Unless you put your keyword phrase in the anchor text (the text that describes the web site being linked to), you are wasting a lot of link power. Unfortunately a lot of people don't know this an end up putting their company name in the link text rather than the keyword phrase that they want their company to be found by. Much better that they link anchor says "blue Nike sneakers" than "Fred's Sports Store".

Google and the Google-powered search partners seek relevance in the interconnectedness of web pages. Incoming links should be from pages where the content on that page is related to the content of the page that is being linked to. A fishing related page linking to a casino site is an example of a non-related link. A jogging related page linking to a blue Nike sneakers product page is related and is looked upon favourably by the search engines.

Another mistake that people make is always linking to the home page rather than to the most relevant page to the anchor text. If the link anchor text is "blue Nike sneakers" then the link should go to a page about blue Nike sneakers, not the home page. This is by far and away the most common linking mistake.

Links from high Google PageRank sites are worth more, a lot more, than links from other sites. It's all about trust. A link from a trusted site tells the search engines that the sites linked to are also trusted - it's a vote of confidence from a credible source. Links from .gov, and .edu sites are also reported as having more weight than standard links. They are also more difficult to get adding to their perceived quality.

Links from the top of a page (except for the header), are said to have more weight than links at the bottom of pages. It's the same with keyword phrases. A keyword phrase in the heading is worth more than in the body text.

Google's algorithm looks for link exchanges between sites and rates these links lower than straight one-way links. If possible, look for one way links by creating link bait - compelling content that will encourage people to link to your pages.

Linking should be a natural part of the body copy. Recent reports suggest that the search engines will derate links from parts of the page that are traditionally sold for advertising. these tend to be the margins, header and footer areas of the page.

The nofollow tag is a recent innovation that tells the search engines that although I am linking to this other page, I do not vouch for the page's integrity. In short, the nofollow tag tells the search engines to ignore the link. Obviously you do not want links to your web pages to have nofollow tags. Be careful with link exchanges. Some dishonest people will exchange links with you but use nofollow tags in the links to your pages to preserve their own link power.

One link to your web site from a page with hundreds of links does little for your SEO results. The page's SEO power is being distributed over all the other links on the page. Google's guidelines recommend no more than 100 links per page, but I believe 20 is a reasonable goal. You never know when the Google algorithm may change. The perfect page that links to your pages should have no more than 20 links.