For those of you who are unaware of what a ‘paid’ link is, it’s one of the classic SEO techniques wherein webmasters pay for backlinks to High PR sites. You probably think it’s the list of links found on sidebars on many blogs and websites. Well, that’s one form of it but in today’s setting paid links may also appear as an ad or an advertorial.
With all of these algorithm updates, dos and don’ts, specialists are left in squabbles on what is an acceptable link and what is spam. Here is a short video of Matt Cutts explainging Google webspam team’s criteria for determining whether a link is considered a paid link or not.