Welcome to the Q&A Forum

Yes David your link is very helpful..

Hi David, Directories are a difficult one. The recent Penguin updates (and to some degree, Panda) have pretty much destroyed the generic directories. However, the benefits of local directories and citations are still there! (http://blog.hubspot.com/blog/tabid/6307/bid/10322/The-Ultimate-List-50-Local-Business-Directories.aspx) With regards to the particular directory that you're querying. The quality is low, even for directory standards. You're probably doing more harm than good by mass submitting to 50 directories that are linking out to all sorts of drop-shipping / foreign / low quality sites. Matt Cutts also made a video explaining how Google treats Paid Directories. There are a few good directories that request a review fee that may be worth it - BOTW, Business.com, Yahoo, but the rest are just paid links. What your agency are doing isn't the darkest of black-hat SEO, but it's definitely low quality, lazy and against Google guidelines. 50 directories probably won't harm your site. However if the majority of your backlink profile is made up of directories, it definitely won't be doing your site any favours. tl;dr Local Directories - Good Genuine Review Fee Based Directories - Possible Benefits Mass Submissions / Paid Directories - Bad If you'd like to read more, I wrote a post about my thoughts on directories back in September that I feel still rings true! watch?v=rKUlVquEImc

Thanks for your answer. Does an over-optimization penalty normally affects all rankings or only the rankings of those keywords, you over-optimized for? In our case, rankings for all the other keywords stayed the same or even improved during this time.