Link farms can be advertised as services to build up your content. They are often set up by creating a network -- one that is often created with the sole purpose of gathering a number of locations from which to point at a website. Because Google dislikes links between unrelated sites, some link farms divide their links into categories or a directory.
Link farms were originated in response to Google's ranking algorithm, PageRank. PageRank thinks of links as votes, where a page linking to another page is casting a vote.
Therefore, pages with the most links were deemed valuable. Link farms were created to help increase PageRank, however, in recent times, Google and other search engines have adapted their algorithms to prevent link farms from appearing at the top of search engine results pages (SERPs).
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