Anchor text refers to the actual text that is being used in a link to another web page. In other words, if a web page included the following:
Please contact us for more details.
The words “contact us” would be the anchor text of that particular link.
Anchor text is important when it comes to link building and building more authority (or “link juice”) to a website for a particular keyword or keyword phrase because it is a major part in Google and other search engines’ algorithm when it comes to determining how well a website ranks for a particular keyword phrase.
Before Google’s Penguin Update, a law firm or attorney website which had more inbound links from other websites which included a specific search term as the anchor text of those links was more likely to rank higher on search results than a website with less inbound links using that anchor text.
For example, if a law firm wanted to rank well for something like “California personal injury lawyer”, then it would hire an SEO firm or hire an in-house SEO professional to build links to their website with the anchor text of those links being “California personal injury lawyer”, “California personal injury law firm”, “California personal injury law Firm Murphy and Murphy”, etc.
However, ever since Google’s Penguin update, websites which use specific keywords and keyword phrases repeatedly as the anchor text of inbound links from other websites are being penalized and dropped in the search engine rankings.
For more information on anchor text, please visit the following resources:
Anchor Text- Best Practices– SEOMoz
Open Site Explorer by SEOMoz- Analyze a website’s anchor text and what keywords are most commonly used.
Google Penguin Update: Impact of Anchor Text Diversity and Link Relevancy– Search Engine Watch
Anchor Text Cloud Tool by Webconfs