In 2005, Google introduced the no follow link which all webmasters know is of huge importance – and those who are in the link building pay attention to this attribute. If a site uses the “nofollow” attribute for their external links, then Google will not award any credit in the form of Page Rank to the recipient website. Any boosting of your website’s ranking comes from followed links which pass link juice. If you are spending a lot of time building your links but not seeing any increase in Page Rank, you may be working with sites which have blocked search engines from taking those links into consideration for calculating your search ranking. If that is the case, you really need to get an SEO to revamp your strategy and help create a better set of sites to target.
The reason the no follow exists at all is abuse. Spammers used to get links in anywhere to point to their site, even if their site was rubbish. This is exactly why sites like Wikipedia started adding a nofollow tag for all external links – to protect their website from spammers who posted junk on the Wikepedia website just for the sake of back links. This used to be one of the biggest problems they had. There are a large and ever increasing number of blogs which also do this to avoid spam comments. If you have been spending time commenting in blogs as part of your SEO strategy, you must know whether the nofollow tag has been enabled or you are wasting your time in most cases.
Different search engines respond to the nofollow attribute differently. Google neither follows nor indexes the link that is tagged with the nofollow attribute. Yahoo, yes they still have a search engine, assigns no value. Bing doesn’t consider links that have the nofollow attribute in their search engine ranking either. Even though your search ranking will not improve with links that come with nofollow the odds are they will help you generate some traffic which of course helps in other ways.
On your own site, you can use the nofollow attribute if you are promoting an affiliate link, since using a nofollow attribute is what the affiliate programs expect you to do anyway. They only want you to send them targeted traffic and they pay a fee for each purchase that your visitors make. This way you can do that type of program and you don’t have to dilute your own ‘link juice’ to do it.
When you have space for banner ads, you can assign a no follow attribute to them as well. NOTE: Being paid specifically for placing the banner in a page with particular pagerank without a nofollow tag is supplying paid links to a customer and means you are helping them with black hat tactics. If someone buys links from you expecting back links from a page with good PR to boost his or her website’s ranking as well, JUST SAY NO. This will save you from a lot of headaches later on!