During a panel at SXSW Matt Cutts revealed that his team are currently working on a new update that penalises over optimised sites. Although Matt Cutts refers to this new update as something new, I don’t think that is the case. Over optimisation penalties have existed for a number of years i.e. high ratio of exact match anchor text leads to “drop 50” penalty which means that if you have a high number of links with exact match anchor text pointing to your website then your site will drop from page one to page five.

Here is the actual transcription of what Matt Cutts said:

We don’t normally pre-announce changes but there is something we are working in the last few months and hope to release it in the next months or few weeks. We are trying to level the playing field a bit. All those people doing, for lack of a better word, over optimization or overly SEO – versus those making great content and great site. We are trying to make GoogleBot smarter, make our relevance better, and we are also looking for those who abuse it, like too many keywords on a page, or exchange way too many links or go well beyond what you normally expect. We have several engineers on my team working on this right now.