Building backlinks from other sites is important for improving a site’s Pagerank. However. many a times webmasters do not pay much attention to the internal linking. So the question is, are the internal links counted as backlinks by Google? And do the internal links contribute to the pagerank?

The answer is Yes. You may ask what is the proof? On Google toolbar you can see that internal links are considered as backlinks. Also you will often see that in most websites the incoming links from external sites connect to the top page contributing to its Pagerank. The top page derives most of the pagerank juice from these inbound links; but you will often see that internal pages also have a pagerank even though they may not have any backlinks from external sites. This pagerank is contributed by the internal backlinks. 

Thus we see that there two types of backlinks. Internal and External. External links tell the search engines  what pages on your site are considered as important by other people. Internal links are important too; they tell the search engines which pages are important to you on your site. However internal links are not weighed anywhere near as heavily as external links, but they do count towards pagerank. You can see the effect especially when you have hundreds or thousands of your pages indexed.

So the internal linking is also important for gaining overall high pagerank. In your website design, you should try and have a text link back to your homepage from every  page of your site. Many sites use Flash and Java navigation and they look great from the user point of view, but their internal pages do not get spidered easily; so you should always include a text link to other pages, preferably using relevant anchor text containing relevant keywords.

It goes without saying that the most important page in your site - the top page - deserves a good backlink from each and every page in your navigation structure. This is one of the easiest ways to create a good internal linking structure, making it easier for search engines to index your site.

This strategy isn’t just limited to your home page, but it can also be applied to other important pages of your site. For example, if you have a blog and want to increase the ranking of a particular post, you could give it a side-wide link on your blog.

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