When you use a nofollow link, publishers (bloggers like you and I) can tell search engines robots not to follow and give ‘votes' (or pass PageRank) to sponsored or paid links, which could, in turn, lead to being penalized by Google.
But why would you not want to give good Google juice to the very companies that pay you for your services? Well, this keeps companies from buying links from bloggers and it keeps Google from losing trust in you, which is a very good thing.
When should I use a NoFollow Link
- Blog post: Simply put, a NoFollow Link should be used on each and every paid link on your site, whether it is in a blog post or on your sidebar. There is no exception to this rule. This prevents paid links from influencing search results and negatively impacting users, and it also keeps you in good standing with Google.
- Comments: It's good practice to set your comments to NoFollow as well protecting you from inadvertently passing page rank to untrusted content, including that from comment spammers. If you want to give Google love to specific, trustworthy commenters and contributors, you can manually remove the NoFollow Link from their post.
- Embeds: Use a NoFollow link on embeds, video graphics, or other informational graphics from websites you do not fully support 100%. A good example of this is Flickr or YouTube. You may be asked (or even required) to use an image or video pertains to a sponsored or paid link, but you may not support 100% of the information Flickr & YouTube has to offer.
If a company large or small requests your services and requires a do-following link, my advice to you is don't do it. Companies like these are the very reason Google created this policy, and they don't care if they damage your reputation with Google or not.