Link Anchor Text and Search Engine Optimization
For quite some time, it has been a well known fact that in order to rank well with the search engines, a page must have a large number of links pointing to it from other pages (link popularity). However, a not so well known fact is that the wording of those links (the link anchor text) is also very important. In fact, there are strong indications that search engines are nowadays paying a great deal of attention to the anchor text of the links pointing to your site.
To give you an example of how important link anchor text is, let's suppose that you run a web design site, and that you want it to rank very high with the search engines for the search term "web design". If you had 100 links pointing to your homepage, and the anchor text of all of them said "click here", they wouldn't tell the search engines a whole lot about your site. The search engines will therefore have trouble knowing that your site is about web design (they will have to try other ways to find out, like crawling the text of your page to try to deduct what is it about), and most likely won't assign your page a good position in the search results pages.
However, if instead of "click here", the anchor text on those links said "web design", the search engines would easily conclude that your site is an authority on web design, and will give your site a high ranking.
Another proof that search engines pay a lot of attention to the link anchor text is the fact that most companies rank very high when the search term is their company name (a company's name is normally the most popular anchor text used to link to its website).
That is why you must take every opportunity to influence the anchor text used to link to your pages. Your anchor text should always include your preferred keywords (the words you think most people will type in the search engine's search box to look for your page). While you won't be able to influence the anchor text used by people who spontaneously link to you, there are other instances in which you do have control, for example, when you list your site in directories.
You can also control the anchor text used by your reciprocal link partners. The best way to make sure they will use the right anchor text, is by providing them not only with your URL and your site name, but with the exact HTML code you want them to use to link to you, including, of course, your preferred link anchor text. (Tip: if your company name doesn't include your keywords but you still want to use mention it in your anchor text, do so within a phrase that contains your keywords).