The theory goes something like this: The search engine powers-that-be, have decided that if other sites are linking to your site, it must be a winner, therefore, it deserves a boost in rankings (when all else is equal). If you think about it, this makes a lot of sense. People link to good sites, not bad ones. 

Most search engines are thought to place some emphasis on link popularity in their ranking algorithm. Some people believe that the number of sites pointing to your site is what determines your link popularity, and the more links there are, the higher your ranking will be. However, that is only partially true. The search engines (and those that program them) are not dumb. They are used to search engine spammers trying to cheat their way into getting a high ranking. Because of this, the search engines are not just looking for the number of links that point to a site, but the quality of those links.

There appear to be two types of links that get factored into the link popularity equation. Links from other sites that focus on the same keyword phrases your site focuses on, and links from relevant categories in major directories and industry specific portals. "Free For All" (FFA) sites, do not constitute quality links, so don't waste your money submitting your site to 500 of them. Links from sites that focus on topics that have nothing to do with your site probably won't help you win any link popularity contests, either.

How Does Link Popularity Work?

Here's an example of how I believe link popularity works: 

Let's say that Sally Pizza Palace Web site has a link to Michael Clothing store. This probably won't help Michael link popularity for the keywords "men's clothing." However, if both Sally Pizza Palace and Michael Men's Clothing Store are both located in the city of Sydney, and people are searching for "men's clothing in Sydney," the quality of that link, may have just gone up a little. There's now a common thread (Sydney) between the sites. It probably won't help for those people simply searching for men's clothing, but may help if they're searching specifically for stores in the City of Sydney. A higher quality link for Michael, however, would be one from "Sam's Clothing Store Directory," which lists a whole bunch of clothing stores that can be found on the Internet. That is exactly the kind of link that the search engines would credit toward link popularity. The key is in having that common thread between the sites.

How to get linked without even trying? 

Interestingly enough, if your site is well written and provides a lot of useful information, you won't have to search out links at all. Other sites will link to yours of their own volition. We have seen this process in action with our Rank Write Roundtable site. Without actively requesting any links (other than the major Directories and a few sites that list email newsletters), many highly relevant sites have added Rank Write to their list of links. Each week, I find more and more sites that have added our link. This, of course, is the ideal, and isn't going to happen for every site. However, if done correctly, even some commercial sites might be able to benefit from this approach. If the commercial site adds some content, and if the content is unique and useful, other sites may want to link to it. You just need to be creative. For instance, Michael's Men's Clothing Store, could add some pages describing the latest trends in men's fashion. What's hot this season, and what's not. If Michael does a good job presenting this information, and updates it often, other fashion sites might add a link to Michael's site, because it adds value to their own site. 

These are the types of things you need to think about when it comes to the link popularity of your site. How can you make your site so good that others will be only too willing to link to it, without you even having to ask for it? If you can figure that out, you won't have to worry about link popularity ever again!

Link Exchange Services

While you network, consider registering with a link exchange service to quickly generate more links pointing to your site. Their operation is simple. You register your site with the service and the service adds you to the links page that other members place on their Web sites. Some services promise to add as many as 500 links pointing to your Web site within 30 days.
Most link exchange services are free, but almost all impose some restrictions on their members. The most common are:

You must display a specific icon on your home page that points to the links page on your site.

 
You must upload the updated links page to your site periodically (usually every 30 days) or be dropped from the service. 

You have to agree to submit your site (including the links page) to search engines on a regular basis. 

Before you register with a service, carefully study its rules and regulations to make sure your site is eligible (some don't accept adult sites, for instance). Also check to make sure that the links are relevant to your site content. Some search engines are beginning to penalize so-called "link farms" that don't add any value to a site.

Link Building Terms Explained:-