Reciprocal links now cancel out any benefit say Google. But what about if one of them is nofollow?

[RedAntSolutions]

As a web agency we have some of our client sites linking back to us from their footer to show who built the site as is common practice in our industry. This seems to work fine for us generating both referral traffic and we think some help with rankings.

Google recently said that reciprocal links do cancel each other out of any benefit which gives us a dilemma for when we want to link to a website as a case study on our own website. Normally we use nofollow on the link but is that enough? I'd rather have the inbound link benefit than provide a link to the website!

[SamuelScott]

Here is Google's definition of bad linkbuilding:

Any links intended to manipulate PageRank or a site's ranking in Google search results may be considered part of a link scheme and a violation of Google’s Webmaster Guidelines. This includes any behavior that manipulates links to your site or outgoing links from your site.

Google sites this an example: Excessive link exchanges ("Link to me and I'll link to you") or partner pages exclusively for the sake of cross-linking.

So, basically, if you arrange to get clients to put links to you in their footer in an attempt to increase your search-engine rankings, then you are violating Google's guidelines and risking a penalty. (Nutshell: Google doesn't want to give you credit for a link that you give yourself.) So, I'd make sure that those links are no-followed AND that the anchor text is your brand name and not any desired keywords. The value from those links is the referral traffic, not any help that they give for rankings.