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Is it possible to fully recover from penalties, or does a taint of previous bad behaviour remain? 

Kevin Gibbons: 

I’ve seen mixed results with this.

In some cases we’ve removed penalties and the traffic has instantly gone back exactly to the levels it was before the ban (which implies the links removed/disavowed were never having an impact in the first place), and we’ve far exceeded record organic traffic once strengthening with great content afterwards.  

In other cases it’s not always so easy – for example, I’ve just had a meeting with a brand who haven’t done any link building for 3-4 years and they’ve just had to go through a manual link penalty removal, and despite this now being removed, they haven’t seen the uplift expected at all in terms of organic traffic returning, so it’s not always back in the flick of a switch.

Mags Sikora:

There are many stories and examples of sites that completely recovered from Google penalties in full, so yes, it is possible.

However, usually those sites that fully recover are large international organisations. If a large company’s rankings drop, there is no doubt that entire SEO team (and probably supporting them agencies) will work on regaining those rankings.

However for a small website, when there are maybe four or five people running entire business, working on rankings recovery full-time is simply impossible, who would ran the business then?

Unfortunately for many small businesses that too heavily depend on organic search, becoming penalised is the beginning of their end.

Sam Silverwood-Cope:

We have seen almost full recovery for some well known penalised sites.

However, mostly sites seem to not perform as well as they did prior to the penalty, this could be for a couple of reasons.

  1. Their links simply are not as good as they used to be, both from the previously paid links as well as the element of oversteer may have taken place in disavowing the links.
  2. Google may simply not trust the site as much as it used to, this could be partly due to the punishment but possibly also due to the fact that positions were lost and the site will take time to regain dominance from others who have taken their place. 

Julia Logan:

Depending on the effectiveness of actions taken to recover, full recovery can be possible.

However, I believe if a site has been penalised once it has to be super careful in the future as it might be watched closer and the new penalties will likely be more difficult to get rid of.

Andrew Girdwood:

It is possible to fully recover. It may well be the case that a penalty is a bit like an anaphylactic shock; not only is it serious but if it happens again it will be worse and brought on more readily.

Jimmy McCann: 

Yes, I have spoken to ex-Google employees who have explicitly said yes it is possible for any domain to recover fully from any malpractice (however persistent offenders may be dealt with more severely if they do not learn from mistakes).