Many websites that use to dominate Google rankings are finding themselves dropping to the second or third page on keyword phrases that they once were near the top of the first page.   Often these sites were affected by major algorithm changes by Google, the two most famous being Penguin and Panda.
You site would be affected by Penguin if you at one time in the past aggressive link building that brought in a log of inbound links from low quality and or unrelated site as well as repeatedly using the same anchor text on inbound links.
You site would be affected by Panda if you have a significant amount of content that is duplicated from other sources.
There are two types of penalties, manual and algorithmic. 
Manual: this is just as it sounds; Google has manually applied a penalty against your site, in the most severe cases your site is totally removed from the index. In other cases a partial action is taken.    The good news about manual penalties is that Google will tell you via webmaster tools if you have a manual action against your site.   There is also a procedure to follow to get the penalty removed and Google will let you know if the penalty is removed.
Algorithmic: The formula that determines ranking takes into consideration the quality of inbound links, having too many spammy links or links from poor quality sites may affect that formula and hurt your rankings.   There are many shades of grey here as your rankings could be affected on a few search terms and they could drop as little as 5 positions or as many as 50. In order to remove an algorithmic penalty, one must address the core issues (bad links or duplicate content). There is no reconsideration request for algorithmic penalties and I can’t really say that there is a definitive time table as to when the algorithm will pick up the changes and start returning your rankings back to “normal”.
How do you know if you are being affected by Penguin or Panda?
The most effective initial step to determine a ranking penalty is to look at your Google analytics data. Look at the Google organic traffic and see if you see shifts in traffic that correlate to the dates on the Google algorithm updates. Moz.com gives a pretty good listing here. Another item to review is to compare Google Organic Traffic with Bing Organic and Yahoo Organic.   If the Google is trending downward, but Bing and Yahoo are the same or increasing, then you should strongly suspect that your site is affected by Penguin or Panda. 
Likewise you can look at rankings (be careful here). If you see that you dropped out of the top 10 in Google, but did not change in Bing, you have another indication of being effected by a Google algorithm update.
Conversely, if you find that traffic shifts and ranking shifts are occurring in both Google and Bing, then there is a strong likely hood that you may have a structural or content issue with your site. There are dozens of things to look at - just a few here:
·         Changing webpage urls without doing a 301 redirect
·         Removing pages or content from your site
·         Incorrectly setting the robot.txt file to block search engines from crawling parts of your site
·         Hosting IP address (shared hosting service) gets blacklisted
·         Significant down time with hosting service
What do you do if your traffic drop is from a Google algorithm update?
First of all one need to identify if it is Penguin or Panda.   Plotting Google analytics traffic against the known timelines will help. See example below:
As one can see, there is a very pronounced traffic shift that occurred at about the same time as the Penguin 3.0 algorithm update. In this case it is very obvious that Penguin affected the traffic and that the course of action is now to identify and remove toxic links. Unfortunately not every case will be this easy to diagnose.
This site below is also a Penguin victim, but much less obvious.
 
The site in general gets much less traffic so it is harder to see the shift through the high level of variability. But this site did get affected.
If it is Penguin
How do you identify and remove links that are affecting your traffic?
There are a number of resources that can be used. Probably the most important is Google Webmaster Tools.   Another source is Majestic SEO.   www.linkresearchtools.com is a paid tool that many SEO specialists use. Inbound links from the following sources should be scrutinized:
·         Article sites
·         Unrelated directories
·         Blog posts
·         Press release sites
·         Forum or blog comments
Not all the above are necessarily harming your site, but if the above sites have page rank of 0 or are not indexed by Google, then you should remove them.  
If you or your SEO firm did link building by article writing, press releases, directory submissions, blog post comments or paid links from websites, then you probably have a lot of cleanup work to do.  
Link analysis will take more than a novice to understand and identify the truly bad links that need to be removed. The danger is that 1. You can actually remove good links and hurt your rankings or 2. Totally miss the bad links.   We recommend using an experienced SEO professional to do this or assist.
If it is Panda
You need to figure out if you have duplicate or thin content issues. One resource is here. Google webmaster tools are another good source. Compare the number pages in your site to the number that Google has indexed. If there is significantly less pages in Google’s index then you might want to investigate the major pages that are not indexed.   Basically, if Google sees a page as very low quality content or duplicate of another page, it will not index it and you will not get any ranking based on those pages. If Google sees too many pages as such on your site, you could get some across the board punishment.
A truly comprehensive analysis of your site for algorithmic penalties can be a time consuming.    An experienced professional that has the tools and experience to navigate through some of these tasks can clear things up quicker and more effectively than a novice.
If you are interested in getting a full review of your site for algorithmic penalties, please contact us and we will gladly provide a quote for this.