According to the Google Webmaster Guidelines and other search engines guidelines, link Farms are not legal.
Participating in any link schemes to manipulate PageRank can lead to a Penalty in Google, which means your site will be demoted in the SERP's.
It is always better to build backlinks by writing good quality content, outreaching or using grey hat techniques.
The sole purpose of a Link Farm is to manipulate the Google (or other search engines) rankings of a website. A Link farm allows a group of people (this group can be small or big) to create links for each other's relevant websites, increasing their links in order to reach a higher position in the organic search.
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The easiest way to identify a Link Farm is by looking at the anchor text of the links present there.
Usually, Link Farms use exact match anchors or spammy ones.
Also, they look just like how they sound. They are really just a bunch of websites with low quality links pointing to each other, often with very poor design. They don't look like real business sites at all.
Back in the days, a lot of article sharing websites were basically operating as link farms. SEOs would just simply automate the process of spinning an article and putting it on websites like Base Articles and generate thousands of links in a short amount of time.
Link farming is not effective anymore as it is an old SEO technique dating back to 1999.
Ten or fifteen years ago, none of the search engines algorithms were as smart as they are now.
All they looked at is how many links you had and what page rank those links held. If you had more of the powerful ones, search engines though you were the most relevant resource.
Nowadays, it's not the case. Search Engines algorithms are so smart, they can look at a page and understand what it is about. Search Engines can also see if the sites link to you are relevant or not.
While you may generate a large number of links from a link farm, most of these links will be spammy links coming from spammy websites. These websites often have thin, irrelevant content on them, which search engines don't prefer.
Many of these websites are low authority Web 2.0s that were only created to act as a part of a link farm.
The Penguin Algorithm update was a big blow for Link Farms since that algorithm update focused on Link Quality. A lot of websites got penalized and lost all of their rankings and the traffic that came with it. A huge amount of businesses had to take the time or consult with an SEO professional to disabow those bad backlinks they have acquired.
Link farms were similar in structure to Private Blog Networks (a grey hat SEO technique), where you have a group of blogs on expired domains, that can link to your website to increase your rankings.
Yes, Link Farms are not allowed in SEO and can result in a penalty from Google.
Link Farms use spammy techniques to obtain links to your website and Google considers it as part of a link scheme according to their Google Webmaster Guidelines.
The answer is no. Getting backlinks from a Link Farm can result in a penalty from Google, demoting your website.
It is true, that a link penalty can be recovered from, but it takes a lot of time and effort, and you will lose most of your rankings and traffic.
It's just not worth it to save a few bucks if it means losing your search engine rankings and traffic.
There are Link Farms that are automated and the spun content is posted on thousands of websites.
The process is completely automated, there is software that can do the creation of the Web2.0 or the website and the posting as well.
They then create a huge network of these links, linking to other sites.
There used to be a lot of Link Farms where you would pay for links, i.e $5-$100.
These sites often look a bit more professional and the links are manually approved before it goes live on your site.
Link Farming is a black hat technique that is outdated and is likely to result in a penalty from Google. Link Farms are not as effective anymore as they were before.
There are a ton of better ways for building inbound links, like using white hat techniques, outreach or creating useful content that can be of value to readers.
Link farming is definitely a questionable search engine optimization tactic.