When optimizing your website for SEO purposes, it is crucial to understand the difference between no-follow links and do-follow links. If you don't understand the difference, then it is likely that 50% of all your linking efforts are being wasted. Here's a short guide to help you understand the difference.
In order to understand the importance of no-follow and do-follow links, you need a basic understanding of Google's PageRank algorithm. The PageRank algorithm was originally conceived by Larry Page at Stanford University (hence the name “Page” Rank). His idea was to rank websites in much the same way as scientific academic papers are ranked. In academia, there has long been a system in use in which the respectability of a particular academic paper is determined by how many other academic papers reference it. Each time another academic paper cites another, it acts as a “vote”. Over time, you can determine the highest quality and most useful papers by looking at how many citations it has received. Page's idea was to apply this same concept to the Internet. By considering each link from one website to another as a “vote”, you should be able to determine the highest quality and most useful webpages by counting those votes.
With the PageRank system in mind, you can now understand the difference between a no-follow and a do-follow link. Essentially, a do-follow link is a link that acts as a vote for the webpage it is pointing towards. A no-follow link still has all the characteristics of a do-follow link, but the webmaster has indicated that he does not condone nor “vote” for that webpage.
It is also important to realize that there is technically no such thing as a “do-follow” link. Rather, there are only regular links and no-follow links. However, in the SEO community, “do-follow” is used as a convention to distinguish those links that act as a vote from those that don't. Do-follow is just another way of saying “non no-follow”.
The PageRank system was a phenomenal success, and it was a large part of the reason that Google was able to quickly rise from obscurity to become the #1 search engine. However, there are several flaws in the system. The primary flaw is that many webmasters realized that they could manipulate the system by “voting” for their website on other people's sites. The easiest and most common way to do this was by commenting on blogs. When you leave a comment on a blog, you are typically given a link back to your own website or blog.
Webmasters began to take full advantage of this by commenting on as many blogs as possible. Eventually, automated software was created that would go from blog to blog and leave automated comments. “Comment spam”, as it became known, began to spiral out of control. In 2005, Google announced a solution. They introduced the no-follow tag, which can be placed inside the html of a hyperlink in order to indicate to the search engines that a particular link shouldn't count as a vote.
The major blogging platforms, such as Wordpress and Blogspot, quickly adopted the convention. By default, all comment backlinks were automatically no-follow links. This rendered the vast majority of comment spam as ineffective. It was no longer effective to spam blogs, because it would no longer help the spammers' search engine rankings.
Now that you know a bit about no-follow and do-follow links, let's discuss how you should use this information to optimize your onsite and offsite SEO efforts.
Since only do-follow links count as a vote for your website, you should seek to obtain as many of these as possible. You can still obtain many do-follow links yourself by writing articles to article directories, or by posting in certain online forums. There are even still a few blogs that still give do-follow links for comments. You can discover which sites give do-follow links by either installing a browser plug-in that is designed for this task, or by digging into the html code. The best way to get votes, and the way that Google recommends, is to create great content that other websites link to naturally. This is more to the spirit of why the system was created in the first place.
Whether or not you no-follow your outbound links probably doesn't have as much of an effect on your search engine rankings, but there is at least one major consideration. Google has indicated that if you link out to “bad neighborhoods”, i.e. known spammers, your site could be penalized. For this reason, you may want to be careful about only allowing your site to “do-follow” sites that you know are trustworthy.
No-follow and do-follow links are something that every webmaster needs to understand. Once you do, you'll be able to better maximize your SEO efforts to achieve higher rankings with less work.