What is a Sponsored Link?
A sponsored link is a link that is part of an advertisement or paid placement. Google asks site owners to mark such links with the rel="sponsored" attribute, and still accepts rel="nofollow" for the same purpose.
Why it matters
Links are a ranking signal, and a link that was paid for does not reflect an independent editorial choice. Google's spam policies list buying or selling links for ranking purposes as link spam, including exchanging money for links or posts that contain links, and advertorials or native advertising where payment is received for articles that include links that pass ranking credit. Marking paid links with the right attribute tells Google how to treat them. For anyone buying or selling placements, understanding the attribute is part of understanding the risk.
How to mark and handle sponsored links
Handling sponsored links properly means marking paid placements, advertisements and similar links with rel="sponsored", or with rel="nofollow", which Google still accepts. It means knowing which links on your own pages were paid for. And it means not treating the attribute as a loophole: Google treats these attributes as hints and may use the signals they provide, so the safe approach is to decide what you buy and sell with the guidance in mind.
Link attributes Google recognizes
rel="sponsored"
The value Google prefers for advertisements and paid placements, commonly called paid links.
rel="nofollow"
The older, general purpose value. Google says it was previously recommended for paid links and is still an acceptable way to flag them, though sponsored is preferred.
rel="ugc"
The value for user generated content such as comments and forum posts. It is not meant for paid links, but it shows that different link types have different attributes.
Example
A publisher accepts payment to publish an article that links to an advertiser. The link in that article carries rel="sponsored", which tells Google it is a paid placement. If the same link were left as a plain followed link, it would fall under what Google's spam policies describe as link spam.
Sponsored links and Orbink
Each Orbink listing shows whether the placement carries a sponsored mention, next to the link type, so you can see the publisher's practice before you order.
Sources
Frequently Asked Questions
Google asks that advertisements and paid placements be marked with rel="sponsored" or rel="nofollow". Its spam policies treat buying or selling links that pass ranking credit for ranking purposes as link spam.
Google says it treats link attributes as hints, not as strict commands, so a sponsored link is not guaranteed to be ignored or counted. The attribute is not a way to engineer an outcome.
Both can flag paid links. Sponsored is the more specific value, for advertisements and paid placements. Nofollow is the older, more general value that Google still accepts for this purpose.
Google's spam policies treat buying or selling links that pass ranking credit as link spam. What follows is up to Google's systems, which can ignore the links or, in serious cases, apply a manual action.