Google may be penalizing sites with a lot of advertisements on them even more now because it is becoming difficult for people to find good content on those particular web pages. If there are ads that are obscuring your content, a user may be having a hard time viewing content on your site leading to the site being flagged as spam.
The recent updates of Googles algorithm have shown that the sites that have been penalized were those with too many ads “above the fold” and their rankings have been dropped as a result. Above the fold refers to a section of your site that can be visible without scrolling. This is interesting considering Google AdSense tells website publishers to place ads above the fold because “All other things being equal, ads located above the fold tend to perform better than those below the fold.”
Many people already assume that sites with heavy advertisements are already being penalized by Google, which leads to the belief that this is either not part of the Panda algorithm update or that it could be made a more specific algorithm in the works.
However, the head of Google’s web spam team, Matt Cutts, said that the company is testing algorithms that are going to help determine “what the things are that really matter, how much content is above the fold.” He also admitted that Google’s algorithm occasionally makes mistakes and marks sites as spam, in which the website should report this issue to his team.