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Anchor text often gives the user relevant descriptive or contextual information about the content of the link's destination. Because of this most search engines (including Google, bing & Yahoo!) use, to varying extents, the anchor text of links pointing to a web page when establishing where to rank it in their results pages.
So, for example, a site that deals primarily with weddings and has a range of links pointing to it using "weddings" and related words as anchor text is likely to rank higher when related terms are entered into a search engine than a competitor with less links, or links with anchor text with no context such as the site's name, or "click here". In fact, this is one of the key benefits of a keyword-heavy brand / site name or URL - when anyone links to you using one of these, they'll inevitably use one of your keywords as part of the link. It's not an SEO strategy in itself, but it can work wonders for for very niche sites with a few very related core terms.
The search engine's reliance on anchor text as a ranking signal can also have unintended side effects. A classic, ongoing example is Adobe Reader's continued #1 ranking for "click here", a result of thousands of sites telling their visitors to "click here to download adobe reader" (there's one more).
Pranksters have also taken advantage of this aspect of the search engines' algorithms, planting several "Googlebombs" over recent years. In a "Googlebomb", thousands of unsolicited links are built to a particular page, raising its ranking for a particular term by using it as anchor text. Possibly the best known is "miserable failure" - a 2005 “Googlebomb” causing the then US president, George Bush Junior's, page on the Whitehouse.gov website to rank for this term for some time.
Google has since taken steps to reduce the effectiveness of this sort of prank - the creation of thousands of identical anchor text links from low quality sources will no longer have the same dramatic effect on rankings. However, anchor text continues to influence rankings. You can see this for yourself - run a backlink check (using a tool such as link diagnosis) for virtually any site in competitive search results in niches such as finance, insurance or clothing and you'll likely see a lot of keywords used as anchor text.
So, consider your anchor text, because the competition certainly will. Whether you feel like you're falling behind, or you want to take an early lead, give the online marketing consultants at I-COM a call. Our SEO services include link building to help improve the anchor text used, and your overall link popularity, helping your site to simply rank better.