Is it true that selling Text Link Ads drops your PageRank?

Most of the blogs and sites write about page rank these days. The reason for all that fuss is that Google reveled new PageRank numbers and majority of famous bloggers and sites were cooping with downward PageRank numbers for their blogs and sites. Apparently they were penalized by Google, because they were selling Contextual Link Ads like TextLinkAds on their site.

Before I introduce you with bloggers who blames that they were penalized and that their PageRank dropped recently, let’s see what PageRank is and how Google explained it on their blog.

Wikipedia describes PageRank:
PageRank is a link analysis algorithm that assigns a numerical weighting to each element of a hyperlinked set of documents, such as the World Wide Web, with the purpose of "measuring" its relative importance within the set. The algorithm may be applied to any collection of entities with reciprocal quotations and references. The numerical weight that it assigns to any given element E is also called the PageRank of E and denoted by PR(E).

Google describes PageRank:
PageRank relies on the uniquely democratic nature of the web by using its vast link structure as an indicator of an individual page's value. In essence, Google interprets a link from page A to page B as a vote, by page A, for page B. But, Google looks at more than the sheer volume of votes, or links a page receives; it also analyzes the page that casts the vote. Votes cast by pages that are themselves "important" weigh more heavily and help to make other pages "important".

We can say that PageRank results from a "ballot" among all the other pages on the World Wide Web about how important a page is. A hyperlink to a page counts as a vote of support. The PageRank of a page is defined recursively and depends on the number and PageRank metric of all pages that link to it ("incoming links"). A page that is linked to by many pages with high PageRank receives a high rank itself. If there are no links to a web page there is no support for that page.

Google assigns a numeric weighting from 0-10 for each webpage on the Internet; this PageRank denotes your site’s importance in the eyes of Google. The scale for PageRank is logarithmic like the Richter scale and roughly based upon quantity of inbound links as well as importance of the page providing the link.

Most probably penalized blogger:

Yaro Starak:
Based on the conversations going on, some referencing to my blog as an example to prove the point, it appears that Google could be going around and manually penalizing sites by dropping their visible PageRank and possibly penalizing their search results too, as a punishment for selling text links.

John Chow:
The most popular reason given for the first batch of PR downgrade (I went from 6 to 5) was that those sites that got hit were selling links. However, that reasoning doesn’t seem to hold anymore because Problogger.net (from 6 to 4) and bunch of other blogs doesn’t sell links.

Daily Blog Tips:
Last week, I noticed the Stanford Daily had dropped from when I wrote the above in April to PR7 today. That’s a huge drop that has no apparent reason to happen. Some others were also reporting PageRank drops. I ping Google, and they confirmed that PageRank scores are being lowered for some sites that sell links.

In addition, Google said that some sites that are selling links may indeed end up being dropped from its search engine or have penalties attached, to prevent them from ranking well.

You will know what is true and what isn’t, after you try selling Contextual Link Ads on your blog. I am not selling them, but even if I would there would be no loss for me, because my PageRank is 0.