The search engines use links (along with a multitude of other factors) to help determine a site’s reputation. Since Google has the ability to crawl the entire web as needed, the search giant knows exactly how many links a website has, where they are coming from, what other sites those sources link to, what “neighborhood” links are around, what anchor text is being used and much more. In short, Google knows everything about your website’s link portfolio.

Since links are the currency of SEO, many site owners get too focused on building as many links as possible in order to appear more valuable to the search engines. However, as the search engines get smarter, algorithm updates (like Penguin) are being designed to not only count the amount of links a website may have, but measure the quality of those links as well. Many sites that invested in low-quality and spammy links have been caught and flagged by the search engines. Even if a site is not directly penalized for having low quality links, when those link sources are classified as spammy and are rendered meaningless (they no longer count as a “vote” in the eyes of Google), a website with a link portfolio that relied heavily on those kinds of links is essentially back at square one. The links may be there, but that doesn’t mean Google is counting them towards anything.

Penguin appears to have been on the lookout for “unnatural links” and “unusual linking patterns” that previous algorithm updates may not have been able to detect.  While Google hasn’t explicitly outlined exactly what Penguin is designed to flag as webspam, the Penguin algorithm update seems to be looking at three major factors when it comes to back link portfolios:

1. If the majority of a website’s back links are low quality or spammy looking (e.g., sponsored links, links in the footers, links from directories, links from link exchange pages, links from low quality blog networks).
2. If majority of a website’s back links are from unrelated websites.
3. If too many links are pointing back to a website with exact match keywords in the anchor texts.

One of the easiest ways to build links, and a black hat SEO tactic many site owners are guilty of simply because they don’t know, is through a link exchange (“you link to me and I’ll link to you”). Google flat out bans link exchanges as a violation of their Webmaster Guidelines. Since a link exchange is solely about building links to rank better it’s considered a black hat tactic and should be avoided.

However, this doesn’t mean you should never link to another site. Penguin has made a lot of site owners panicked over the quality if inbound links and I’ve even read reports about sites threatening to sue others for linking. Without links, the Internet as we know it would cease to exist. Continue building outbound links on your site as needed, but before making the decision to link out you should ask yourself if that website is going to be beneficial for your site’s visitors. It’s important to remember that every outbound link on your site is a potential exit route for your visitors. Theoretically a website about personal injury claims might be of interest and value to a visitor on a car repair site (the train of thought being you need car repair services because you got in an accident and you might need an attorney to represent you), but why would you want to send visitors away from your website? Once they are gone there is no reason to assume they will come back and actually convert. The potential for losing visitors and risk of a link exchange penalty is not worth a link that solely exists to get back links from other websites.