Exchanging Links
Opportunity Cost
Over the last year, Google has gotten much better at detecting link exchanges and giving them no weight or negative weight. Typically for most savvy webmasters, the time wasted on a lavish link exchange program would be better spent creating useful, original, link-worthy content.
Trading links with a couple exceptionally relevant related resources might be a good idea, but don't waste your time trading dozens or hundreds of links.
Does it Work?
Not as well as it once did. Many people who created SEO software, or information products that sold themselves as experts, found that their Google rankings tanked hard core because link exchanges are not all they were once cracked up to be.
If you go too far off topic with your link exchanges, at best it is an opportunity cost waste that will have limited upside on your Google rankings. At worst, it can waste your time and put you in spammy web communities that actually cause your site to rank far worse than it would if you stayed away from the spammy link networks.
The Limits of Reciprocal Linking
As your time becomes more valuable and you learn more, sometimes it is cheaper to create tools or ideas that will build authoritative links instead of manually going after low quality link exchanges.
There are a variety of link exchange networks. A few of the more popular ones are Link Market, Links4Trade, LinksManager, and Link Metro. Some of these networks may help you save time, but do not look for them to be the be-all and end-all solution to your marketing needs. Most of the sites listed in link exchange hubs are garbage. I would not join one of the automated link exchange networks with any site I was serious about running long term.
Link networks still suffer from the problem mentioned on June 26, 2000 when Brett Tabke closed the Buddy Links program:
You must ask yourself why sites would join BL in the first place? Because they couldn't get listed in the search engines. That left us at times 'bottom' feeding.
Do not limit yourself to being stuck in networks.
I tend to view the web as a whole as my link pool because if you are willing to work hard enough and create the right content, you can get almost anyone to link to you.
We Build Pages made a query combination tool which can also be used to find link sources by tracking various searches on different search engines.
The problem with relying on reciprocal links is that is has been abused. Some unscrupulous people have e-mailed competitors link partners asking them to remove links. In order to do this, they spoofed the 'e-mail from' address to make it look like their competitor sent the e-mail. If you trade links, you should do so with trusted sources and ensure they trust you as well.
Keep in mind that since reciprocal links tend to be in virtually hidden sections of sites chuck full of links that most of them do not carry much weight. Also, if you link to off-topic resources, quality sites might be less likely to link to your site.
Greg Boser recently pointed out how ineffective most reciprocal link exchange networks are on his blog http://www.webguerrilla.com/linking/the-truth-aboutreciprocal-link-networks/
Jim Boykin mentioned that the fact that link exchange sections are typically tucked away in a corner that is not heavily referenced from external sources. This also means that smart search algorithms are not going to place much trust on them, especially if the pages follow the footprints of a typical link exchange page.
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