The Aim of Advertising
There is widespread concern in that if sponsored links must feature the nofollow attribute, it will drive online advertising underground and compromise the credibility of online content. However, the attribute actually gives webmasters more power as online citizens. Therefore, it will increase the credibility of online content by making search rankings better reflect market trends.

Opposing Google's drive to make the nofollow attribute an industry standard, Greywolf explains how paid reviews will begin omitting disclaimers that divulge that the review has been paid for, and this will compromise the credibility of online content. Greywolf writes:

I think [...] Google is being extremely hypocritical about the entire thing and using fear, uncertainty and doubt (FUD) to corral web publishers to their way of thinking.

[...] by making a big stink about it they are going to drive [reviews] back underground. The way reviews are now they are disclosed in a form that humans can read, understand evaluate and make decisions about on their own. [...] What’s really happening is we’ve got another FUD campaign going, this time designed to stamp out paid reviews in an inconsistent, arbitrary and undocumented manor. [...] What happens then, the market goes underground, the disclaimer requirement fades away, and no one, especially the people viewing a page know what editorial forces might be at work behind the scenes influencing that page.

Although Greywolf's concerns that review will be driven back underground are valid, they fail to acknowledge both what an advertiser is entitled to when they purchase an ad or review, and how Web 2.0 is changing the marketplace of ideas and opinions. In other words, search rankings should be based on reputation and relevance, and no advertiser should be able to buy that.

When people advertise, they are buying publicity and a brand name. They are not directly buying business or a reputation. A brand name is not the same thing as a reputation. A brand name is about being recognized. A reputation, on the other hand, is what the general consensus is about your company's products, services, and general ethos.

A massive advertising campaign might generate an initial influx of business, but if your products or customer service ethos are inferior, that surge will quickly dissipate. Sooner or later, you will develop a reputation, and that reputation will not only precede you, but your advertisements as well. In fact, at that point, your advertisements will only count against you. When met with your ads, consumers will recall your bad reputation and actually receive your advertising as an infringement on their space. At that point, damage-control-doctrine would dictate to lay-low for one or two business cycle, then remerge by announcing new management, partnerships, or deals, as well as some kind of campaign designed to regain the confidence of consumers in the marketplace.

An E-thical Democracy
As long as links are used to determine search engine rankings, advertisers will be able to buy votes. When the average user searches a product or service, however, they expect those search results to reflect the reputation of the providers in question--i.e. they expect search results that they would consider relevant. In other words, consumers expect search results to inform them. However, the company with the largest advertising budget and, therefore, most links is not necessarily the most relevant.

Indeed, even Carsten Cumbrowski at Search Engine Journal , an opponent of the nofollow tag, concedes that a link is not a vote, but a pointer offers transparency and helps the user along in weighing out the evidence for themselves. Cumbrowski writes:

Everybody talks about that a link is a positive vote for another web page by the webmaster who adds the link to his site.
This might be true for the majority of links but can not be automatically assumed for any link. People also link to pages and sites they complain about [...] the people that don’t know about [SEO] link to the site they rant about to make sure that the reader is perfectly clear about who and what they are complaining about.

A better word for a link is “pointer” and not “vote”. Imagine that no search engines exists and think about what a link would be good for and what all links have in common. They have in common that they are relevant to the context they are being placed in.
[...]
Relevance does not mean recommendation.
[...]
The “Vote” or recommendation (which can be the recommendation NOT to use a service or buy a product) is completely independent from the link.
[...]
There are also the cases of a neutral point of view. A link would not be a vote about the product or service at all, but a simple pointer that makes aware of its existence, no more and no less.

If Cumbrowski's point underscore anything, it's the problem of using links to rank search results altogether in the age of Web 2.0. Essentially, a company's search rank can actually benefit from bad publicity. As blogs speak out against a company's policies, products, or services, more and more links are generated.

More to the point, however, as bloggers become more educated about the nofollow tag, they will be able to point readers toward source sites with or without endorsing them. Until the nofollow tag emerged, however, the price that an SEO-savvy blogger had to pay to be completely transparent in a user-friendly way, was to vote for whoever it was they were deriding. In other words, by linking the enemy, they were sleeping with them.

Insofar as Greywolf's point about reviews go, it is well-founded. There will, no doubt be a transition phase during which so-called black-hat reviewers will neither disclose that they've been compensated, nor include the nofollow tag. I suspect, however, that such a trend will peter out as newer SEO techniques are developed in the face of the nofollow's wake.

For example, advertisers will quickly learn that it is more beneficial to pay for a reputable review. Essentially, writers that consistently write review with disclosures will be regarded as more credible as those who do not. Consequently, it will be better for the advertiser to pay for such a review, and then attempt to have the review linked in as many places as possible. Indeed, countless blog could make passing mentions of such review, include links without the nofollow attribute, and Google would be none the wiser that the review is not a highly relevant page for, say, keyword "Product-A."

All in all, the nofollow is making the internet a more democratic space and, as a result, a more efficient marketplace. First of all, it is making it more difficult to buy votes. Secondly, it is offering users a way to point at someone without endorsing them. Considering the advance of Web 2.0, this last point is particularly pertinent. Indeed, as far as the nofollow attribute goes, Google is making the internet more user-friendly and, therefore, a better place.

The SEO market, on the other hand, is about to undergo considerable change, and SEOers will have to become innovative to adapt and compete in the new marketplace. They are, however, a resourceful lot and most will be fine. In fact, with every change comes new opportunity, and some SEOers will likely become extremely successful as they re-invent their strategy and tactics.