Google rolled out it's original page layout algorithm on January 19th 2012, and updated it in October 2012.
And at the PubCon Conference in October 2013, Matt Cutts announced that the next generation of algorithms is looking to tighten penalties even further on websites with very little content above the fold.
(Update: It looks like the latest version of this algo was released on Feb 6th 2014).
This algo is actually quite tough to recover from. Lots of sites have attempted to get rid of the penalty by simply reducing the ads and have seen no results (apart from a drop in their income due to the reduction of ads).
There is also some evidence that the algo can't tell the difference between ads and images. The algo really seems to be looking for TEXT above the fold.