First, the Good side of IBL:
Ok, I'm not going to use the Google PageRank as a factor here because obviously its an inaccurate measuring tool that focuses on something (Inbound / Backlinks) already measured more accurately by other means.
Granted NO tool has yet to be found that is 100% accurate with no glitches. Thats just life.
Importance of Inbound / Backlinks:
* Search Engine Placement
It's becoming more & more evident that inbound links play a prominent roll in search engine placements. The more Authoritative the site is that points to you, retroactively the more authority (Link Juice) your site receives from the link in accordance to the search term / Phrase (Assuming the links are Anchored).
* Virtual Doorways
Virtual Doorways is pretty self explanatory & basic. The more Links (Doorways) pointing to you & allowing potentials to access your site (Business) the better. Kind of a strategical geography tactic.
Example: A StarBucks Coffee shop just opened on the corner of a half way busy street. The west wall is connected to the rest of a strip mall, while the south, north, & East wall face 3 separate streets (One being the Main street).
By placing a door to the main street the business starts to receive walk in traffic. They notice that there are still people walking up & down the 2 adjoining streets but don't seem to come around to the main street side. By adding an additional entrance to the other 2 adjoining streets they start to find more browsing traffic coming in (Thus boosting potential Sales).
* Branding Power
As we all know, Branding is based on repetition & consistency. It takes time to do. In order to speed up this processes you would need to get your Brand name in front of more viewers (Hinse Inbound / Backlinks).
As an individual surfs the net & starts to see the same Brand name mentioned in more places, they tend to become curious & visit simply to see what all the fuss is about.
The name (Especially if Unique) will stick in their brain & become familiar to them. Next time someone asks them about a certain product or service, guess what? Your Unique Brand & impression on them will pop in their head due to repetitive viewing & become a referral (even if they never used any of your products / services before them self).
There are several other beneficial factors obtained by inbound / backlink campaigns, I just used the above 3 because they are most relevant of them ALL.
Now the Bad side:
Bad IBL's (E.G. Link Farms, Web rings, FFA's, Etc...) Are being placed in the Omitted section of google just like duplicate content is & do NOT count as an IBL for you. Depending on the Negative aspects of the Originating site giving you the IBL, you may or may not also receive a Penalty.
What is a Bad IBL in a nutshell? It's simply a page / software / program designed for the soul purpose of manipulating the search engine algorithm. The Mathematical Algorithms calculate several aspects of an IBL , !st & foremost is if the IBL is originating from a Red Flagged site (This of course is a site that has already been penalized by Google).
It would be safe to assume that if you have negative (Red Flags) Pointing at you (IBL's) that you will also start to fall into the red Flag area. Just like if you have Quality authoritative sites pointing at you, you will be placed in a more Positive Authoritative status yourself.
Sometimes it can be hard determining the 2 & ONLY Google programs know what Google Algorithms Red Flag. It's simply a common sense scenario at best....
Hope this helps a bit....

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