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At the beginning of the web era,
users would go to directories to find sites relevant to
their interests. In fact, Yahoo!, the web's number one
destination, started as a directory. Nowadays, most users
rely on search engines, not directories, to find what
they're looking for.
When search engines started to become popular, they relied
on web pages' 'keyword metatags' to determine the topic
and relevance of the page (the keyword metatag is a
section within a web page's HTML code where webmasters can
insert words that are relevant to the page's content).
Webmasters discovered that by stuffing their meta tags
with popular search terms repeated hundreds of times, they
could propel their pages to the top of the search results.
Search engines caught up to the abuse and decided to
ignore the meta tags and rely instead on web page copy.
Webmasters then started to overstuff their page copy with
popular search terms, often writing them in the same color
as the web page's background, so that they could be
detected by search engines while being invisible to users.
Again, search engines discovered the trick and decided
that the best way to rank a web page's content and its
topical relevance was to rely on inbound links from other
pages. The rationale behind this is that it is much more
difficult to influence other people to link to you than it
is to manipulate your own web page elements. In fact,
inbound links are the foundation of Google's Pagerank™
algorithm.
There are several ways to get inbound links, among them
writing articles that include your bylines with a link to
your page, exchanging links, and listing your site in
directories.
Listing your sites in good directories is probably the
best way to get quality links that are highly valued by
the search engines. Since directories rely on human
editors who enforce strict criteria to list a site, and
since directories organize the information in highly
focused categories, they are an invaluable resource for
search engines to measure the quality and the relevance of
a web page.
In summary, directories are important not because they
generate significant traffic (they don't), but because
they are given great importance by the search engines to
qualify and rank web pages, and to determine their topical
relevance.
You should definitely list your site with quality
directories if you want to increase your chances of
success with the search engines.
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