Mathematical PageRanks for a simple network, expressed as percentages. (Google uses a logarithmic scale.) Page C has a higher PageRank than Page E, even though there are fewer links to C; the one link to C comes from an important page and hence is of high value. If web surfers who start on a random page have an 85% likelihood of choosing a random link from the page they are currently visiting, and a 15% likelihood of jumping to a page chosen at random from the entire web, they will reach Page E 8.1% of the time. (The 15% likelihood of jumping to an arbitrary page corresponds to a damping factor of 85%.) Without damping, all web surfers would eventually end up on Pages A, B, or C, and all other pages would have PageRank zero. In the presence of damping, Page A effectively links to all pages in the web, even though it has no outgoing links of its own.


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(spread across a number of pages) which lists something like 1,000 restaurants in a large city with contact details and a web link to each of those restaurant’s home page. Given that the outgoing links are relevant to my content, should I or should I not be using REL=nofollow for each link given the massive quantity of them? How will my ranking for pages containing those links and pages elsewhere on my site be affected if I do or don’t include REL=nofollow for those links? My fear is that if I don’t use REL=nofollow, Google will assume my site is just a generic directory of links (given the large number of them) and will penalize me accordingly.

By 2004, search engines had incorporated a wide range of undisclosed factors in their ranking algorithms to reduce the impact of link manipulation. In June 2007, The New York Times' Saul Hansell stated Google ranks sites using more than 200 different signals.[25] The leading search engines, Google, Bing, and Yahoo, do not disclose the algorithms they use to rank pages. Some SEO practitioners have studied different approaches to search engine optimization, and have shared their personal opinions.[26] Patents related to search engines can provide information to better understand search engines.[27] In 2005, Google began personalizing search results for each user. Depending on their history of previous searches, Google crafted results for logged in users.[28]


Something a lot of people seem to have overlooked was hinted at in Greg Boser’s comment above. Greg identified that there is a major (and unfair) disparity with how authority sites such as Wikipedia disrupt the linkscape by run-of-site nofollows. Once Wikipedia implemented the no-follows, previously high-value links from Wikipedia were rendered worthless making the site less of a target for spammers. Increasingly large sites are following suit in order to cleanse their own pages of spam.

There are also many keyword research tools (some free and some paid) that claim to take the effort out of this process. A popular tool for first timers is Traffic Travis, which can also analyse your competitors’ sites for their keyword optimization strategies and, as a bonus, it can deliver detailed analysis on their back-linking strategy, too. You can also use Moz.com’s incredibly useful keyword research tools – they’re the industry leader, but they come at a somewhat higher price.
While most search engine companies try to keep their processes a secret, their criteria for high spots on SERPs isn't a complete mystery. Search engines are successful only if they provide a user links to the best Web sites related to the user's search terms. If your site is the best skydiving resource on the Web, it benefits search engines to list the site high up on their SERPs. You just have to find a way to show search engines that your site belongs at the top of the heap. That's where search engine optimization (SEO) comes in -- it's a collection of techniques a webmaster can use to improve his or her site's SERP position.
When Googlebot crawls a page, it should see the page the same way an average user does15. For optimal rendering and indexing, always allow Googlebot access to the JavaScript, CSS, and image files used by your website. If your site's robots.txt file disallows crawling of these assets, it directly harms how well our algorithms render and index your content. This can result in suboptimal rankings.
“Google itself solely decides how much PageRank will flow to each and every link on a particular page. In general, the more links on a page, the less PageRank each link gets. Google might decide some links don’t deserve credit and give them no PageRank. The use of nofollow doesn’t ‘conserve’ PageRank for other links; it simply prevents those links from getting any PageRank that Google otherwise might have given them.”
If I’m writing a page about the use of the vCard microformat on a page, it absolutely makes sense for me to link out to the definition where it was originally published, and improves user experience as well as lending authority to my arguments. Often as SEOs we get obsessed with the little things, claiming that its hard to get links on particular subjects, and that is pretty true, but its mainly our own selfishness in linking out to authority content that prevents other people giving us the same courtesy.
If you’re a blogger (or a blog reader), you’re painfully familiar with people who try to raise their own websites’ search engine rankings by submitting linked blog comments like “Visit my discount pharmaceuticals site.” This is called comment spam, we don’t like it either, and we’ve been testing a new tag that blocks it. From now on, when Google sees the attribute (rel=“nofollow”) on hyperlinks, those links won’t get any credit when we rank websites in our search results.
Also, backlinks are important for the end user. With an end user, backlinks connect searchers with information that is similar to what is being written on other resources. An example of this happens when an end user is reading a page that discusses “how child care expenses are driving women out of the workforce.” As they scroll down, they might see another link with a study on “how the rise in child care costs over the last 25 years affected women’s employment.” In this case, a backlink establishes connection points for information that a searcher may be interested in clicking. This external link creates a solid experience because it transfers the user directly to additionally desirable information if needed.

Link text is the visible text inside a link. This text tells users and Google something about the page you're linking to. Links on your page may be internal—pointing to other pages on your site—or external—leading to content on other sites. In either of these cases, the better your anchor text is, the easier it is for users to navigate and for Google to understand what the page you're linking to is about.
A decent article which encourages discussion and healthy debate. Reading some of the comments I see it also highlights some of the misunderstandings some people (including some SEOs) have of Google PageRank. Toolbar PageRank is not the same thing as PageRank. The little green bar (Toolbar PageRank) was never a very accurate metric and told you very little about the value of any particular web page. It may have been officially killed off earlier this year, but the truth is its been dead for many years. Real PageRank on the other hand, is at the core of Google’s algorithm and remains very important.
PageRank was developed by Google founders Larry Page and Sergey Brin at Stanford. In fact the name. PageRank is a likely play on Larry Page's name. At the time that Page and Brin met, early search engines typically linked to pages that had the highest keyword density, which meant people could game the system by repeating the same phrase over and over to attract higher search page results. Sometimes web designers would even put hidden text on pages to repeat phrases. 
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