One of the many factors that determine the PageRank of a site are the number and quality of links within the website and that point to and from it. Google was the first search engine to use the link building ability of a website to determine its popularity and PageRank. Other search engines soon followed suit, creating an environment for web administrators to start looking for links to other sites to boost the popularity of their websites. This lead to unethical practice of Link farming.
What is Link Farming?
Link farming can be described as a black hat SEO tactic whereby a website creates mutual links with another website called a link farm, or pays a site for inbound links so as to artificially create links that would deceive the search engines into recognizing the site as a popular site and providing it with a higher search rank. Link farms exist only to promote link popularity score and have no other purpose. These sites are recognized by the fact that they contain links to sites that are completely different in nature and are totally unrelated to each other. Link farming can be seen as the spamming of the index of a search engine and is known as spamdexing.
Google and Link Farming
Once Google recognized the way artificial links were being created to manipulate search rank, it worked on eliminating the problem by changing its algorithm to recognize link farms and penalizing websites that were using links from these farms to artificially boost their popularity rating. Now, Google bans sites that it finds are linked to link farms and such sites might find themselves being removed from Google indexing itself. Google also rates links created by link farms as spam.
Why are Links Important?
We need to understand that a website has two types of links. The internal links and links from other websites (or external links). With search engine ranking and results becoming more organic, a search engine looks at the quantity but also the quality of links that point to pages and elements within the website and also the links to and from other sites to the website to determine its search rating. It was based on the principle that the more links present within the website, the better its content and the more traffic it receives. Links are important for SEO and webmasters need them to boost the popularity of their websites.
Good Links and Bad Links
Since search engines use links to determine the popularity of a site, and then links need to be present in a website for it to have a decent rank. Not all links are treated equally by search engines any more. The links that come from authority sites and have relevance are considered better for the website than links from non-authority sites, or those that the search engine deems irrelevant. So good links are those links that point to popular websites that rank high on search result and are relevant to the content of the website.
Linking is important for the existence of internet. Websites have to link to each other. Hence, it is important to pay attention to links but not to link to sites that are obviously link farms. If you need good links, look for forums and blogs that are relevant to your business and link to them or get a listing in a business directory.