I recently requested a link back from a site that is ranking 2nd for a term that i'm working on and they said they would gladly give me the link and remove my competitors but would also like me to have an ad on the same page for an annual fee that i could link to a landing page. I know that paying for links is no good and google can penalize you.
so do i pay them and do a no follow to the landing page from the ad and call it a day? and how does google differentiate an ad from a link?