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In order to understand the importance of link building, it's important to first understand the basics of how a link is created, how the search engines see links, and how they interpret them.

What links mean for search engines

There are two fundamental ways that the search engines use links: Find new web pages Determine how well a page should rank in their results

Once search engines have crawled pages on the web, they can extract the content of those pages and add it to their indexes. In this way, they can decide if they feel a page is of sufficient quality to be ranked well for relevant keywords. When they are deciding this, the search engines do not just look at the content of the page; they also look at the number of links pointing to that page from external websites and the quality of those external websites. Generally speaking, the more high-quality websites that link to you, the more likely you are to rank well in search results.

Links as a ranking factor are what allowed Google to start to dominate the search engine market back in the late 1990s. One of Google's founders, Larry Page, invented PageRank, which Google used to measure the quality of a page based in part on the number of links pointing to it. This metric was then used as part of the overall ranking algorithm and became a strong signal because it was a very good way of determining the quality of a page. The thought was if a web page has a large number of other web pages pointing to it it must be an important page. Hence Page Rank... You wouldn't tell your friends about a restaurant if you didn't really like it.

SEO grey hatters soon discovered how to manipulate PageRank and search results for chosen keywords. Google started actively trying to find ways to discover websites which were manipulating search results, and began rolling out regular updates which were specifically aimed at filtering out websites that didn't deserve to rank. You have probably heard of Panda, Penguin and Hummingbird, these are algorithms Google uses to rank pages.

This has also led to Google starting to discount a number of link building techniques that were previously deemed fine, for example, submitting your website to web directories and getting a link in return. This was a technique that Google actually recommended at one point, but it became abused and overused by SEOs, so Google stopped passing as much value from those sort of links. These links were called reciprocal links. They have little to no value in todays SEO world.

More recently, Google has actively penalized the rankings of websites who have attempted such overuse of these techniques.

The full algorithm that Google uses to determine search results is a tightly gaurded secret. The general consensus among the SEO community is that links still play a big role in that algorithm.

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