What I think is happening is that, youre not really being penalized by Google, instead your paid links (eg. TLA) are no longer helping or boosting your rankings, thus lowering your SERPs naturally. So essentially, you can continue to use TLA, but it won't help you in terms of SERPs or SEO. The only benefit will be pure traffic.
Bullshit. I'm not only running TLA ads on four sites, at the suggestion of an AdSense rep regarding another advertiser, I have all ads clearly labeled as to the source, so the TLA ads have "Ads by TLA" underneath them along with my referrer link back to TLA. My traffic on those sites has increased over the past month. If yours has decreased, it's for some other reason. Look at your incoming links for starters. How many of them did you buy? No you can't. SteveB has it right. ^^^
i just found this site talking about adding site wide TLA http://www.directtraffic.org/links/Beware-of-Site-Wide-Text-Link-Ads.htm is that the answer? or it just another sales pitch, below is some article inside the page: "Beware of Site Wide Text Link Ads Site Wide Text Link Ads Site wide text-link-ads could seriously damage your web presence. In the great old days, placing site-wide link ads on high ranking websites for our clients delivered significant results. Using the same site-wide link building strategy for web promotion today will get you into very hot water with Google. Site Wide Text Link Ads Google Have you heard of the new online sport “Google Bowling� Basically, a “Google Bowler†uses the current loop hole in the Google search algorithm (our view) to bowl his competitors out of the Google search engine rankings. How does it work? Well, rather simply, actually, way too simply. The Google bowler will go to a few big websites (1,000 pages +) that sell site-wide links on their site and buy link ad space, find more site-wide link publishers, buy more site-wide links and point them (on the same day) to the same competitor. Result: If they strike the website will disappear out of the ranking/search results. It has been Google Bowled! Therefore: Buying site-wide links is a dangerous tactic as far as Google is concerned. Beware! Make sure that your direct-link-ad provider does not include site wide links in their link building strategy. "
No, I have been using TLA for about a year now, my traffic has increased steadily. And yes, I'm using the XML file as well. The only thing that has suffered lately, and can't really blame TLA, is my Alexa rank. Was 40,000'ish now is 68,000ish. But I blame this on my site being down for 3 weeks due to hosting issues.