Google analyses the quality, quantity and relevance of the websites which link to yours. When Google looks at the link profile they are looking at the things as what kind of websites usually links to your business site, how promptly you acquired these links and anchor text used by linking website. When Google algorithm find out large number of new links or any imbalance in anchor text, then it raises big red flag.

Usually companies who have been badly beaten with penguin update are because of lack of natural links.

Here are some of the areas which are causing issues.

1. Keyword stuffing through out the content and code tags.
2. Blog comments/ guest forums, involving spammy signatures spam.
3. Paid text links along with exact anchor text, managed to rank higher on one certain keyword
4. Inbound links from some dangerous websites such as warez, malware and adult industry.

Well it’s very easy to blame Google and sign a petition asking to kill the penguin update but this is not the time to play blame game. This is the right time to look at your business website, do a proper, careful evaluation of the inbound link profile of yours.