It does work, but these days it is a risky tactic, especially if you don't know what you're doing. Google is on the prowl for any websites buying or selling text links.
Buying links did work, but now, Google will bust you within 2 months. But buying links also has a negative side as well. For a link to be of SEO Value, you must have it in place for 6 months before it starts to count (link age affect) but when you check for that link in Webmaster tools, it doesn't show up. I would not do it.
It works if you're trying to increase your traffic. It won't work if you're trying to improve your search engine ranking. If you want to buy links, make sure they have the rel="nofollow" attribute on them so you don't get an ACME™ brand anvil dropped on your head by the search engines.
Which part? Buying links for traffic, or being banned by the search engines for buying links to manipulate one's rankings?
The second part. I know that buying links is against the rules, but how can they find out that the links are bought? Of course, lets assume no one files a report.
Google is too smart to find and fine the link buyers and sellers. The first penalty would be to remove the PR (the toolbar PR would be gray).
I don't buy that "google is too smart". There is no possible way of knowing if the links are bought or not, except if someone reports it (and it doesn't have to be true in that case either). I need someone to explain this to the core. Thanks in advance.
The same way we do. Seriously. Take a look at a Web site. Look in areas you normally wouldn't put a link. If there are links there, and especially if they're not directly related to the site, would YOU think those links were bought? I know I would.
i want to do link exchange with a site related to my category but it has 4pr and a very good traffic, where as mine is preety new i.e. 3 months old it has 0pr and if i link exchange with that site by giving him some fee, i mean "paid link exchange" i don't know wat is the correct word for it, will google still gonna know this, even if i do link exchange. hope its clear.
Only if the seller leaves the rel="nofollow" attribute off of the paid links, Chancey. Other than that, Google could care less (as I said earlier).