On my home page, I'm doing something kinda spammy. And by spammy, I mean it seems to work just fine thank you very much.
I wanted to rank on some regional terms, but didn't want to throw up all those blocks of states with individual pages that you see around. They just seemed to spammy for my tastes.
So I put up a paragraph on the homepage talking about say 'red widgets in oklahoma'. Then I link those words (red widgets in oklahoma) right back to the homepage. In other words, my homepage links to itself, with some nice juicy text.
And guess what? Despite no other backlinks with text to do with oklahoma, my site ranks #1 or 2 for red widgets in oklahoma.
Are there any variations on this that might work better? Are circular links like this commonly used?