Google wants us to do SEO the "right way." And they plan on making everyone reform their ways, or pay the price.
Matt Cutts, Google's super-friendly spam chief, has been making it more and more difficult to game the system for a long time. Everyone remembers the penalties JCPenny and Overstock were slapped with over a year ago for their questionable linking practices. Matt even penalized Google's own Chrome homepage for questionable link practices (a pretty humorous story any way you slice it). Matt also announced that there will soon be new penalties for web pages that appear to be "too optimized."
Needless to say, they're serioues about purifying the SEO landscape. The question is, will you survive the purge?
Google's "Unnatural" Link Warning
Recently, webmasters with a whole lot of questionable links began seeing a new warning in their Webmaster Tools accounts:

The message was a surprise for some. But plenty of supposed "link builders" knew what they were doing. They knew the link spam they were creating wasn't going to last forever, and eventually they may even get penalized for it. And how that day has come.

So what's a link builder to do?
Stop Building Unnatural Links

If your link building reports look anything like this, stop paying for them, immediately. In fact, ask your link building company to remove every link they ever built for you. In my opinion, you deserve a full refund too.
Some business owners have a hard time figuring out which SEO company to hire. When faced with a number of options, the tendency is to go with the company that has the cheapest fees. Let me give you a hint: As a rule of thumb, if an SEO company is offshore and surprisingly cheap, don't hire them. And think long and hard before hiring a super cheap company even based in your country, or down the street. In the SEO world, there's no cutting corners, and you get what you pay for.
Use Natural Language On Your Website
There has been lots of speculation about what Google's on-page "over optimization" penalty will be. However there does seem to be a consensus on one thing: It will most likely penalize sites that try to craft content with the perfect mix of their target keywords, a.k.a. "keyword stuffing."
Keyword stuffing occurs when you try to fill a page with a particular keyword just enough times in order to convince Google that the page is the best, most relevant page to rank #1 for said keyword. There are a couple of problems with this approach however.
First of all, Google doesn't like any tactic that tries to manipulate search results. If you're doing anything to "force" a certain page or website to rank higher, chances are you'll get in trouble for it sooner or later.
Second, keyword stuffing doesn't consider the user that's actually going to read your website. Since when does someone want to read "cardigan sweater" over and over and over again? If your content isn't good, people will not stay on your site. If that means Google sees a high bounce rate, you're going to have a hard time climbing up search results.
Instead of stuffing keywords onto your pages, write naturally. Use natural language, the type of stuff somebody would write if they weren't even thinking about SEO (that's right). Be very warry of "SEO copy writers" - chances are they think about keyword stuffing and little else. Excact keyword percentages are no longer a huge ranking factor. Instead (warning, this one's a zinger), write stuff that people actually want to read.
Contribute to Your Industry
Want to get links and be noticed? Contribute some (significant) value to your industry. Write how-to guides, in-depth resources, industry studies and the like. Talk with real people, online and face-to-face. Find out what questions they have and answer them. If you're going to "stuff" your website, stuff it with amazing, unique content.

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Thanks for nice sharing.
Hi Nate,
Great article. It is true that keyword density is losing its value. I hardly use that as a indicator these days. But i do use the keyword atleast three times in an article. How often would you suggest to use it?
Hi Nicky. Honestly, I do not even think about keyword density anymore. Instead I ask myself questions like, "Is this content high-quality, and relevant to whoever is searching for X keyword?"