If our site hasn't been hit with the Phantom Update, are we clear?
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Our SEO provider created a bunch of "unique url" websites that have direct match domain names. The content is pretty much the same for over 130 websites (city name is different) that link directly to our main site. For me this was a huge red flag, but when I questioned them and they said it was fine. We haven't seen a drop in traffic, but concerned that Google just hasn't gotten to us. DA for each of these sites are 1 after several months.
Should we be worried? I think yes, but I am an SEO newbie.
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Yes.
You should be worried. This is blackhat SEO by its very definition and it is exactly the kind of stuff the Google Webspam team is going after. It's kind of like saying "Hey we just fired a bunch of chemical weapons even though we were told not to. Should we be worried?" Yeah, expect some cruise missiles headed your way.
Okay maybe it's not that drastic but I'm trying to be topical here

I would fire that SEO company and shame them in the process for giving us digital marketers a bad reputation. The Penguin (not Phantom) will come for you. It's only a matter of time.
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Hi,
Short answer: yes, you are right, you should be worried. Google is good at spotting those satellite sites and they will either just not consider those links so all your effort with those is for nothing or they might push a manual penalty for unnatural links and/or one of the algo will get this network and push them all down including your main site.
Those links don't count towards your link profile and are for sure not sending any "love" so it will be a good idea to lose those asap. If for some reason those sites or some of them are performing well in search for local terms keep them but add no follow to the links that are pointing back to you to be safe.
As for the duplicate content - I would't worry so much - you won't rank but there is no filter or penalty for duplicate content.
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I agree with Jesse - this would cause major red flags to go up at google.
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Thanks for the validation and advice! It seems blatantly clear we should fire the provider, but to be understand, they should have known better, correct? It is one thing to pay for services and it not work, but to be charged for services that could harm your business, is really unfortunate.
Again thank you for the input.
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The thing is a lot of so-called "SEOs" these days are still using these types of tactics. I'm dealing with this regularly. And the real kicker is, sometimes blackhat SEO works. But in every instance it is temporary. Meaning no matter what that algorithm is going to catch up with those sites sooner or later.
So while yes they should have known better, there's a pretty good chance they think they can sneak past the Penguins and the Pandas out there.
Nonetheless this is a dying art and hopefully all of these "SEOs" go away soon so that us real marketers can maintain (or re-build) our reputation.
You're incredibly welcome for the input. Keep an eye on your Webmaster Tools account and your rankings. If you notice a penalty or things start to shift dramatically, it's time for a re-submission package. Should that day come, hop on these forums, read the moz blogs, and this community will help you through it.
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Hi Jesse,
I checked our WMT account and we seem to be fine at the moment. I raised the concern about the duplicate content sites with the SEO. However, they defended their strategy, saying that because the urls are all on different c blocks, it isn't an issue. Also, said we would negatively impact our DA.
I agree that it would hurt our DA because these duplicate domains represent the bulk of our linking domains. IMO this is going to catch up to us. My understanding is the only safe value of these other sits is if the content on the other sites is unique and valuable. Not to mention there are not links from any other site to the duplicate sites, only outbound links to our main site.
Can you shed some light on this tactic?