External Links are hyperlinks that point at (target) any domain other than the domain the link exists on (source).
In layman’s terms, if another website links to you, this is considered an external link to your site. Similarly, if you link out to another website, this is also considered an external link.
Link Anchor Text
Use descriptive keywords in anchor text that reflect the same topic or keywords the target page is trying to target. It’s not necessary to use the same keyword text every time—in fact, doing so can trigger spam detectors. Instead, strive for a variety of anchor text that enhances context and usability for your users—and for search engines, as well.
What is an External Link?
An external link is a link that points at an external domain.
Top SEOs believe that external links are the most important source of ranking power.
External links pass “link juice” (ranking power) differently than internal links because the search engines consider them as third-party votes.
Top SEOs don’t believe that the “title” link attribute is used for rankings purposes.
FROM: 10 ILLUSTRATIONS ON SEARCH ENGINES’ VALUATION OF LINKS
SEO Best Practice
Search engine ranking factor survey data has shown that getting external links is the single most important objective for attaining high rankings. This stems from the idea that external links are one of the hardest metrics to manipulate and thus, one of the best ways for search engines to determine the popularity of a given web page. This idea was first used by the early search engine Alta Vista and later improved upon by by Google.
Google first made its mark by introducing the Stanford community to PageRank (an algorithm developed by Google co-founder Larry Page). This algorithm counted hyperlinks as votes for popularity. The pages that had the most links pointing at them were considered the most popular. When they were deemed relevant for a particular query, the most popular and relevant pages would become the first pages listed in Google’s results. Although this algorithm is much more complex today, it still likely includes the notion of external links as votes.
Today, the major search engines use many metrics to determine the value of external links. Some of these metrics include:
The trustworthiness of the linking domain.
The popularity of the linking page.
The relevancy of the content between the source page and the target page.
The anchor text used in the link.
The number of links to the same page on the source page.
The number of root domains that link to the target page.
The amount of variations that are used as anchor text to links to the target page.
The ownership relationship between the source and target domains.
In addition to these metrics, external links are important for two main reasons:
Whereas traffic is a “messy” metric and difficult for search engines to measure accurately (according to Yahoo! search engineers), external links are both a more stable metric and an easier metric to measure. This is because traffic numbers are buried in private server logs while external links are publicly visible and easily stored. For this reason and others, external links are a great metric for determining the popularity of a given web page. This metric (which is roughly similar to toolbar PageRank) is combined with relevancy metrics to determine the best results for a given search query.
Links provide relevancy clues that are tremendously valuable for search engines. The anchor text used in links is usually written by humans (who can interpret web pages better than computers) and is usually highly reflective of the content of the page being linked to. Many times this will be a short phrase (e.g., “best aircraft article”) or the URL of the target page (e.g., http://www.best-aircraft-articles.com).
The target and source page, as well as the domain cited in a link also provide valuable relevancy metrics for search engines. Links tend to point to related content. This helps search engines establish knowledge hubs on the Internet that they can then use to validate the importance of a given web document.