Search engines do not like paid links. They do not want webmasters paying for inbound links from other websites. Why? Because when done properly it enables webmasters to quickly and easily rank very high. Since there is a potential high reward, many webmasters are understandably attracted to paid links.
Before you get involved with paid links make sure you understand the landscape. The search engines are very vocal about selling links and buying links can result in search engine penalties. Google has made some very public examples of websites involved with paid links. They have mostly only gone after the sellers. Websites that have bought links are been targeted much less. There are some big brokers of paid links. They used to publicly list the URLs that were willing to sell links. Not surprisingly Google has targeted these brokers and gone after their inventory.
If you still want to do paid links and are willing to accept the risks for a chance of being rewarded with high rankings then follow this checklist:
#1 Always try and make it look natural
#2 Only buy links from related/relevant websites (remember make it look natural)
#3 Build up gradually (it is not natural for a site to get 1 million links overnight)
#4 Vary the anchor text (natural links would have variations)
#5 Prefer private deals over known link brokers
#6 Stretch your budget by only picking sites that can also deliver direct traffic
#7 Make sure the links can be followed by search engines (no tracking codes)
#8 Give it time, don't cancel link buys after just a month
This checklist is not a foolproof, guaranteed guide. It is simply meant to help you get into the right mindset for paid links. You want to minimize the chances of being flagged by the search engines and increase the chances of the paid links help drive direct traffic to your site and also help your search engine rankings. Some of my best paid links have been done on very weak sites (in the eyes of search engines) that have driven large amounts of high converting traffic. If you get enough of that traffic you won't even need traffic from Google anymore!