If your website took a huge hit in the search results from the Google Penguin update there are ways you can recover. The update was aimed at taking down the websites that were using artificial means to increase the links to their websites. The techniques employed to manipulate the search engines is called black hat techniques, and as a result of all the violations to the Google guidelines over 3% of websites on the internet were adversely affected by the Google Penguin update. If your website suffered a huge hit because of tactics you employed or just because you may have hired an agency to help and they used those techniques, there are ways to fix your website without having to start from scratch all over again.
The first thing you need to do is stop using the agency or stop using the tool that was creating links to your website. This is the time to build natural organic links that will retain their value. To do this you need to start looking for other websites with better ranking than yours in the same niche, and see if they would be interested in exchanging links. You can also look for forums and chat boards in your niche that allow posts with a signature. The signature should have a link back to your website so that the search engines can see you are connecting to relative websites that can benefit your users.
The next thing you can do to improve your website ranking is to clean up your websites content. Chances are you have some content that is not related to your niche and is hurting your standings. Take the time to make sure everything on your website is related to your main keyword. If your website is promoting dry cleaning, then make sure to remove all the content on automobiles and fishing. Keep the content relative and keep it fresh if you want to be portrayed as an authority in your niche. Add fresh content that is well written and that has many long tail keywords within each paragraph. Take time to place links within your articles on certain keywords to other pages within your website. If your new articles references cleaning jackets, then link it to an article on your website that is about cleaning shirts. The search engine spiders will follow those links are rank you higher if all the subject matter is related.
The Google Penguin update primarily focused on the value of the links and keywords in your website. To fix this on your website you can take your anchor text and hyperlink it to a high ranking website that is related to that term. You need not worry that you are sending traffic away from your website. This does not mean send traffic to your competition, it means sending people to information that will inform them more on your niche. If your website sells products for clearing up acne and your anchor text is clearing acne, you can take that anchor text and link it to a Wikipedia page or WebMD, which are both very high ranking websites that only provide information about your niche. This will help improve your rank tremendously.