In a nutshell, good backlinks get you good search engine rankings. Bad backlinks can do the opposite. On the other hand, ugly backlinks can get your site demoted or removed from search results and even if you realize your mistake, disavowing them is not a simple solution either. That can hurt. And that's why you should never sign up with SEOs who promise you hundreds of links overnight because most probably, these would be ugly backlinks.
As a related aside, it’s important to remember that Google’s algorithms don’t just take backlinks into account, you also have to ensure your pages are optimized correctly, and that your website provides a great user experience for visitors.
Google updates their algorithms frequently so it is vital as an SEO to keep up to date with ranking changes and the reasons why certain websites search performances might change.
What are good backlinks?
Google wants to see people (or websites) linking to your website naturally. It hates what it calls "link schemes", which include "any behavior that manipulates links to your site or outgoing links from your site". But why would people link to your site naturally? Google thinks the best way to get other sites to link to your site is to create high-quality content.
"Creating good content pays off: Links are usually editorial votes given by choice."
In order to determine if a link is manipulative or genuine, Google's Penguin algorithm measures a myriad of factors. These include the quality of the linking domain and the other links leading from it, the anchor text, the surrounding links and text, the domains authority, and link diversity, among many other factors. The goal is to measure three things:
1. Relevancy: Relevancy means that the link's context, anchor text, and the linking domain's other content are relevant to the page where the link is leading. For instance, a link from a vacation rental website to a limousine service may qualify as a good backlink.
2. Trust: How much does Google trust the website linking to your page? Nobody knows for sure how Google measures trust. But in all probability, they have a list of hand-picked websites that they consider to be 100% trustworthy (i.e., sites with domain authority). These may include sites like Wikipedia, CNN, BBC, the Telegraph, etc. Google's spiders measure the number of links a particular website is "away" from the trusted domains in order to find out "how much" that website can be trusted.
3. Diversity: This dimension takes into account your overall link profile. If most of the backlinks are coming in from the same domain, Google may interpret it as a link scheme. To achieve higher rankings, you should have a broad-based link profile with several websites of different types linking to your site.
What are bad (and ugly) backlinks?
The bad and ugly backlinks happen when a link building campaign goes wrong. For instance, if you're building backlinks through aggressive guest posting without considering the authority or trust of the linking domain, Google's algorithm can sniff out spammy links. Or, if you're into exchanging backlinks with friendly websites, Google may penalize both websites. Other examples of bad backlinks include links from blogging networks and article directories, low-quality guest blogs, irrelevant domains, advertorials, low-quality directories, etc.
As for the ugly ones, these are the backlinks that openly and unabashedly violate Google's guidelines. The examples can include backlinks built by robots on hundreds of websites, backlinks built using "dofollow" widgets (such as a badge or plugin), links hacked into other websites without their permission, or links from foreign language websites that have nothing to do with your business. Google is likely to take a strong notice and may demote your website to a page that nobody will ever visit (which is where Google’s Search Console Disavow tool comes in handy).
Use your head
Using the information provided in this post, you should now be able to start improving your website’s link equity. It’s important to remember at this point, however, that your best tool when determining whether you would want a backlink from a website is your own self. If you view a website from a neutral perspective, you should be able to quickly determine the quality of the site. If you have doubts about the quality and relevance of the website, don’t pursue the opportunity and move on.