When you place important information on your website, post or pages, the search engines expects that you will link to other important information on the web. Your page rankings can be lower if you fail to link off your site. However, you do not want to link directly to a competitor. It is best to link to information sites that have useful unbiased information.
Where to link to (thanks to http://www.shoutmeloud.com/seo-benefits-and-tips-for-outbound-links.html) :
• Links to pages which actually add value and cover the topic really well.
• Link to blogs having good PR or Successful blogs.
• Link to the bloggers in your networks or same niche, this will help you to create community with fellow bloggers.
Read the reference article for a more comprehensive discussion on outbound linking.
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