I believe Link Exchanges still provide quality and useful backlinks that search engine love. There is no right or wrong way to make link exchanges, but you must follow certain guidelines which I shall explain below.
In my experience I have seen big improvements in search engines rankings after getting reciprocal links from related websites.
Link exchange guidelines:
Get reciprocal links only from sites that are related to your own at first. Best thing to do is create a directory with categories and subcategories. Like ebay although you won't need to have hundreds of subcategories. Once you build a strong link exchange directory with related sites start getting links from any type of site.
This only applies if your website is brand new but also if you get links slowly. If you are experienced, and know how to get many link exchanges fast, then there is no need to create a highly focused directory before getting links from any category.
A link is important, so important that it does not need to be on a page with 40 other links to be considered important. All links are required, so accept a link even if there are a hundred other links on the same page.
The only time I reject a link is when a webmaster creates a page on his site, totally blank, and he does not link to it from anywhere. So it cannot get indexed any time. They just upload the page on the server and that's it.
Installing one of the free plugins that display links that are using nofollow tags is also important. So make sure your links won't be using nofollow tags.
Pay attention to three way link exchanges from certain type of sites. If you link to site A, and the webmaster then links to you from a directory (not a site) that is no good. At least get a link from a website.
Do not link exchange with directories. They have no content and most of them have categories that relate to everything you can imagine. All links are important, but still I ignore directories, I submit my website to many directories but not to those that require a link back.
Making link exchanges with sites hosted on free webservers is not bad, however these websites usually do not last long, the webmaster may buy a domain and all links get lost. But it is still a link, so get it if you can.
Check their links pages, and if they have too many characters in the URL pay attention. If it is too long search engines cannot index that page and a link on the page is useless.
However check to see if some of the pages got indexed, if at least one got indexed then even the rest can get indexed.
Those are basic rules.
If you have a blog do blog link exchange, you place their blog on the sidebar and vice versa. They might also accept an article exchange which is even better.
I check to see if my link partners are still linking back once a month, assuming you don't have some directory that does the work for you. Before I delete any links I send the webmaster an email or use their contact form. Sometimes they just move the site to a better location not always remove link. So good thing to check before deleting link partners.
Getting too many link exchanges at once is also not recommended. That looks very spammy and even worse if they all have same anchor text. So for a whole month you did nothing than all of a sudden you have 100 new links in one day.
Done slowly and every day, say 30 links a day that is absolutely great. Whatever the amount it must be the same every day approximately. I can tell from my results. It is also good news because you work less.
Hope that all this information helps. Even though the keywords you select are very competitive you still are able to get good results if you focus on getting links.
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