Hemanth Kumar, a good rule of thumb is: if a link on your website is internal (that is, it points back to your website), let it flow PageRank–no need to use nofollow. If a link on your website points to a different website, much of the time it still makes sense for that link to flow PageRank. The time when I would use nofollow are when you can’t or don’t want to vouch for a site, e.g. if a link is added by an outside user that you don’t particularly trust. For example, if an unknown user leaves a link on your guestbook page, that would be a great time to use the nofollow attribute on that link.

Thanks Matt for the informative post. However I do have some questions regarding blog comments. Let say a blog post of mine have PR 10, the page has 10 links, 3 of them are my internal link to my other related post, the other 7 links are external links from blog comment. Based on your explanation, even the 7 external links are nofollow, my 3 internal link will only get 1 PR each which is still the same if the 7 external link is dofollow. Therefore there is no point of adding nofollow for the sake of keeping the PR flow within your own links. Is this correct?
For search engine optimization purposes, some companies offer to sell high PageRank links to webmasters.[40] As links from higher-PR pages are believed to be more valuable, they tend to be more expensive. It can be an effective and viable marketing strategy to buy link advertisements on content pages of quality and relevant sites to drive traffic and increase a webmaster's link popularity. However, Google has publicly warned webmasters that if they are or were discovered to be selling links for the purpose of conferring PageRank and reputation, their links will be devalued (ignored in the calculation of other pages' PageRanks). The practice of buying and selling links is intensely debated across the Webmaster community. Google advises webmasters to use the nofollow HTML attribute value on sponsored links. According to Matt Cutts, Google is concerned about webmasters who try to game the system, and thereby reduce the quality and relevance of Google search results.[40]
Paid channel marketing is something you’ve probably come across in some form or another. Other names for this topic include Search Engine Marketing (SEM), online advertising, or pay-per-click (PPC) marketing. Very often, marketers use these terms interchangeably to describe the same concept — traffic purchased through online ads. Marketers frequently shy away from this technique because it costs money. This perspective will put you at a significant disadvantage. It’s not uncommon for companies to run PPC campaigns with uncapped budgets. Why? Because you should be generating an ROI anyway. This chapter walks through the basics of how.
A breadcrumb is a row of internal links at the top or bottom of the page that allows visitors to quickly navigate back to a previous section or the root page. Many breadcrumbs have the most general page (usually the root page) as the first, leftmost link and list the more specific sections out to the right. We recommend using breadcrumb structured data markup28 when showing breadcrumbs. 

Search Engine Optimization

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