As the debate over paid links continues to wage a lot of innocent business owners get caught in the crossfire. They often hear bits and pieces of information and then have to make decisions based on that information. Rarely is the average business owner as fully informed as the average SEO. Heck, even the average SEO is in the dark much of the time trying to parse statements and warnings made by the search engine representatives.

One of the areas of confusion that many have regarding paid links is knowing when a paid link is really a paid link, and when is a paid link penalized. I think a fair argument can be that a payment doesn't necessarily always have to be monetary. Any quid pro quo on a link can legitimately be considered a "paid" link.

But not to worry, Google and the other engines don't work that way. In fact, in their attempt to eliminate all forms of paid links from affecting their natural algorithmic search results Google has left one giant loophole in the paid link witch hunt: paid directory links.

Why directories are exempt

The party line is that with directories you're paying for the site review. The inclusion into the directory isn't automatic based on payment. In fact, many directories will tell you that payment is no guarantee of inclusion and if your site doesn't meet their submission standards that no refunds will be provided.

Of course, this begs the question why paid reviews are considered paid links, or why other "paid reviews" don't get the same treatment. One can only assume that somehow directories have established themselves as a legitimate service business that isn't easily subject to manipulation. There is a whole other reality to that, however as in recent years a whole slew of spam directories were popping up left and right attempting to take advantage of the link algorithms.

But for once, the search engines didn't throw the babies out with the bath water. These directories, like any other site, are put to the test by the search engines to determine their legitimacy. Most of the high-quality directories withstood and still maintain their value while much of the junk directories were devalued and prevented from passing link juice.

Spotting quality directories

Of course, you should still be careful about which directory you submit to. Just because a directory says that you are paying for a review doesn't necessarily make it so. And just because a directory doesn't charge for inclusion doesn't automatically make it worthless. Each directory has to stand on its own merits.

The main thing to look for is whether submission and/or payment means automatic inclusion. If the directory you're submitting to provides a manual review of each and every submission, then that gives you an indication to the directory's overall credibility. But not all directories that say they review sites actually do. You can usually tell by doing your own review of sites listed in the directory. If enough of included sites look like garbage then there is a good chance the directory itself is junk and the search may already know it.

Another place to find quality directories is within your local area and specific niche. A lot of times you can find good, quality free and paid directories that have very high value, both to visitors and to search engines.

How to avoid the junk directory penalty

One thing to keep in mind with any directory is that if it turns out to be considered a junk directory by the search engines, you won't be penalized just by being listed. There really is no penalty to sites listed in directories, even if those directories are considered junk. At worst, the directory itself won't pass any link value to your or any other sites. This is really no different than if a nofollow tag was added to each link.

This gives you plenty of room for error. That's not to say that you should go out and submit to any and every directory without any consideration, but that you don't have to fear any type of penalty if you find yourself in a bad directory. As with any link building strategy, what you should be looking for more than anything is not the link value that it passes (though that's good too) but what kind of traffic that the link will bring you.

If the you feel you'll get quality, targeted traffic from any particular directory, then having little search engine value or nofollowed links won't matter a bit. Targeted traffic is what matters more. If it's link value 're looking for then consider the links you'll get from many of your site visitors alone, not just from any single directory listing.

The directory loophole won't be closed anytime soon. The search engines know there are a lot of quality directories out there that provide valuable information to web users. In fact both Google and Yahoo have direct ties to the two biggest directories, DMOZ and the Yahoo! Directory, respectively. That in itself should say enough about the value of a good directory link, and how they are treated differently than other "paid" links.