Link Exchange Primer
One method of promotion that many webmasters engage in is link exchanges. A link exchange is an agreement whereby two webmasters agree to link to each other from their respective sites. The benefits of a link exchange are twofold. Firstly you gain direct traffic from people clicking on the link, secondly you gain another incoming link for search engine optimization purposes.
Not all link exchanges are created equal and this article is going to explain how to optimize your link exchange efforts so that you get the most benefit possible.
Evaluating Partners
The quality of the sites that you exchange links with reflects on your own site. It is important for your site's image that you only exchange links with sites of quality. If the sites you link to look cheap, you do too. A fair link exchange is one in which both sites receive the same benefit. This doesn't mean that both sites get the same amount of traffic though. A site with a high amount of traffic might not advertise it's off site links as much as a site with lower traffic and so the amount of visitors sent each way might even out.
You can simply ask the webmaster how much traffic he receives, or you could use a tool like Alexa.com to get an estimate. You should also note where he places his links, as compared to where you place yours.
You will need to measure the PageRank of your partner's site, you can do this using the Google Toolbar. Specifically you should know their overall PageRank power, or the PageRank of their links page. If a person links to you on every page of their site then their overall PageRank power will tell you how much PageRank the exchange will give you. If you also link to the person on every page of your site then your overall PageRank power will tell you how much overall PageRank (spread throughout your entire site) you will lose in this exchange.
If you both employ separate link pages you can calculate how much PageRank you gain and lose by dividing the PageRank of your or your partner's links page by the number of links (both internal and external) on that page.
Doing the above will allow you to measure both your partner's PageRank and traffic contribution to your site so that you can decide if it is worth while to exchange links with them.
Deceptive Practices
There are many ways to mask links so that search engines do not see them. This can be done for a valid reason, such as denying a search engine access to a shopping cart script, or to stop the flow of PR to an affiliate program when you sending them PR is not part of the affiliate agreement. However it is my opinion that using such methods in a link exchange is unethical unless your partner is fully educated about the matter and decides he wants to exchange links anyways.
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