all about assessing links, and more specifically the "quality" of inbound links directing traffic to your website.
So, to answer your question, Penguin's algorithm is intended to penalize sites that have relied too heavily on paid links, unnatural linking, and links from sites that Google deems to be of poor quality.
How does Google's Penguin 2.0 affect search ranking?
The consensus amongst most of the SEO articles I've read since 2.0 seem to be that sites with unnatural links are the biggest losers in this update, especially ones that have used exact match anchor text links.
Link relevancy is really big in this Penguin update, and Google is specifically targeting things like comment spam and links from irrelevant or "dodgy" sites.
If you want to rank, your inbound links need to be coming from sites with authority, or publishers that Google trusts.
So, whereas guest posting everywhere and anywhere and then dropping a link may have seemed like a smart SEO tactic in 2009, nowadays the quality of the sites that link to your own website are more important than ever.
What should I do if I've been hit by Penguin
After every algorithm update, publishers that have been hit scramble to the nearest SEO agency looking for help.
From what I've read so far, there are several really simple things you should know:
- Whatever you do, you won't see a sudden surge in traffic (unless you've been hit with a manual penalty too). Recovery is hard work, slow and painful.
- Start building your social. Quality social links are more important than EVER. And how people engage with your social links is something Google is very interested in. If you're not on G+ already, get on it!
- You need links from similar sites, or sites in the niche you operate in. Anything that boosts your authority and trustworthiness is great.
- Build your brand. Things like users searching for your brand name in Google is a big positive.
- Try to tidy up your links manually first, and then check out Google's Links Disavow Tool to get rid of unwanted "weak" links. (more about that in this SearchEngineLand article). It's said that getting rid of poor links can often be harder (and more expensive) than building them in the first place.
- Keep up to date. Keep an eye on what Matt Cutt's is saying, get real data from other publishers, and learn as much as you can from others. Not staying in the loop means you risk relying on old-fashioned SEO tips that might have seemed like a great idea a few years ago, but are now obvious no-no's in Penguin's eyes.
