We've all heard that external links leak PageRank. In other words, when you link to a web address outside your own website you are, from a search engines point of view, giving credit to that webpage. The more external links you have on one page, the more credit is not only being given out to those pages, but (partially in order to combat link trading) the more credit is at the same time being taken away from your page.
Therefore, it's important where and how you place your external links. This is especially true of external links that repeat across most or all of your pages. Links that do this may reside in your footer, in the sidebar (such as in a blog roll on your blog where you link to your friends' blogs), in your site navigation, or anywhere else. We're going to show you how to keep these links from leaking search engine credit unnecessarily, while at the same time still providing a useful service to your visitors.
The best way to think about external links, and incidentally, anything to do with search, is to ask yourself the question - will having this link prove more useful to a visitor than not having it? The answer to this question can be found within Google Analytics. Once you're signed in to your Analytics account, browse to the Content section, and click on Site Overlay.
You'll be able to see, using an intuitive visual perspective of your own website, where and how frequently visitors click on some links relative to others. Scroll on down to your footer, sidebar, or wherever you have external links recurring on multiple pages, and see if your visitors are clicking on them. If you don't see enough data, you may want to adjust the range of dates your data is covering (i.e. if you were looking at the past month try expanding the date selection to the past year).
Finally, while the Google Analytics approach gives you a rough idea of which links people are actually clicking on, it doesn't necessarily mean that you should unlink or not link to everything that is not being clicked on. In fact, this could entirely screw up your navigation. And remember that you are addressing only external links - those to website addresses outside of your own domain name. For obvious reasons you don't want to remove links to your own webpages.
But how do search engines actually treat your external links, such as those grouped together in your footer? As mentioned, external links can draw search engine credit away from your pages. Not only that, but a link to another site also indicates that you are vouching for the quality of that page's content. It goes without saying then that you should refrain from linking to a bunch of crap that will give your site a bad name. Also worth remembering is that search engines grow more intelligent by the day. Links that recur on every page of your website, such as those in your footer for sidebar, will not mass leak credit out of every page. In fact, Google is able to recognize these links as belonging to your footer or sidebar or whatever and instead of crediting outgoing link juice to all of them will simply choose the one it considers most relevant. This is usually the one found on your root, or homepage.
For this reason, if you are a webmaster or designer, the word is out that it pays to take the time to change up the footer link crediting your website on every single page with unique link text so it can be given credit more than one time. Our take here at Guru of Search is that this is a waste of time. Simply for the fact that it's not doing your visitors any favors, and therefore any search engine credit that exists now will eventually be negated (because the large search engine companies - Google, Yahoo, MSN, Baidu, etc. have thousands of employees working around the clock to make their search engine smarter).
Bottom line, don't stress over external links. If you like a site or page and want to link to it, and it makes sense to do so in the context of where you place your link (ie. it may be something your visitors would like), then do it. Spend more time generating content and less time trying to figure out what makes the search engines tick. Because whatever juice they use to drive their decisions today will taste different a year from now.
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