Paid-for links and ads on your site MUST have a nofollow attribute (see Google’s policy on nofollow). If you have paid links that are left followed, the search engines might suspect you are trying to manipulate search results and slap your site with a ranking penalty. Google’s Penguin algorithm eats manipulative paid links for lunch, so stay off the menu by adding nofollow attributes where applicable.
Webmasters and content providers began optimizing websites for search engines in the mid-1990s, as the first search engines were cataloging the early Web. Initially, all webmasters needed only to submit the address of a page, or URL, to the various engines which would send a "spider" to "crawl" that page, extract links to other pages from it, and return information found on the page to be indexed. The process involves a search engine spider downloading a page and storing it on the search engine's own server. A second program, known as an indexer, extracts information about the page, such as the words it contains, where they are located, and any weight for specific words, as well as all links the page contains. All of this information is then placed into a scheduler for crawling at a later date.