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I have spent a small amount of time on reciprocal links, mainly for link popularity. The problem is, the linking pages are a long list, rarely generating referrals. The main (really only) benefit is link pop.
I have a couple simple ideas. On most sites which are SEO'd, each page of a site is usually targetted to one idea, one mission. At the bottom of the page, you can link to partnering sites which have a page/site on the same topic. If the visitor didn't get what they want at your site, you are offering options which are of value to them. In return, the linked site would optimally do the same for you. You could also list these links as an additional part of your navbar, on the individual pages.
To tie this into website advertising, you can use paid links mixed in with your partnering links.
The problem with doing this type of thing is time. It takes time to find partners, and to ensure they follow up with their end of the deal. You could make a "partner with us" page, that would explain the situation in detail. If you are listed well, your competition will probably find you and check you out. This page would open the door for partnering, without having to find them.
Other than that, the only thing I know of, is the time-consuming leg-work of finding them yourself. You could spend a minimal amount of time, only attempting to partner with a few high-traffic sites.
Then, use your logs for making sure you are still getting the referrals, just as you check your SE referrals.
"The main (really only) benefit is link pop." YES!
For me, the only benefit of requesting reciprocal links is link popularity. Considering the importance of link popularity, it is something that I am devoting a lot of time to. So what I meant by link marketing was not promoting the sites by placing links on relevant sites to generate traffic, but to improve on link popularity.
My main issue is that ranking index pages is my main target and where I focus my optimization efforts. Thus, I'd want to have all of the incoming/outgoing links on the index page. Before I was using a form of hidden links, but I am now cautious about doing this because I got many sites dropped from Google and haven't been able to get them reindexed.
So, where to place the links? I don't want to provide a visible set of related links at the bottom of the index because I want to keep visitors at my sites. Also, I like to use at least 30 relevant outgoing links per index page.
"You could make a "partner with us" page, " YES!
I am doing this, and keeping it hidden from viewers on the other pages of the site. Thus my question, is link popularity site dependent or page dependent? If I have a site, IndexA, and I create a links page, IndexApage1. This serves to get sites spidered. In terms of ranking, thi sis another issue. It is harder to rank tour pages than index pages. So maybe (due to link pop) I would get that links page well ranked but not the index, which contains all of the content, marketing promos, etc.
What I am now doing is including button menus on that links page to other pages within the site. However, engines give many more ranking points to index pages, so this strategy is a bit more difficult.
Any thoughts on this? Is link popularity site dependent or page dependent? Any ideas of where to place links on index page so that it's not considered spam?
Overall, link pop campaigns can be very time consuming. A tool like Zeus will help cut the time involved, particularly as the number of links you are managing goes up, but also demands a few compromises. For example, it will create a link directory that allows extensive customizaton, but if you want to integrate the links with your content pages you'll have to do that manually. The good news is that individual directory pages can become traffic attractors themselves.
I rather like the idea of incorporating outbound links on the relevant content pages from an SEO viewpoint, although they are a potential distraction when you want to keep users moving around your own site. Opening these links in a new window may help a bit, but the distraction factor is still there.
Linking is now more than something we might consider doing to enrich our site. It's something we must do. Optimizing now requires I use my energies in different ways. Instead of throwing out new and improved marketing pages all the time and feeding the machine like a drug I feed links to very specific themed pages within my site and then tie all those pages to each other.
These pages just continue to grow individually and as a whole. Its pretty exciting stuff.
The way I develop a site brings in tons of alternative traffic for variations of keywords. Plus, an amazing amount of vertical traffic from link partners that continues to surprise me.
Oh, and what you say about large sites is very true but it's great strategy for smaller sites because you are actually making them more viable, fuller of content and with more substance. My links though are always in keyword rich descriptive sentences. My link pages offer more than a set of links.