Help with my competitor’s backlinks please- they are all reciprocal.

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[I’ve been cough spying cough on my competitor’s backlinks and it seems they are almost all reciprocal links. I was always taught that reciprocal links cancel each other out- this is truly correct? I use Angelas and Pauls’s links and some of my own and although I know a lot of them don’t last forever, they are all 1-way links. Yahoo site explorer says my competitor has 133 links and it says my own site has 128, but my webmaster tools show my site has 1000 links to it. His site is 8 years older and his pr is 3 to my 2 but I cannot beat him to any 1 slot for any keywords. I could understand it if his links were all 1 way but Yahoo explorer shows almost every 1 to be reciprocal. I’ve used SEO spyglass and it doesn’t show up much more than 130 links os I don’t think he actively builds links as I do.]

The fact that you are comparing the number of backlinks between you and your competitor indicates you may not understand how Google ranks your pages in SERPs. The quality of your backlinks is much more important than the quantity.

You may be able to beat your competitor with a single high-quality backlink. Why not go that route instead?

Backlink types can be broken down into two basic types:

  1. The type you earn naturally from other webmasters that like your content and link to it.
  2. The type that you create yourself (promotional) when you post content on other websites.

As I’m sure you have already realized, folks aren’t likely to link naturally to your profile pages, so those backlinks will never be worth much unless you promote them yourself. By creating and including backlinks from high-quality content you are more likely to build a reputation as a thought leader or expert in your niche. This not only creates backlinks from quality content, but it is also far more likely to generate natural backlinks. A great way expands on that approach is to do guest blogging for other bloggers in your niche, or even similar niches.

You may want to “qualify” this advice just a bit.

A limited amount of reciprocal links are okay as long as they are useful and relevant to your visitors.

Originally Posted by Google Webmaster Guidelines
However, some webmasters engage in link exchange schemes and build partner pages exclusively for the sake of cross-linking, disregarding the quality of the links, the sources, and the long-term impact it will have on their sites. This is in violation of Google’s Webmaster Guidelines and can negatively impact your site’s ranking in search results. Examples of link schemes can include:
Links intended to manipulate PageRankLinks to web spammers or bad neighborhoods on the web excessive reciprocal links or excessive link exchanging (“Link to me and I’ll link to you.”)Buying or selling links that pass PageRank best way to get other sites to create relevant links to yours is to create unique, relevant content that can quickly gain popularity in the Internet community. The more useful content you have, the greater the chances someone else will find that content valuable to their readers and link to it. Before making any single decision, you should ask yourself the question: Is this going to be beneficial for my page’s visitors?

It is not only the number of links you have pointing to your site that matters, but also the quality and relevance of those links. Creating good content pays off: Links are usually editorial votes given by choice, and the buzzing blogger community can be an excellent place to generate interest.

Source: Link schemes – Webmaster Tools Help

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