Managing Link Investment Risk

I’ve been seeing an increase in risky linking behavior over the past year. That may seem counter-intuitive to people who are knowledgeable about Google’s anti-link spamming efforts — it certainly seems so to me. But then, when you look at the economics of the situation, Google is probably doing more to increase the demand for risky links than any other enterprise in the searchable Web ecosystem.

Before I go farther with that point, let me lay out a few concepts that we haven’t openly discussed in the SEO community (to the best of my knowledge). I have no doubt these issues have been discussed at length under other descriptions in many private chats, forums, and after hours at SEO conferences.

Link Investment and Link Investment Strategy
There are two kinds of links: ephemeral or short-term links and long-lived links. Recent algorithmic chasing analyses suggest there may levels of complexity involved with long-lived links that I don’t have room for in this article. I just want to focus on the fundamental principle of investing in long-lived links.

You can measure your link investment in terms of how much money you pay for links — and I don’t mean just in terms of what your link buying budget is. If you don’t buy links directly you still invest in them through your time, whatever tools and access you pay for, the salaries of your link ninja staff, etc. There is an economic cost associated with every email sent out to ask for links, to ask for press exposure, etc. These costs represent your link investment.

Long-term link investment should have a larger payoff than short-term link investment for most people. In certain situations, short-term link investments pay off handsomely. For example, if you’re launching a new brand and you acquire a front-page link on Yahoo!, you grab a LOT of visibility even though that link won’t last long. The residual value of that visibility will be distributed through secondary links created by people who saw the link on Yahoo!, and a Cascade Effect will (hopefully) ensue whereby links spread outward (this has been mistakenly called “viral marketing” by the SEO linking community, but it is more accurate to call it “echo marketing”, “pulse marketing”, or “wave marketing”) to tertiary and other sites.

Link Investment Strategy has to choose between three options: short-term (high value) link visibility, long-term (low- to intermediate-value) link visibility, or a blended approach that typically (but not always) begins with a short-term investment and switches over to a long-term investment.

Link Investment Risk
There are risks associated with every link investment strategy. We can summarize these risks as “foolish risks”, “prudent risks”, and “unexpected risks”. We’ve seen all three types of risks materialize in the SEO community.

One example of a foolish risk is sharing your link resources on your blog. Telling other people to go drop links where you get your links from is just plain stupid. Naturally, you can find new SEO articles every day that tell you about “dofollow blogs and forums”, “10 great places to drop links”, etc. So another example of a foolish risk is using those kinds of publicly disclosed linking resources.

Opinions may vary on whether purchasing links is a foolish risk. You have to figure that out for yourself.

An example of a prudent risk would be buying a link from an established, well-trusted Web directory (which are exempted from the foolish risk behavior of disclosing linking resources). It’s not easy to get into those directories, but getting in can be helpful (if not as helpful as was once widely believed). Another example of a prudent risk would be to ask your business partners for links, offering links in exchange. That kind of reciprocal linking is usually not excessive enough to trip any alarm filters.

Unexpected risks are things like doing something prudent today that becomes an official search engine no-no tomorrow. There was a time, for example, when Google did not specifically forbid buying and selling links. They only added the prohibition in 2007, as I recall. And then they launched a new war on paid links that has been going on ever since.

Another type of unexpected risk was reciprocal linking. There was a time when the search engines didn’t care (in fact, reciprocal linking has always been a natural process of the Web). But eventually excessive reciprocal linking became enough of a problem that search engines started penalizing or filtering out some or all of those “excessive” links.

Another type of unexpected risk involved obtaining links from GeoCities Web sites. They were around for years and many of them were pretty popular at one time. Getting a link from one of those well-established, trusted GeoCities sites helped many another site. But those links will all be gone in a few short links. Who could have foreseen that? A year ago, maybe a little longer, I would have considered obtaining an ethical link from a GeoCities site a prudent risk.

Things change and you cannot always be sure that your widely accepted “white hat” technique today will enjoy the same status tomorrow. Look at all the poor PageRank sculptors who got caught bleeding rather than hoarding PageRank more than a year after Google changed the process without telling them.

Some people would have argued that using “rel=’nofollow’” on internal links was a prudent risk two years ago. I would have argued it was a foolish risk. So when it comes to assessing risks, understand there is little to no clear science behind the process. Experience teaches us where the best and worst risks lay in our strategies.

Managing Link Investment Risk
So now that we understand the fundamental concepts of Link Investment and Link Investment Risk, how do we manage the risk? Is it simply a matter of logging everything we do in a spreadsheet or database program?

In fact, a spreadsheet is probably all you need to do your risk assessment and analysis. You have to identify the risks and define their values for yourself. You can look for consensus in the SEO community but I don’t think you’ll find much beyond the usual “don’t do this” and “don’t do that” type of generic advice articles.

You can and should (in my opinion) assess the risks for both your resources and your strategies. If you use only one class of resources (say, links in blog comments) that is (in my opinion) a high risk or foolish risk strategy. BTW — the difference between a high risk and a foolish risk is the potential return on investment.

You should reassess your link investment risks from time to time and update them. Collect notes about anecdotes you find on blogs and forums where people have used the resources you use or the strategies you use. If they complain about the results, that should negative impact the risk.

You can determine risks on the basis of expected return on investment as well. A risk is not just about getting caught or whether the resource will still be viable in the future. If you’re spending $100 a day to obtain a link, can you expect that link to bring in (even over a long period of time) at least $101? If not, you’re taking a high risk with your investment.

Gambling that the latest hot tool, technique, or resource will pay off you in the long-run is a high risk strategy. It may prove to be a foolish risk strategy. Either way, most people will not obtain a significant return on investment from high or foolish risk strategies.

How to Approach Link Investment Risk Management
You want to diversify in both resources and strategies. The more diversified your portfolio is, the more easily it can weather unexpected downturns in value.

The more strategically flexible you are in the ways and places you obtain links, the less likely that you’ll trip algorithmic filters, red flags, etc. Temper that expectation with reasonable behavior. If you’re only investing in black hat link building tools that go out and drop links from your computer in the background, that’s at least a high risk strategy. The guys selling that software are making their money off your investment, not off the links that the software drops. If it were THAT good, they could just set up thousand of affiliate sites and build links to their sites and rake in the millions of dollars in commission.

It’s okay to try to new things but you should always implement fundamental principles in your link building. If you are not sure of what the link building fundamental principles are, start writing down ideas and then find ways to pare down the list so that it is as stingy as possible.

Sure, you can look on blogs like this one for fundamental principles but we all have our own ideas. In my view fundamental link building principles respect other sites, seek value beyond PageRank and anchor text, and work toward creating useful, interesting resources.

Summing Up
The point of all this is that a lot of people have been blindly following bad advice from some of the “best” SEOs in the business about link sculpting and link building for several years — and that bad advice is starting to have a large effect across the Webmastering community. People need to understand that just because someone who is well-known says “X is a great idea” doesn’t mean that “X” is a great idea. It just means that someone who is well-known has expressed an opinion about X.

A lot of people believed in and promoted PageRank sculpting through internalized nofollow despite sometimes stern warnings from people like Shari Thurow, Adam Lasnik, Adam Audette, Vanessa Fox, Matt Cutts, and me.

There are other bad link building ideas out there, or at the very least extremely risky ideas. If you don’t agree with me about which ideas are bad, you should at the very least be estimating for yourself (and grading your performance as time passes) just how risky your resources and strategies are.