Links are the fundamental vehicle that gets us from here to there on the web. Without them, we'd have no where to go, or at least a much harder time getting there. Links are, of course, deeply important to search engines as well. In fact, links and PageRank are at the very core of Google.
Spend a little time on just about any website and it won't be long before you come across a "click here," "click this," or "more" link. You probably wouldn't trade a $20 bill for $5, yet that is exactly what is happening when you use completely generic, non-descriptive anchor text with your links.
Search engines place even greater weight on links as another signal of what the destination page and site is about. While this is one of the basics of SEO, there seems to be no shortage of suboptimal links in the world. Links, whether internal or external, are too valuable to waste.
If you've ever wondered how much value search engines, Google especially, place on anchor text, just do a search for "click here" and see what shows up in the top of the results. The top search result has consistently been, for as long as I can remember, the Adobe Acrobat Reader® download page. Now click on the link for the cached version in Google and you'll see a little message stating:
These terms only appear in links pointing to this page: click here.
Anchor text is so powerful that it enables a page that doesn't feature the phrase "click here," to show up on page 1 of Google (as well as the other major search engines) out of over 1 billion competing results. Actually, neither the word "click" nor the word "here" appears at all on the Adobe page. This is the result of thousands of links pointing to this specific page from other sites; sites that have directed their visitors to Adobe's Acrobat Reader to insure that their visitors can access a PDF file download on the site. This phenomenon has a name: "Google bombing." Realistically, most sites will not naturally garner enough links to cause this kind of result, but it does help to illustrate the importance of anchor text.
Use links just like you use a page's title as a way to tell search engines, as well as users, what the page is all about. The difference is the anchor text of the link is talking about the destination page. And just like title tags, anchor text is an excellent area to incorporate your keywords. The anchor text of your links should be kept short and sweet yet descriptive, which keeps them user friendly while also maintaining strong keyword focus for search engines.
If you find that you have a lot of suboptimal links on your site, you can probably do a little rewording of those links to make them optimized. Creating optimal anchor text, when you can, is even more important for external links. This is also why it is important to use textual links instead of image links whenever you can. At a minimum, if you must use an image for the link, be sure to include an alt attribute, or better yet, use the CSS "image replacement" technique.
For example, if I was linking to a page on Zappos.com for men's sneakers, rather than this:
Click here to see men's sneakers at Zappos,
I might reword that sentence to read,
See men's sneakers at Zappos.
While the rewording doesn't really change the meaning to humans and may not seem all that different, it does carry much greater and more accurate meaning to search engines. Realistically, a site, even one as popular as Zappos, would be challenged to have any pages rank for "click here," even if they wanted to, but ranking for "men's sneakers" would not only more probable, but also worthwhile. Best of all, this is one of those simple things that carries tremendous value that nearly every site can improve on.