Any Form of Paid Links = SPAM by Google
It is a well known fact that Google considers paid links as SPAM and website’s PageRank were penalized few years back for paid links. With this there was various consideration in getting paid links that experts used to share that the links shouldn’t be named as sponsored/paid links so that crawlers can identify and similar conditions.
However the websites like www.text-links-ads.com, www.textlinkbrokers.com etc do carry testimonials from SEO experts in their homepage supporting the paid links. I’m sure they would have said this before Google was against paid links but majority of the optimizers still rely on these websites to get quality and high PR links for their websites.

All these methods of generating paid links where often queried to Google asking if they treat this as SPAM or not. Google has reconfirmed by replying using their Googlewebmaster twitter account that they are considering links via these sites as SPAM.

Share your thoughts on the recent update on Google Paid links

While Google frowns upon paid links, and it should, I don't believe that Google has a fool proof system to detect paid links.
I believe that Google mainly rely on webmasters who report paid links or paid link havens which are public knowledge to detect and penalize paid links. It would be very difficult, if not impossible to detect paid links algorithmically.
I may be completely wrong when I say this but I have seen instance wherein websites that rank high smell of paid links. I know that they are paid links because I have used those resources in the past myself.
Would love to hear your thoughts on this Raghavan.
@saurav – Google might look for some parameters like Paid Links, Sponsored Links, Sponsored Listings etc in the pages to detect through its algorithm apart from webmaster reports. I'm sure still SEOs will rely on paid links to get quality, relevant links since they are no longer free.
Benedict, it is a great post thanks for posting it!
ive reported thousands of paid links and google has never imposed any penalties against these sites… its all hogwash!
@mark – Agreed, if you have read the content above the SPAM report form it states that in egregious case only they remove the content from the index and in all other case they use the data to improve their ranking and filtering algo. I suppose paid links report will help them to improve their algo by some filtering. In case of actions I only remember the PageRank penalization that too when Google has started considering Paid Links as SPAM nothing much after that.
raghavan8in is right. I remember few years ago the link bid directory craze… then google dropped pagerank for all sites run by phplinkbid