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If a blog owner wants to place a small ad (say via guest post) in their blog why should they be penalized when the same blog is not penalized when they place an ad via Google ad network? (Referring to near spam text ad placements in between content that you see in many sites).

Because Google makes money from one form of advertising, and makes no money from the other.

Because Google can easily tell that one is paid for, but not easily tell with the other. The method of ranking by incoming links is very flawed and prone to abuse.

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