A reciprocal link is a mutual link between two objects, commonly between two websites to ensure mutual traffic. Example: Alice and Bob have websites. If Bob's website links to Alice's website, and Alice's website links to Bob's website, the websites are reciprocally linked. Website owners often submit their sites to reciprocal link exchange directories, in order to achieve higher rankings in the search engines. Reciprocal linking between websites is an important part of the search engine optimization process because Google uses link popularity algorithms (defined as the number of links that led to a particular page and the anchor text of the link) to rank websites for relevancy.

Three way linking (site A -> site B -> site C -> site A) is a special type of reciprocal linking. The attempt of this link building method is to create more "natural" links in the eyes of search engines. The value of links by three-way linking can then be better than normal reciprocal links, which are usually done between two domains.

In order to take advantage of the need for inbound links to rank well in the search engines, a number of automatic link exchange services have been launched. Members of these schemes will typically agree to have several links added to all their web pages in return for getting similar links back from other sites.

An alternative to the automated linking above is a link exchange forum, in which members will advertise the sites that they want to get links to, and will in turn offer reciprocal or three way links back to the sites that link to them. The links generated through such services are subject to editorial review.

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1. They increase your web site traffic, from people who click on the links. 2. Reciprocal links also play a major role in boosting your rankings in search engines.

Warning: Late in 2005, Google's Matt Cutts made it clear that it's possible to "overdo" reciprocal links. Getting good, solid, reciprocal links should be part of your links strategy, not your total marketing strategy.
When ranking sites, the major search engines take into account the number and quality of the sites that link to you.
Persuading good quality, relevant sites to link to you can be tedious, time-consuming and frustrating. Here are some tips to increase your chances of success.
One way to find link partners is to do searches in major search engines such as Google and Yahoo! to find sites which complement yours but are not direct competitors.
Many sites also link to direct competitors, figuring that the benefits outweigh any disadvantages.