A Google Webmaster Help thread has one webmaster who runs a home construction resource complaining that his rankings tanked. After some back and forth, Googler, JohnMu came in and said:
I browsed your site's reviews a bit and most of the links are either affiliate links or links to the companies without nofollow. This doesn't seem to match your reply regarding the use of nofollow. Perhaps it would be good to double-check and submit a reconsideration request should you find something that could be improved.
Yes, this webmaster dared to write a review or an article and decided to link to related products within the article, via a straight link, to the affiliate. Google likely automatically found the links, felt the site was abusing their paid link policy and slapped them with a penalty for it.
So, if you have affiliate links that you have not nofollowed, you better nofollow them. If you don't, well, then you join the ranks of sites link the one in the thread or like this site. Yes - before you all comment that we don't nofollow our paid links, I admit it, we don't. I am one of the few bloggers who decided that this blog's sponsors are not just "advertisers" but also extremely related to the site's content and can be useful to ALL of our readers. Hence, I decided to take a hit on this site's PageRank and ranking - to stand tall. Don't get me wrong, I believe this was a smart move by Google, and I totally feel they have every right to do this. Doesn't mean I don't have a choice to take a hit in the Google rankings for it.
Forum discussion at Google Webmaster Help.
